China’s Ping An mulls acquiring Prudential’s Asia business
LONDON • Prudential plc’s focus on Asia is paying off and its business in the region is drawing interest from competitors.
The largest UK-listed insurer reported that first-half (1H) profit from its Asian operations soared 14% to £1.02 billion (RM5.29 billion) on a constant exchange rate basis, ahead of a spinoff that would separate its UK operations from faster- growing markets elsewhere.
Ping An Insurance (Group) Co of China Ltd has evaluated acquiring Prudential’s Asia business and has sounded out the Chinese government about whether it would be supportive of a deal, Bloomberg News reported earlier yesterday.
CEO Mike Wells has previously announced plans to split the insurer into two businesses to take greater advantage of potential growth in Asia, which generates about a third of its earnings and where new demand for insurance is strongest.
The insurer hopes it can roll out retirement solutions it developed in the US to Asia as the population there ages.
The firm said in a statement yesterday that the demerger of M&G Prudential, its UK asset management and retirement unit, is on track.
Wells said in a Bloomberg Television interview yesterday that he is bullish on Asia and sees the opportunity to grow the asset-management business in the region. The firm posted a double-digit increase in new business profit in the region and rising average assets at its asset manager Eastspring Investments.
Prudential shares rose as much as 4.4% in London yesterday, the most in four months, on news of Ping An’s interest.
The demerger is unlikely to happen before Prudential completes its sale of £12 billion of annuities to Rothesay Life.
After that process is completed, both Prudential and M&G Prudential are likely to be included in the benchmark FTSE 100 Index of the UK’s biggest companies.
Operating profit was £2.41 billion in the 1H, beating the average estimate of £2.24 billion from four analysts surveyed by Bloomberg.
The M&G unit saw inflows of £3.5 billion in the 1H, while PruFund new inflows were £4.4 billion.
Eastspring reported net outflows £900 million as modest retail inflows were more than offset by higher redemptions in institutional fixed income products.
The firm said average assets under management at the unit rose to £139.5 billion in the 1H, from £124.9 billion in the year-earlier period.