UK's Pru 2007 Profit Rises 25%, Meets Forecasts


UK insurer Prudential posted a 25 percent rise in 2007 profit on Thursday, broadly in line with forecasts, helped by growth in Asia and the absence of loss-making Internet bank Egg, sold to Citigroup in early 2007.

Prudential, Britain's largest insurer by market value, said operating profit, on European embedded value basis, was 2.54 billion pounds ($5.17 billion). That compares with 2.13 billion for the year earlier, restated to exclude Egg.

Analysts polled by Reuters expected on average operating profit at 2.5 billion pounds, with estimates ranging from 2.38 billion to 2.68 billion pounds.

The company's own average of forecasts was 2.46 billion pounds.

On a statutory basis, total operating profit was 1.21 billion pounds, up 20 percent and again in line with forecasts.

New business profit rose 22 percent to 1.215 billion, while the group's margin remained stable at 42 percent, as higher margins in the UK business offset a dip in Asia.

In Asia, which accounts for almost half the group's business, analysts have been watching for signs of contagion from a U.S. slowdown, but Pru said operating profit from its Asian operations rose almost 28 percent to 1.1 billion pounds and its insurance operations alone rose 26 percent.

New business profit there rose 34 percent and the group said Asia is expected to deliver its target of doubling 2005 new business profit a year early. Asia's margin, however, dipped to 50 percent from 54 percent.

Operating profit at its U.S. insurance operations came in at 627 million pounds, down 11 percent, hit by the weak dollar.

Prudential CEO on Profit, Outlook

In its slimmed down UK business, where Pru announced plans to restructure and pull out of lower margin business last year, operating profit from its insurance operations rose to 859 million pounds, up 25 percent.

Prudential said it would pay a dividend of 18p per share, up 5 percent and in line with expectations.

Shares in Prudential, which battles with Aviva for the top spot in the UK life insurance sector, have dropped more than 9 percent since the start of the year but still trade on the UK life sector's highest multiple and the stock has outperformed its battered peers by over 3 percent, partly on the back of speculation linked to China's Ping An Insurance.

Ping An shareholders have approved plans for a $17 billion fund raising, potentially one of the world's largest, fuelling speculation of acquisitions abroad. 

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