RE: PRU.... Bullish Broker Views...19 Mar 2015 17:26
Take note of this, good write up from Hargreaves L........
PRUDENTIAL
Sell: 1,752.00pBuy: 1,753.00p19.00p (1.10%)
FTSE 100: 0.25%
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HL COMMENT (10 MARCH 2015)Updated 19/March/2015
Prudential delivered a strong performance in 2014. IFRS operating profit increased 14% at constant currency to £3,186 million (8% at actual exchange rates), with all three of the Pru's core geographic regions delivering growth. Asia and the US both performed strongly with operating profit in both divisions growing by 17% at constant currency. The UK Life business also delivered a resilient performance, growing operating profit by 7%, despite a substantial decline in individual annuity sales as a result of the recent budget changes. This gave the company the confidence to raise the full year dividend by 10%. On a less positive note, Prudential has also announced today that its highly regarded CEO, Tidjane Thiam, will step down later this year, to take the reins at Credit Suisse. The shares fell by around 3% in early morning trading.
Key highlights (on constant exchange rate basis):
IFRS operating profit of £3,186 million, up 14%.
Underlying free surplus generation (after investment in new business) of £2,579 million, up 9%. Net cash remittances from increased by 11% to £1,482 million.
IFRS shareholders funds of £11.8 billion, up 22%.
Insurance Groups Directive (IGD) capital surplus estimated at £4.7 billion; solvency requirements covered 2.4 times.
Annual premium equivalent (APE) sales increased by 12% to £4,650 million.
Full year dividend increased by 10% to 36.93 pence per share. A progressive dividend policy is maintained with medium term target dividend cover of around two times.
Geographic/divisional performance
Prudential operates four main business units. The UK Life business, which includes the sale of with-profits policies and annuities, the asset management business, which includes M&G in the UK and Eastspring Investments in Asia. In the US, Jackson National is primarily focused on the sales on variable annuities and other retirement products, whilst Asia Life sells a range of insurance policies in South East Asia. The performance of each of these business units is summarised below:
UK Life: IFRS operating profit rose 7% to £752 million despite a 49% decline in sales of individual annuities as a result of after major changes to the UK's pensions regime were announced in the last Budget. This was more than offset by a 34% increase in with-profits bond sales and a strong rise in bulk annuity sales to defined benefit pension schemes.
Asset management: M&G IFRS operating profit rose 13% to £446 million and cash remitted increased by a record 21% to £285 million. Continued net fund inflows and generally positive market movements saw M&G's total funds under management rise by 8% to £264 b
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