Best financial services stocks to buy3 Nov 2025 15:42
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Originally established as Prudential Mutual Assurance, Investment, and Loan Association in 1848, Prudential plc has moved on a lot since then. The stock is trading at a 14% discount to our fair value estimate of $33 per share.
With the divestment of Prudential PLC’s UK and European operations, followed by the sale of its Jackson business in North America, Prudential is now a life and health insurer that is fully focused on Asia and Africa, with one of the region’s largest asset management businesses.
Prudential is not the number-one operator. However, we do think the company is gaining traction and taking market share. Its roots stand in selling life insurance to the middle classes and branching out into the industrial and urbanizing working classes. While that happened almost two decades ago, we think that is still a relative narrative. The industrial division of Prudential led to the rise of door-to-door sales. The “man from the Pru” was born and for Prudential became synonymous. While that market may have matured and this practice has generally died, Prudential’s new geographical focus harkens back to these Industrial Revolution times, just in a different part of the world. Prudential’s more mature markets of Hong Kong and Singapore speak to the origination of the business to serve the middle class. Our sense is that in these markets, Prudential has been catering more to high net worths. Prudential’s establishment and focus on Southeast Asia is reminiscent of its sales and service to the rising industrial working class.
While Prudential may not be the biggest and it may not be the first, we think the business has historically placed strong emphasis on pricing and underwriting discipline, and yet in this region it has been successful at combining that with growth. While margins on sales such as fees and loading costs have been pressured as competition has increased, Prudential has done a prodigious job of recouping this loss of profit from administration and acquisition costs. More telling is that Prudential improved the margin it makes from insurance by 5 basis points per year on average. The business hasn’t been operating for very long on a stand-alone basis. However, we think the markets and the company have some interesting features that could lead to economic profits—and, over time, a moat.
Henry Heathfield, Morningstar analyst
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