Prudential shares fell 1% to 978.6p in early morning trading on Wednesday, after the insurance giant reported a 90% tumble in IFRS post-tax profit from continuing operations to $106 million in HY1 2022 against $1 billion the last year.
The Asia-focused insurer attributed its post-tax profit drop to high market volatility, resulting in lower equity levels, rising government bond yields and widening corporate bond spreads.
Prudential also mentioned a 5% slide in new business from continuing operations to $1 billion from $1.1 billion, with the benefit of higher APE sales offset by higher interest rates, lower Hong Kong sales, where margins have traditionally been higher, and an increase in bancassurance sales.
However, the group confirmed a 12% growth in operating free surplus generated from continuing operations to $1.2 billion compared to $1.1 billion.
Prudential noted an 8% climb in adjusted operating profit from continuing operations to $1.6 billion against $1.5 billion in the previous year, driven by a 6% rise in life and asset management operating profit and a 32% decline in central costs.
FY 2022 guidance
The insurance firm said its major markets were starting to regain stability, however it warned operating conditions would remain challenging over FY 2022.
Prudential confirmed it had sufficient financial resilience to continue its business operations across Asia and Africa.
“Our resilient operational performance demonstrates the strength of our well positioned and well diversified franchise across the Asia region, driven by our multi-channel, digitally enhanced distribution platform,” said Prudential CEO Mark FitzPatrick.
Dividend
The group recommended a HY1 2022 dividend of 5.7c, equating to one-third of Prudential’s FY 2021 payout of 17.2c.