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Prudential says first-half profit rose 8%; warns of ongoing COVID problems

The logo of British life insurer Prudential is seen on their building in London, Britain, March 17, 2019. REUTERS/Simon Dawson

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HONG KONG, Aug 10 (Reuters) – Prudential Plc (PRU.L) on Wednesday reported an 8% rise in first-half operating profit, but the Asia-focused insurer warned of challenging conditions for the remainder of the year as COVID restrictions remain in place in some markets .

Adjusted operating income from continuing operations for the London and Hong Kong-listed company was $1.66 billion for the period, up from $1.57 billion a year earlier, it said in a statement.

However, that number was lower than an average profit of $1.68 billion from 17 analysts in an estimate compiled by the company.

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Annualized Premium Equivalent (APE) revenue, a measure of insurance revenue in annualized metrics, rose 9% to $2.2 billion for the period.

“We delivered stronger APE revenue growth in the second quarter as conditions in most markets began to normalize,” Group Chief Executive Officer Mark FitzPatrick said in the statement, referring to the revenue recovery from disruptions due to COVID-19 19

Hong Kong-listed Prudential shares fell 0.1% in afternoon trade, while the benchmark index (.HSI) was flat.

“While there are signs that the impact of COVID-19 is stabilizing in many of our markets, we expect operating conditions to remain challenging for the remainder of the year,” he said.

Rising interest rates and weak sales in Hong Kong, along with higher sales from more expensive banking partners, also pushed the new business margin down 5% to $1.1 billion.

APE sales in Hong Kong, where COVID restrictions remain strict despite recent easing, fell 10% in the first six months.

“Significant macroeconomic volatility … and a significant increase in government bond yields and widening of corporate bond spreads,” weighed on the insurer’s balance sheet, FitzPatrick added.

Wealth management arm Eastspring saw operating profit fall 15% on investment losses.

In May, the British insurer named former Manulife Asia chief Anil Wadhwani as its next chief executive, due to take office in February 2023 to focus on Asia.

Founded in London in 1848, Prudential has transformed itself in recent years, spinning off its UK and European unit M&G (MNG.L) in 2019 and spinning off US business Jackson last year.

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Reporting by Selena Li; Edited by Tom Hogue and Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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