Prudential beats expectations

August 14, 2009

U.K. based life insurer Prudential has easily beaten the expectations of investors as its Chief Executive, Mark Tucker, prepares to stand down in October. The company’s concentration on profitable business rather than sales growth seems to have paid off. When Tidjane Thiam, Prudential’s Chief Financial Officer takes over it is considered unlikely that he will make any dramatic changes.

New business sales fell by 8% on last year as the downturn in the economy took effect and the company decided to divert concentration from capital intensive products.

Prudential’s operations in the U.K., Asia and the U.S. showed an increase in margins. The company announced a new business profit of £691 million before tax. This figure is 25% higher than last years. Prudential’s solvency ratio of 262% makes it one of the strongest companies in its sector. It now possesses a capital surplus of £3 billion above the regulatory minimum.

Some have suggested that concentrating on the wider margins available in Asia and the U.S. by unloading the U.K. business could reap rewards. But this misses the fact that around a third of Prudential’s operating profit comes from U.K. business. The insurer’s A-plus grade credit rating is a great advantage in winning new business and has a lot to do with the company’s capital in the U.K.

Thanks to online.wsj.com for the above quotes, for more information on this article please visit their website.

Random Posts

Written by Steven Adams · Filed Under Business 

Comments

Comments are closed.