Prudential: Q3 new business

7:25 a.m. Fri 28 Oct 2005

Life assurer, Prudential reported that insurance sales (on an APE basis) rose to £1.6bn in the nine months to September 2005, 27% ahead of last year. Growth was strongest in the UK and Europe where, bolstered by acquisitions, APE sales rose by 34% to £700m. Sales in Asia rose to £508m, up 27% over last year while those in the US rose to £401m, up 17%.

UK & Europe APE sales were driven by strong sales of bulk annuities and unit-linked bonds. Much of the growth was due to the acquisition of the in-force pension annuities book from Phoenix Life & Pensions in June 2005. Excluding the acquisition, APE sales increased by 7 %.

Growth rates in Asia were high in most markets excepting the Philippines, Thailand, Vietnam and Japan where combined sales declined by 9%. Growth in Hong Kong was relatively weak at 7% but the rest of Asia fared well. Sales in Singapore grew 21%, Malaysia by 18%, Taiwan 13%, Indonesia 57%, China 33%, India 64% and Korea by 90% in the nine month period.

In the US, increased variable annuity, fixed index annuity, and institutional product sales were the drivers of growth.

The fund management business; M&G reported record gross fund inflows of £5.6bn in the first nine months of 2005, up 62% over last year. Net fund inflows increased 343% to £2.7bn for the year to date.

The company also announced that it intended to retain and develop its online bank Egg citing its strong customer franchise, brand, strong growth and use as an entry point to the savings and loan market as reasons for the decision.

While these are certainly plausible reasons for retaining the bank the decision marks an about turn in thinking-whether this was prompted by an inability to find a buyer for Egg is not known. Egg’s performance, while better than last year, is certainly not spectacular. (See our piece on Egg’s results).

The share trades at 468.5p on a prospective PE (2005 earnings) of 12.6x with a yield of 3.5%.