Eurozone woes lift Prudential to record highs

FTSE 100 insurer sees strong inflows from Italy and Spain as investors seek non-Euro safe haven

Prudential saw a strong performance across all three geographic divisions - the UK, the US and Asia Credit: Photo: PA

The looming crisis in the Eurozone has been a boon for Prudential, attracting assets from southern Europe in to M&G, its fund management arm.

Tidjane Thiam, chief executive of the FTSE 100 insurer, said that M&G had delivered a “remarkable performance,” contributing to a 17pc increase in profits across the group for the first nine months of the year.

M&G has booked seen net retail flows of £5.3bn year to date, £1.5bn of which came in the third quarter, with funds under management from continental Europe standing at a record high of £29.6bn at the end of September, up 34pc over the last year.

“In a funny way, we’re getting upside from the Eurozone crisis,” said Mr Thiam. “Being a non-Euro player is a plus in this context, as we’re seeing strong flows from the likes of Italy and Spain, countries that are under pressure.”

Increased flows from Europe offset net outflows from the UK, down £1.1bn in the nine months to September. “We keep talking about diversification, but it works,” added Mr Thiam.

Shares in Prudential touched £15.03 on the numbers at one stage, a record high, falling slightly to end the day up 16p at £14.91, a record close, valuing the business at £38.21bn.

The shares have increased seven-fold since lows surrounding Prudential’s foiled bid for Asian rival AIA in 2008.

Despite warning of increased volatility in some of its key markets, the FTSE 100 insurer reported better than expected group new business profits of £1.51bn, up 17pc, with double-digit increases in new business profits in all three of its geographic regions, the UK, the US and Asia. The UK - long the cash cow for Prudential’s Asian growth business - saw new business profit rise by 28pc to £209m, despite the disruption to the annuity market as a result of George Osborne’s changes outlined in this year’s Budget.

Mr Thiam said that demand for UK life products has been “very, very strong” and praised the business, the fastest growing in the group, for increasing profits despite the disruptions at the hands of the Chancellor.

He also pointed to strength in its Asian operations, in particular in Hong Kong, where sales rose 34pc, and also to Indonesia, where despite a 4pc dip in sales due to ongoing politicial uncertainty in the market, Prudential increased its market share to 27pc by the end of September from 23pc a year earlier.

Analyst Eamon Flanagan at Shore Capital praised “Prudential’s excellent performance” citing both business volumes and profits ahead of our expectations and towards the top end of market forecasts.