Prudential’s new boss, Mike Wells, said the UK should remain in the European Union, but noted that the impact of a vote to leave on the insurer’s business would be “manageable”.
His comments came as the company beat City forecasts with a 22% rise in profits to £4bn for 2015 and said it would pay a special dividend.
Wells was among almost 200 business leaders who signed an open letter calling for Britain to stay in the EU, published in the Times last month. The signatories included executives at BP, BT, Vodafone, Asda, HSBC and Marks & Spencer.
Wells, Prudential’s former US chief who took over from Tidjane Thiam as group chief executive in June, said: “It’s in our interest for the UK to remain.” But he noted that the company generates 87% of its business outside the EU, and said the impact of a Brexit vote in the June referendum would be “manageable”.
The group’s investment arm, M&G, would be most affected should Britain leave the EU. “The infrastructure for its distribution is set up in Europe, and an exit from the EU could affect that materially,” Wells said.
M&G suffered fund outflows of 7% to £246bn last year, as retail investors pulled nearly £11bn of funds during volatile markets. Its Optimal Income fund, run by Richard Woolnough, was hit by withdrawals of £9bn, leaving it with £15bn in funds. Woolnough is one of the highest paid fund managers in the City and scooped £17.5m last year after a bumper year for his bond funds.
Prudential’s Asian business made operating profits before tax of £1.3bn, up 17% at constant exchange rates, while the US put in £1.7bn, up 10%, and the UK contributed nearly £1.2bn, up 60%, boosted by a one-off item of £339m.
Hong Kong was particularly strong with sales surging 74%, as the firm hired more agents and demand from mainland Chinese customers, who account for half of its new business in Hong Kong, picked up. However, Singapore, Indonesia and Malaysia slowed. The company now has 560,000 agents across Asia, mostly women.
Wells brushed off concerns about China’s economic slowdown, arguing that the country’s growing middle classes still wanted to invest in savings products, and foreign insurers only had a small slice of the Chinese market – less than 10% – with Prudential controlling 5.5% through a joint-venture.
Prudential raised its 2015 dividend by 5% to 38.78p a share and will also pay a special dividend of 10p a share. Its share price rose nearly 3% to £13.65, making it the biggest riser on the FTSE 100 index.
