The rumours circling Prudential (PRU) – exacerbated by the merger of its UK asset management business with its domestic and European life businesses – have proved well-founded. The life assurer will separate M&G Prudential from the remainder of the group, with both entities listing on London’s main market. As part of its shift towards a more capital-light business model, the former has sold its £12bn UK annuity portfolio to Rothesay Life.
The plc will include its Asian, African and US savings and protections businesses. Management has been focusing beyond Europe for some time, towards Asian markets particularly – its 2017 figures indicate why. Asia grew operating profits 15 per cent, while cash generation was up a quarter, becoming the greatest cash contributor for the first time. A jump in sales of health and protection products meant regular premium contracts accounted for 94 per cent of annual premium equivalent sales, adding stability to revenue streams.
In the US, uncertainty over the implementation of government reforms to retirement advice dampened variable annuity sales, which rose just 1 per cent. Institutional products performed better, helping generate a 15 per cent increase in new business profits. Meanwhile, the UK had a scorcher of a year, with PruFund new business sales up more than a third and M&G generating record external net inflows of £17.3bn.
Analysts at Panmure Gordon expect adjusted EPS of 156p during the 12 months to December 2018.
| PRUDENTIAL (PRU) | ||||
| ORD PRICE: | 1,921p | MARKET VALUE: | £49.7bn | |
| TOUCH: | 1,920.5-1,921.5p | 12-MONTH HIGH: | 1,993p | LOW: 1,612p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 622p* | SOLVENCY II RATIO: | 202% | |
| Year to 31 Dec | Gross premiums (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 30.5 | 2.08 | 53 | 33.57 |
| 2014 | 32.8 | 3.15 | 87 | 36.93 |
| 2015 | 36.7 | 3.32 | 101 | 38.78 |
| 2016 | 39.0 | 3.21 | 75 | 43.5 |
| 2017 | 44.0 | 3.97 | 93 | 47 |
| % change | +13 | +24 | +24 | +8 |
| Ex-div: | 29 Mar | |||
| Payment: | 18 May | |||
| *Includes intangible assets of £12.5bn, or 483p a share | ||||
