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Prudential’s new chief executive Anil Wadhwani has unveiled plans to reduce the FTSE 100 insurer’s reliance on Hong Kong and China after it was hit by zero-Covid policies in its core markets.
It was the first time Wadhwani, who took over the group in February, has publicly set out his vision for the company, which shed its US and European operations to focus on Asia in a turbulent restructuring that was completed in late 2021.
Wadhwani vowed on Wednesday that Prudential would “do things differently”, outlining a plan to expand in India and Africa as well as its existing key markets in Hong Kong, China and south-east Asia.
“China and Hong Kong both are going to be absolutely critical for our growth,” he said. “Having said which, we are very, very keen on ensuring that we are driving a multi market growth engine model.”
Prudential suffered a steep drop in profits in Hong Kong last year as pandemic rules prevented mainland Chinese customers from crossing the border to buy insurance policies in the territory, an important source of sales for the group.
Wadhwani’s remarks came as Prudential reported its results for the first half of the year on Wednesday. New business profits, an important measure of predicted earnings on newly sold products, rose 39 per cent to $1.5bn, slightly above analysts’ expectations.
The figure surged in Hong Kong, rising 218 per cent to $670mn after Covid-19 restrictions ended, allowing mainland visitors to travel to the territory. But it dropped in mainland China, falling 16 per cent to $171mn because of lower sales and “averse economics”, Prudential said.
The group set a new target to grow new business profit by a compound annual growth rate of 15 to 20 per cent until 2027. Analysts at Barclays welcomed the “ambitious” goal. Prudential’s shares were up more than 3 per cent in morning trading on Wednesday in London.
Wadhwani is under pressure to generate growth at Prudential, since its rationale for breaking away from its UK and US businesses was to focus on fast-growing Asian markets. The insurer said it was “highly optimistic of the medium- to long-term growth potential” of China, despite the country’s sluggish economic growth.
Prudential is “very strongly capitalised right now” and will “absolutely” consider growing through acquisitions, Wadhwani said.
The insurer announced an interim dividend of 6.26 cents per share, up from 5.74 cents a year ago, and said adjusted operating profits rose 6 per cent on a constant currency basis to $1.5bn.
Prudential, the UK’s largest insurer by market value and whose history dates back to 1848, holds a joint primary listing and headquarters in London and Hong Kong and retains its UK domicile. Wadhwani is the company’s first chief executive to be based in Asia.
The Asia pivot has raised questions about the future of its London headquarters and it has previously been pressed by activist shareholder Third Point to change its UK domicile.
New business profits rose in Indonesia and Malaysia, though they fell 20 per cent in Singapore, it said.
Wadhwani was confronted with a scandal just three months into his tenure when Prudential’s chief financial officer James Turner resigned following an investigation into his conduct.
Prudential said it was linked to “a recent recruitment situation” where Turner’s actions “fell short” of its standards, without setting out details.
Additional reporting by Greg McMillan
