In a notable development from the financial sector, British insurer Prudential has made a significant commitment to its shareholders by announcing a 9% increase in payouts. This decision comes in light of the company facing considerable valuation losses in its investment portfolio, which contributed to a stark decline in profit for the first half of the year.
On Wednesday, the board of Prudential, which operates in both London and Hong Kong, declared an interim dividend of $0.0684 per share for the period ending June 30. This marks an increase from the $0.0626 per share dividend declared in the same timeframe last year, reflecting the company's adherence to its management's expectations despite the adverse market conditions. The insurer's insurance revenue demonstrated a positive trajectory, climbing to $4.96 billion compared to $4.59 billion year-on-year.
This growth was attributed to robust operational activities across multiple regions, notably in Hong Kong, Indonesia, Malaysia, and Singapore. Furthermore, the annualized premium equivalent (APE) sales, which serve as a crucial barometer for insurance sales, increased by 3%, reaching $3.11 billion. However, not all indicators were positive; the profit attributable to equity holders saw a significant drop, plummeting to $120 million from a lofty $944 million the previous year.
This drastic shift was largely due to short-term fluctuations in investment returns associated with changes in interest rates, which surged to $1.08 billion, a stark increase from the $287 million recorded in the previous period. Despite these challenges, adjusted operating profits saw slight growth, expanding to $1.54 billion from $1.46 billion. Prudential also reported a 1% decline in new business profits, a critical metric reflecting the profitability of new policies sold, which fell to $1.47 billion.
The decrease was primarily driven by sluggish sales in mainland China, Hong Kong, and Indonesia, with the company attributing the downturn to rising interest rates and various economic factors, including heightened base effects in numerous markets. Conversely, Singapore's new business profits surged by 14% to $226 million, with APE sales escalating by 17% to $450 million, driven by increased sales volume, bolstered agency recruitment focus, and heightened agent productivity. The company highlighted its strategic initiatives that contributed to a resilient performance in the first half of 2024, particularly actions taken to reposition its business in the Chinese Mainland in anticipation of upcoming regulatory and macro-economic changes.
Similarly, proactive measures regarding medical repricing in Indonesia and Malaysia were undertaken. Other areas such as Singapore, India, and Taiwan have shown promising performance due to Prudential’s commitment to product innovation and the expansion of its distribution capabilities. For the entirety of 2024, Prudential has set optimistic targets, estimating that new business profits will align with the company’s annual growth objectives for the years 2022 through 2027.
With Asia and Africa identified as 'structural drivers of growth,' Prudential anticipates continued strong demand for protection plans, long-term savings, and retirement solutions. During a recent commentary by Chief Executive Officer Anil Wadhwani, he shared, 'We entered this year with a clear strategy and a set of outcomes we are confident in achieving by 2027, namely a compounded annual growth rate for new business profit of 15% to 20% and double-digit growth for cash generation, both measured from a 2022 base.' In reaction to these announcements, Prudential's shares witnessed a slight uptick, rising by 2% in midmorning trading, with the stock price reaching $674.80, reflecting a change of $+12 and a percent change of +1.87%.
The market remains attentive to the company's strategic moves and the overall economic environment as Prudential works toward its ambitious growth trajectory..