LONDON (Alliance News) - Prudential PLC Thursday reported a 29% increase in first-quarter new business profit, boosted by its operations in the US, the UK and Asia, while its fund management arm benefited from more than GBP1.4 billion in net inflows over the quarter.
In a statement, Prudential said new business profit increased to GBP529.0 million in the quarter ended March 31 from GBP410.0 million. While increases were reported across all three of its main areas of operation, they were most marked in the US and the UK.
In the US, where Prudential targets retiring baby boomers, first-quarter new business profit rose to GBP195.0 million from GBP125.0 million, although the increase was higher on constant exchange rates. In the UK, new business profit rose to GBP91.0 million from GBP48.0 million. In Asia, the increase was just 3.0%, moving up by GBP6.0 million to GBP243.0 million, but on constant exchange rates the increase would have been 20%, as emerging market currencies have suffered from depreciation amidst weakening investor sentiment.
Results in the UK were driven by three bulk annuity deals, but individual annuities annual premium equivalent sales fell by 35% to GBP36.0 million as a result of a market downturn, which Prudential said began to emerge through 2013 as policyholders increasingly put off retirement. Prudential also said the implications of changes made by the UK government in its 2014 Budget that allow individuals more freedom with their pensions pots - which removed the effective requirement to purchase annuities - are still uncertain.
"Alongside other market participants, we anticipate a disruption to sales, which could be significant, in the individual annuities market as the industry works with all stakeholders to define the new pensions system," Prudential said in a statement.
Meanwhile, fund management arm M&G Investments' net inflows were driven by its retail business's GBP1.3 billion in net inflows, while the institutional business saw GBP100.0 million in net inflows. The institutional business's new business was offset by the expected loss of some short-term segregated mandates, but Prudential said it has a "strong" pipeline of new mandates which have been won but not yet funded.
That said, the GBP1.4 billion in M&G's overall net inflows compares with GBP2.4 billion in the comparative quarter of 2013.
Eastspring Investments, Prudential's Asian asset manager, reported flat net inflows at GBP1.1 billion.
Overall, group funds under management increased to GBP311.1 billion from GBP301.2 billion, while external funds under management increased to GBP147.9 billion from GBP139.0 billion.
"We remain focused on the disciplined execution of our strategy and on capturing the profitable growth opportunities available to us across the group, particularly in Asia where we continue to grow our multi-channel distribution and build on our strong market positions," Tidjane Thiam, chief executive, said in a statement.
Prudential shares were Thursday quoted at 1,404.00 pence, up 1.9%.