FTSE 100 insurance group Prudential (PRU) posted a strong increase in third-quarter and nine-month earnings as sales in Asia rose despite the impact of a slowing global economy.

However, mention of the ‘challenging’ current environment kept a lid on the shares, which dipped 2% to 878p at the open before recovering to trade 0.3% lower at 897p by mid-morning.

STRONG UNDERLYING GROWTH

Year-to-date new business profit rose 37% to $2.14 billion ‘with third-quarter momentum continuing to reflect the strength of our multi-market, multi-channel strategy’, the company said.

Excluding economic impacts such as the effect of higher interest rates, new business profit increased 48% with improved margins thanks to ‘positive developments in channel and geographic mix’.

The Asia-focused firm registered a 40% increased in APE (annual premium equivalent) sales to $4.42 billion led by Hong Kong, with higher sales to mainland Chinese and local customers.

‘Consumer demand in Asia remained resilient and we have seen ongoing demand for both savings and health and protection products from both Domestic and Chinese Mainland visitor customers in Hong Kong. At the same time, several of our ASEAN (Association of South East Asian Nations) based businesses have seen double-digit growth in new business profit for the first nine months of 2023’, commented chief executive Anil Wadhwani.

The group’s ASEAN-based businesses include Indonesia, Malaysia, Singapore and Vietnam.

Meanwhile, the Indian business, ICICI Prudential Life, and the African business delivered between them double-digit growth in APE sales and new business profits during the nine-month period.

ANALYSTS’ VIEWS

Analyst Philip Kett at Jefferies described Prudential’s earnings report as ‘reassuringly similar’ to that of AIA (1299:HKG), one of Asia’s leading insurance groups.

Last week, AIA reported a 35% increase in new business and said it had also seen double-digit growth in sales in China, Hong Kong, South East Asia and India.

China recently surprised markets with a mid-year budget revision, something it rarely does outside of a crisis, indicating policymakers are intent on boosting growth, while third-quarter GDP (gross domestic product) increased by 4.9%, beating market forecasts.

‘Policymakers appear to have recognised that the lingering property rout and indebted local government require meaningful fiscal expansion. While a bazooka type of stimulus reminiscent of previous cycles is still not the base case, coordinated fiscal and monetary moves will likely continue until the economy is out of the woods’, commented analysts at Principal Asset Management.

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