(Bloomberg) -- Prudential Plc reported a slight drop in new business profit for the first half as the insurer was hit by slower sales in its key markets of mainland China and Hong Kong.
The profitability measure of new policies sold fell 1.4% from a year earlier to $1.47 billion in the six months ended June, the group said in an exchange statement on Wednesday. That was in line with analysts’ estimates compiled by the company.
The results underscore the challenge for Prudential to maintain its growth targets, as the effects of pent-up demand unleashed last year after China’s reopening begin to fade. Chief Executive Officer Anil Wadhwani has been on a mission to reinvigorate the Asia and Africa-focused insurer, which has lagged behind rival AIA Group Ltd. in new business growth.
Prudential said it expects new business profits to expand this year at a rate consistent with its mid-term target. Wadhwani unveiled a plan a year ago to more than double the full-year total to $5.4 billion by 2027 versus 2022, implying 20% annual growth.
“We have seen a pickup in sales momentum in June, which continues into the second half of the year,” the insurer said.
Shares of Prudential rose as much as 2.7% in London on Wednesday morning. The stock closed 0.2% higher in Hong Kong after sliding earlier, paring this year’s decline to 20%. AIA is down 19% in 2024.
New business profit of Prudential’s China venture tumbled by a third from a year earlier on an actual exchange rate basis, the statement showed. Sales slid 18%, hit by new regulations on expense controls for bancassurance distribution.
Citic Prudential Life has been shifting its product mix toward more profitable annuity and longer-premium payment term insurance policies. Amid a domestic economic slowdown and falling local interest rates, Chinese authorities have also issued new rules curbing guaranteed investment returns on savings-type policies, prompting its China venture to reprice them. Prudential moved to reprice key savings products and shift its product mix in the second quarter last year, ahead of the pricing regulation change.
Hong Kong
In Hong Kong, sales declined 7% while new business profit dropped 2.8% against the high base last year, when the resumption of quarantine-free travel led a wave of mainland Chinese visitors to buy insurance in the former British colony.
Read more on the results here
Sales in Indonesia tumbled 29%, with a 23% fall in new business profit, reflecting an industrywide slowdown and “short-term challenges” in its own agency business, the insurer said.
Adjusted operating profit rose 5.6% to $1.54 billion, after stripping out exchange-rate and equity-market swings. Prudential declared an interim dividend of 6.84 cents, 9% higher than a year earlier.
The company announced in late June that it plans to buy back $2 billion worth of shares by mid-2026.
(Updates with comments on outlook in fourth and fifth paragraphs)
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