Prudential has come a long way since its shares were hammered following the bungled attempt to buy AIG's Asian business - that cost the group £284m. In fact, Prudential managed a stellar performance in 2010, pushing annual premium equivalent sales ahead by 23 per cent to £3.49bn and boosting underlying free-cash generation by 21 per cent to £1.71bn.
Much of the improvement came from a 24 per cent rise in new business sales to £1.5bn in Prudential's fast-growing Asian markets - management is working hard there to increase revenue still further. Moreover, new group objectives include a plan to double 2009's IFRS life and asset management operating profit of £465m by 2013. And each business unit is also to remit net cash to the group over the same timescale. That means net cash from Asia is targeted to rise from 2009's £40m to £300m, while the US Jackson operation is to deliver £200m of net cash, up from 2009's £39m. If achieved, this would generate a cumulative underlying free-cash surplus of £6.5bn over the same period.
On the asset management side, M&G boosted funds under management by 14 per cent to £198bn, which was achieved despite a drop in net investment inflows from £13.5bn to £9.1bn. The fall reflected a slide in institutional inflows from £6bn to £1.7bn, although the previous year's inflows were dominated by a single £4bn fixed-income mandate. On the retail side, inflows were virtually unchanged at £7.5bn, although a tight control on costs helped to improve the cost-to-income ratio from 65 per cent to 63 per cent.
Group finances remain in pretty good shape, too, and the capital surplus over regulatory requirements rose from £3.4bn to £4.3bn. Prior to these figures, Charles Stanley was expecting pre-tax profit for 2011 of £1.9bn, giving EPS of 52.5p.
| PRUDENTIAL (PRU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 739p | MARKET VALUE: | £18.8bn | |
| TOUCH: | 738-739p | 12-MONTH HIGH: | 746p | LOW: 485p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 315p* | EMBEDDED VALUE: | 715p | |
| Year to 31 Dec | Gross life premiums(£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 16.2 | 1.37 | 36.2 | 17.1 |
| 2007 | 18.4 | 1.06 | 28.8 | 18.0 |
| 2008 | 19.0 | -2.07 | -16.0 | 18.9 |
| 2009 | 20.3 | 1.56 | 27.6 | 19.9 |
| 2010 | 24.6 | 2.07 | 56.7 | 23.9 |
| % change | +21 | +33 | +105 | +20 |
Ex-div: 30 Mar Payment: 26 May *Includes intangible assets of £6.1bn, or 239p a share | ||||
