Prudential posts 8% earning rise and sees China reopening boosting 2023 sales

Insurance giant Prudential has reported a rise in annual earnings and said 2023 had “started well” as the removal of China’s Covid restrictions have helped boost sales.

The group – which has headquarters in London and Hong Kong and is focused on the Asia and African markets – reported underlying operating profit up 8% on a constant currency basis to 3.4 billion US dollars (£2.8 billion) for 2022.

New business profit fell 11% on a constant currency basis to 2.2 billion US dollars (£1.8 billion), due in part to higher interest rates.

It saw sales lift 9%, but said revenue growth had surged to 15% in the first two months of 2023 thanks to China’s reopening.

Prudential’s new chief executive Anil Wadhwani, who replaced Mark FitzPatrick in the top job last month, said 2022 “was the first full year for the group as an Asia and Africa-focused business”.

He added: “We have delivered a resilient performance against a backdrop of Covid-19-related disruption and broader macroeconomic volatility.

“The removal of the bulk of Covid-19-related restrictions across the region and the progressive opening up of the Chinese Mainland economy has meant that 2023 has started well with encouraging progress in year-on-year sales, with group-wide APE (annualised premium equivalent) sales for the two months ended February 2023 up 15% over the prior year.”

Border restrictions across China were removed last month following the ending of the country’s zero-Covid policy.

The opening up of borders meant that mainland visitors could go to Hong Kong – a key revenue market for Prudential.

Mr Wadhwani said: “In Hong Kong we have seen a gradual increase in cross-border traffic from the Chinese Mainland as travel restrictions are eased.

“Demand for savings products across the Hong Kong business is driving the increase in APE sales in the first two months of 2023.”

The figures follow Prudential’s move to shift its focus solely on to faster-growing markets in Asia
and Africa, having sold off its UK and US arms.

It completed the sale of US-based Jackson Financial in September 2021, having demerged its UK unit, M&G, in 2019.

It is dual listed in London and Hong Kong, but has recently moved its senior management team from London to its new global headquarters in Hong Kong.

Analysts at Jefferies said the results showed “encouraging progress” in 2023.

They said the outlook for the all-important insurance market of Hong Kong was promising, with Prudential “well-positioned to grow, following the border reopening”.

“Demand appears intact, with surveys showing that 86% of visitors intend to buy insurance in Hong Kong,” they added.