All the more surprising, then, to see that both customers and shareholders gave the Pru the benefit of the doubt in 1997. New business figures, released yesterday, showed that single product sales were up 19 per cent while sales of regular premiums rose 7 per cent. Over the same period Prudential shares, helped by the general euphoria about financial stocks, rose by almost 50 per cent.
Judging by yesterday's 26p share price fall to 770p, however, investors are thinking again. Although there was some inevitable profit-taking, analysts were disappointed with the figures, which showed a fall in fourth- quarter sales in the US. Prudential's problem is that its products do better when interest rates are high. With no prospect of a US rates rising, sales will slow.
In the UK, meanwhile, all the bad publicity is unlikely to help this year, although the inclusion of last year's Scottish Amicable acquisition will provide a new source of revenues. And the Asian turmoil is bound to dent the Pru's sales in the Far East, though the group claims it is too early to tell.
So the Pru faces a number of challenges in 1998. Even though it is one of the country's strongest financial institutions, the shares will struggle to justify their current exalted rating. Investors who hold the shares should consider locking in some profits. Otherwise, steer clear for now.