Chief executives don't employ dry sarcasm enough. Here is Prudential's Tidjane Thiam's response to the cautious remarks on Asia made by rival insurer Aviva last week: "China is expected to grow between 5% and 10% so it will be a more sensible strategy to invest in Europe right now." Nicely done.
Alternatively, Thiam could have pointed to the two companies' different versions of a "rebased" dividend. At the Pru, it means a 16% increase. At Aviva, rebased means debased, to the tune of 44%.
It's chalk and cheese, and two-thirds of the Pru's outperformance can be explained by its extraordinary rate of growth in Asia. The time has come to retire the old caricature of a cash-cow UK business funding an Asian operation with uncertain medium-term prospects. In reality, the medium-term has arrived for the Pru in Asia: for the first time, the division was the biggest remitter of cash to the centre after a 66% increase to £341m.
As for the long-term, well, who knows? Thiam reckons it is possible to imagine an insurer having 200 million customers in Asia given the potential increase in the numbers of middle-class savers and buyers of health insurance policies. He didn't say it would be the Pru – currently at the head of the pack with 13m customers – but you catch his drift.
The market responded to this bullish talk by pushing up the share price by 9%, which was probably fair. The profits and cash from Asia are turning out better, and arriving more quickly, than expected. Of course a rapid slowdown in mainland China – impacting the Pru's larger units elsewhere in Asia – remains a real risk. But the risk is merely a reason to resist silly calls for a break-up of the company. There is no need to change a winning formula.
