Firing On All Cylinders: The Man From The Pru
While its principal domestic rival, Aviva, remains a turnaround in progress, Prudential reminded the market today why it has been the darling of investors in the insurance sector during the last few years.
The 17 per cent rise in first half operating profits, to £1.52bn, announced by Tidjane Thiam, the chief executive, was comfortably ahead of market expectations.
What was especially striking about these numbers is that they have been achieved in the face of some significant headwinds. Pru's UK arm, once seen as something of a Cinderella operation compared with its racier businesses in the United States and Asia, cranked up operating profits by 10 per cent in spite of the pensions bombshell dropped by George Osborne, the Chancellor, in his March Budget that paralysed annuity sales across the industry.
This was because, while sales of individual annuities fell sharply, sales of with-profit bonds were strong, as were sales of 'bulk annuities', the long-term contracts by which a company pension scheme insures itself against long-term liabilities.
In Asia, the region seen in the long run as offering the most exciting growth, Pru also did well in the face of instability in Thailand and flood-hit Indonesia and falls in a number of local currencies (which means lower profits when translated back into sterling). Strong performances in Singapore and Hong Kong, in particular, will have reassured investors that the growth in Asia's middle classes, the factor seen as driving profits in years to come, is continuing unabated while the Pru's recently-extended distribution deal with Standard Chartered continues to pay off.
The star performer, though, was Jackson Life, the Pru's US business, where operating profits were up by 28 per cent as stronger stock markets and an improving economy boosted the confidence of customers.
Rounding it off was another resilient performance from M&G, the Pru's fund management arm, which enjoyed strong inflows of money from retail and institutional investors alike.
Overall all, then, these figures point to a business firing on all cylinders. If shareholders have a slight grumble, it may be that the dividend, raised by 15 per cent, has not been hiked by more.
But that should inspire confidence that Mr Thiam and his team can still find a better use for the cash being thrown off by this company than simply handing it back to shareholders.
It is why the Pru's shares, up by more than one and a half per cent this morning, trade at a premium to the sector.