Pru UK profits up 15% in Q1

Laura Miller
clock • 2 min read

Prudential's UK new business profits rose 15% in Q1, as the insurer reaffirmed a commitment to its domestic arm today.

The company was rumoured to be looking to offload its UK and US arms to facilitate the purchase of AIA, the Asian arm of AIG.

However, today's announcement of its delayed £14.5bn rights issue to buy AIA included plans to organise its business into four broad divisions: Asia, UK, US and asset management including M&G.

The parent group has been buoyed by a strong showing from it UK arm with new business profits £69m (APE) in Q1 2010, up from £60m for the same period a year earlier.

Sales across its UK arm rose 7% for the period to £193m, from £180m in Q1 2009, lifted by corporate pensions and protection.

In a record quarterly performance, PruProtect sales grew to £5m in Q1 2010, up 145% on the same period in 2009.

The first quarter results also show a strong performance from Prudential's UK retirement business.

Individual pension sales, including income drawdown, of £15m were 21% higher than during the first quarter in 2009. Income drawdown sales of £4m were double the first quarter 2009 while individual annuities new business of £59m was 2% up on Q1 2009.

With-profits bonds sales of £29m were down 6% on Q1 2009, but this was offset by an increase in sales of unit-linked bonds, Prudential says. Sales of onshore bonds of £33m were in line with the first quarter of 2009.

Group chief executive Tidjane Thiam says: "Prudential UK continued to serve targeted segments of the retirement savings and income markets, emphasising value over volume. This strategy delivered attractive returns on the capital employed in the first quarter."

Thaim has faced fierce criticism from shareholders in the run-up to today's rights issue to help fund the takeover of AIA.

Today, Prudential said the cash call will comprise 11 new shares for every two existing shares at an issue price of 104p per share for UK shareholders, more than an 80% discount to the insurer's closing level on Friday.

Pru shares fell sharply this morning on news of the rights issue, though have recovered somewhat to be down 1.5p to 541.00p per share.

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