new business is positive, dividend is announced
Underlying operating profit increased 8% to $1.7 billion in the first half, largely reflecting an increase in underlying operating profit from asset management and life insurance. life, as well as lower interest charges. Annual premium equivalent (APE), which is an important measure of new business activity, increased 9% to $2.2 billion.
Looking ahead, Prudential said the impacts of Covid-19 are stabilizing in its markets, but operating conditions are still expected to be difficult for the rest of the year.
The Board of Directors approved a first interim ordinary dividend of 5.74 cents per share, in accordance with the policy of paying one-third of the ordinary dividend for the previous year.
Anil Wadhwani will become Group CEO from February 25, 2023, subject to final regulatory approval. After that, the group’s executive directors will be based in Hong Kong.
The shares remained unchanged after the announcement.
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Annual premium equivalent (APE) sales growth was narrowed to increases in 75% of Prudential’s Asian life insurance markets and balanced growth across different products. Growth in other markets, Singapore and China offset declines elsewhere.
The group’s core life insurance business saw revenue rise from $3.4 billion to $3.7 billion as all areas grew, including insurance margin and other revenue. There was a 15% increase in administration costs, while acquisition costs fell from $990 million to $1.1 billion, primarily due to higher APE sales. Underlying life insurance operating income increased by about $80 million to $1.9 billion.
Eastspring, which is Prudential’s asset management business, saw a 12% drop in total funds under management to $222.3 billion, as the decline was driven by unfavorable market movements. There was a net inflow of investments of $2.3 billion. Underlying operating profit fell 15%.
The group’s net operating profit, a key measure of cash generation, rose 12% to $1.2 billion. This reflects higher capital generation, partially offset by higher costs.
The group’s GWS capital position, which represents the capital requirements set by the Hong Kong regulator, resulted in a coverage ratio of 548%.
Key Prudential Facts
- Forward price/earnings ratio: 8.8
- Ten-year average price-to-earnings ratio: 8.1
- Forecast dividend yield (next 12 months): 1.6%
All ratios are from Refinitiv. Remember that returns are variable and are not a reliable indicator of future income. Keep in mind that key numbers shouldn’t be considered alone – it’s important to understand the big picture.
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This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. Unless otherwise stated, estimates, including forward-looking returns, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Returns are variable and not guaranteed. Investments go up and down in value, so investors could suffer a loss.
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