Prudential reported first-half annual premium equivalent (APE) sales of $3.3bn, up 5% ignoring currency moves, and underlying operating profit was up 6% to $1.6bn. New business profit rose 12% to $1.3bn, driven by higher volumes and improving margins.
The asset management business, Eastspring, rose 7% since the start of the year to $274.9bn.
The free surplus ratio, its preferred measure of balance sheet strength, was 221% at the end of the year (175-200% target range).
An interim dividend of 7.71 cents per share was announced, up 13%. The group also intends to return $500mn through buybacks in 2026 and a further $600mn in 2027.
The shares were broadly flat in early trading.
Our view
Prudential started the year with some good momentum. New business profit growth tracked ahead of the group’s 10% target over the first half, and management expressed a confident tone about the future.
The business offers life and health insurance, as well as asset management, across a range of Asian countries. Hong Kong operations boast a market-leading position for products aimed at visitors from mainland China. We’re pleased to see last year’s strong growth continue. Price increases seem to have landed without too much disruption, volumes are moving up, and the combination has been positive for margins.
Medium-term initiatives are evolution rather than revolution and include investment across several core areas, including technology, and creating a more joined-up customer approach across the product ranges. Benefits are already being felt, with sales agents becoming more profitable and AI driving higher sales by improving customer journeys.
Looking further ahead, the broader Asian and Indian regions should benefit from long-term economic development. Insurance uptake is also low in areas like Asia, and in many cases, state provisions for pensions and social security are limited. India offers lots of potential in the health insurance space, with a huge population and around half of all health expenses being covered by disposable cash. We see several longer-term opportunities in many of these underpenetrated markets.
China is a challenging market, where Prudential mainly operates through joint ventures. This reflects broader economic headwinds, including slower growth, property sector weakness, and subdued demand. Prudential expects these conditions, along with regulatory tightening, to persist through the remainder of 2025.
Prudential also has a big asset management business, Eastspring, which manages over $270bn of assets. It offers a host of investment solutions as well as managing premiums generated from the life insurance business. While market volatility persisted due to geopolitical and tariff-related uncertainty, Eastspring continued to see strong demand for its active strategies
Capital levels are strong, and the group’s committed to increasing the dividend by 10% through to 2027, as well as accelerating the pace of its ongoing buyback. But this isn't a high yielder like some of its UK-listed peers and nothing is guaranteed.
The refreshed strategy brings with it some bold goals, and progress looks good. We think Prudential's Asian focus and higher growth opportunities give a different option for a UK investor. The key challenge comes from China, where uncertain economic conditions continue to add risk.
Environmental, social and governance (ESG) risk
The financials sector is medium-risk in terms of ESG. Product governance is the largest risk for most companies, especially those in the US and Europe with enhanced regulatory scrutiny. Data privacy and security is also an increasingly important risk for banks and diversified financial firms. Business ethics, ESG integration and labour relations are also worth monitoring.
According to Sustainalytics, Prudential’s management of material ESG issues is strong.
Prudential trains sales employees annually on responsible marketing and has strong policies for data privacy and security. The company invests in digital products to enhance customer experience but does not disclose customer complaint details. While it offers thorough training on ethics and corruption, and also provides whistleblower protections, Prudential lacks ethical risk assessments in investment and product development.
Developments in Malaysia are worth keeping an eye on, legal and regulatory hurdles have raised the region’s risk profile.
Prudential key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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