Prudential: FTSE 100 insurer smashes profit expectations
FTSE 100 insurer Prudential beat profit expectations amid news it is considering spinning off its Indian asset management business.
The firm reported adjusted operating profit before tax of $3.1bn (£2.4bn), up 10 per cent and above analyst expectations of $3bn, it revealed in its full-year results.
As expected by analysts, Prudential also increased its dividend by 13 per cent. Including the $785m spent on the firm’s $2bn share buyback plan, total shareholder returns across the year totalled $1.4bn.
An 11 per cent jump from new business profit to $3.1bn helped drive the growth.
“The long-term growth trends inherent in our Asia and Africa markets are reasserting themselves, creating significant opportunities for us,” said Prudential boss Anil Wadhwani.
“Insurance penetration rates in Asia are low and there is continued, and growing, demand for long term savings and protection products across our markets, alongside a need for wealth management and retirement planning, particularly in our higher income Asian markets.”
Last month, Prudential announced that it was considering a potential listing of its Indian asset management business IPAMC, in which it owns a 49 per cent stake with ICICI Bank.
UBS analysts estimated IPAMC would be valued at around $3.5bn, or around 15 per cent of Prudential’s market cap. The arm constitutes around five per cent of the group’s earnings.
Indian asset managers often trade at a high multiple of earnings, as much as 30 times, while Prudential currently trades at a nine times multiple.
The FTSE 100 firm’s stock price has risen 20 per cent since the start of 2025, but it’s lost more than 23 per cent over the last two years.
“Prudential’s absolute underperformance can be explained by investor concerns around China,” said UBS analysts, though they argued that this was unfair to the firm.
In addition to IPAMC, the FTSE 100 firm also owns around 22 per cent of listed Indian life insurer, ICICI-Pru, which is worth about $2.2bn.
UBS analysts calculated that when the two stakes are combined, this represents between 30 and 40 per cent of Prudential’s current market capitalisation.
This would imply that Prudential’s remaining businesses are trading at a six to seven times multiple to earnings, in line with listed Chinese players, the UBS analysts explained.
“We believe this is unjustified given only 10 per cent of Prudential’s earnings are directly driven by China,” said the analysts.