Prudential share price slides despite profit rise as Tidjane Thiam prepares move to Credit Suisse
The numbers
Prudential has reported a profit before tax of £2.6bn for 2014 – 60 per cent up from the previous year. Operating profit rose 14 per cent to £3.1bn.
The company's full year dividend climbed by 10 per cent to 36p per share. The Pru's capital surplus is estimated to stand at £4.7bn.
Why it's interesting
The Pru's share price opened 3.5 per cent lower after it was revealed last night that chief executive Tidjane Thiam is leaving the company to head up Credit Suisse. Thiam has spent six years at the insurance giant and garnered a reputation for success. However, his switch to Credit Suisse will be his first experience of the world of investment banking.
The head of US subsidiary Jackson National Life, Michael Wells, is expected to be nominated as his replacement, according to reports from Sky News. Thiam will leave the Pru in a strong position, with profits up and more concentration on Asia bearing fruit with operating profits for the Asian life insurance up 17 per cent to £1.1bn.
What Prudential said
Commenting on the results, Thiam said:
The group delivered a strong performance in 2014. We continued to grow across our key metrics despite the challenges presented by historically low long-term interest rates in the US and the UK, major currency discontinuities in some of our key Asian markets and unprecedented regulatory changes in the UK life market.
IFRS operating profit increased 14 per cent to £3,186m and EEV new business profit grew 10 per cent to £2,126m. The group's underlying free surplus generation increased by 9 per cent to £2,579m and cash remitted by our business units increased by 11 per cent to £1,482m.
These results represent solid progress towards our 2017 growth and cash objectives, which we set out at the December 2013 investor day in London
In short
Prudential is in strong position and shareholders will happy with the hike in dividends. Pru's share price has tripled since 2009 and they will be sad to lose the highly regarded Thiam to the Swiss banking giant.