Prudential warns of Ukraine conflict risks as annual earnings jump

The insurance giant reported a better-than-expected 16% jump in underlying operating profits to 3.2bn US dollars (£2.4bn).

Insurance giant Prudential warned of risks of global economic and financial market fallout from the Ukraine conflict as it posted a jump in annual earnings (Chris Young/PA) (PA Archive)

Insurance giant Prudential warned about risks of global economic and financial market fallout from the Ukraine conflict as it posted a jump in annual earnings.

The Asia and Africa-focused group said Russia’s invasion of Ukraine has already caused large movements in financial markets and sent energy prices soaring, but warned of “broad implications for geopolitical relations”.

It said this could lead to sudden changes in “global trade, financial systems and standards”.

Outgoing chief executive Mike Wells said: “The current conflict in Ukraine could have wider implications for global economic and market conditions as well as geopolitical relations.”

The comments came as the company reported a better-than-expected 16% jump in underlying operating profits to 3.2 billion US dollars (£2.4 billion), which helped shares leap 6% higher.

But it revealed a 2.8 billion dollar (£2.1 billion) bottom-line loss for 2021 against profits of 2.2 billion dollars (£1.7 billion) in 2020 due to a hefty writedown on the value of its US business Jackson, which was spun off last year.

Prudential chief executive Mike Wells is retiring at the end of the month after seven years in the role (Prudential/PA) (PA Archive)

The group also said new business levels remain under pressure in Hong Kong from the ongoing closure of the border with mainland China.

“The timing of the opening of the Hong Kong border remains uncertain and Covid-19 will continue to have an impact,” Mr Wells said.

Hong Kong new business profits dropped 6% on sales which tumbled 27%.

Prudential revealed last month that it was moving its top bosses to Asia, with Mr Wells set to retire at the end of March after seven years in the role.

The group had planned to base the incoming chief executive in Hong Kong, where its Asian headquarters are, but recently admitted they may initially be located elsewhere due to Covid restrictions in the territory.

Prudential has shifted its focus solely on to faster-growing markets in Asia and Africa, having sold off its UK and US arms.

It completed the sale of US-based Jackson Financial last September.

In 2019 Prudential demerged its UK unit, M&G, but kept a head office in London.

It is dual listed in London and Hong Kong.