Prudential chief Tidjane Thiam has defended the insurer’s Asia-focused strategy following a period of economic and political uncertainty across the region.
The company beat City forecasts during the first half of the year despite “challenging conditions” in its core growth market as well as regulatory upheaval closer to home following changes to the UK pensions industry in March’s Budget.
Prudential’s operating profits rose 17 per cent to £1.5 billion in the six months ending June 30 on a constant currency basis, although the figure was just 7 per cent higher on an actual currency basis with the company blaming the depreciation of currencies in its “sweet spot” Asian markets and the recent strengthening of the British pound.
Thiam added: “In the first half of this year, some of our markets experienced headwinds as a result of political and economic events such as the uncertainty over the outcome of presidential elections in Indonesia or the military takeover in Thailand.
"These shorter-term, cyclical pressures do not detract from the long-term structural trend of growing demand for our products and services from the rapidly growing and underinsured middle classes [in Asia].”
Since being forced to scrap its botched $35.5 billion (£21 billion) bid for rival AIA in June 2010, the Pru’s share price has climbed from under 600p to 1373p, where it settled today having risen 2.5 per cent on the back of the results.
The company’s UK life operating profits accounted for £374 million of profits, compared to £686 million in the US, £525 million in Asia and £227 million at fund manager M&G. However, the impact of the Coalition’s reforms to the UK retirement market were still noticeable as sales of individual annuities were down by 43 per cent to £63 million.
From next year, savers will be given more freedom with their pension pots and won’t have to buy an annuity when they retire.
“The UK market continues to be heavily influenced by an unprecedented level of regulatory and legislative change,” Thiam added. “Our experience in retirement income products and investment expertise means that we believe we are well positioned to help customers through this period of change and provide solutions that meet their retirement needs.”