HONG KONG – Prudential (NYSE: PUK) saw sales in the Singapore market propel its first-half profit increase, but a slowdown in business in its one-time largest markets of Hong Kong and China weighed on overall growth.
On Wednesday, the London and Hong Kong dual-listed company posted an operating profit of $1.54 billion for the first six months on a constant exchange rate basis, up 9% from $1.46 billion in the corresponding period last year.
Its Hong Kong shares rose 2.1% after the earnings, recouping a dip in the morning session, while the benchmark Hang Seng Index was down 1% on the day.
The annual premium equivalent (APE) sales, a gauge of sales volume, of its China onshore joint venture Citic-Prudential Life Insurance (CPL) dropped 15% to $324 million in the first half, versus a year ago.
The weak sales came after Prudential (NYSE: PUK) and Citic, which own 50% of the unit each, injected cash of 2.5 billion yuan ($350.64 million) in December last year.
The China joint venture started in last year’s third quarter, aiming to “reprice and reposition” its product mix in the market in line with domestic regulations.
The one-time adjustment affected sales activities but some signs of recovery have emerged recently.
“We believe that we’ve started to turn the corner in China as we’ve entered the second half of the year,” Chief Executive Anil Wadhwani told reporters, referring to improved new sales from the market.
A slowing Chinese economy and concerns about the property sector are keeping the pressure on interest rates, a factor that could also weigh on the Asian, as well as global, economy, the insurer said in a statement.
But China’s increasingly ageing population and rising demand for insurance protection offer significant opportunities for insurance businesses, Wadhwani said.
“And we remain cautiously optimistic about our growth prospects based on the demand drivers and based on our position in the China market.”
The company’s flagship market, Hong Kong, saw a drop of 7% in APE sales to $955 million, largely due to a high base effect from a year ago, when volume surged on pent-up demand from Chinese visitors buying insurance in Hong Kong after the COVID-19 pandemic.
The firm has stepped up the expansion of its agency workforce, having recruited 2,600 new agents in the first half against last year’s total of 4,000, Wadhwani said.
The Asia and Africa-focused insurer’s Singapore business grew by 17% to $450 million in the first six months from the same period a year ago, with the city-state replacing China onshore to become Prudential’s second-largest new sales market.
In Indonesia, APE sales dropped by 25% to $107 million during the period from a year ago, also mainly due to repricing and upgrade of products.
($1=7.1298 Chinese yuan renminbi)
(Source: ReutersReuters)
