Prudential says profit target more challenging as China weighs on sales

What happened

Prudential said third-quarter annual premium equivalent sales fell 6% to $1.6bn, mainly because of weaker mainland China sales. New business profit rose 1% to $709m, helped by improved new business margins, but the company expects mainland China new business profit to decline 10% to 15% for the full year.

Confirmed

Global impact / market context

China’s slower recovery and rules limiting bancassurance expenses, meaning costs tied to selling insurance through banks, are restraining sales and expected profit. That may offset growth elsewhere: Hong Kong, Malaysia and Thailand performed strongly, and bancassurance profit outside China grew by more than 20%.

Analyst inference

The figures show a mixed business picture: sales fell overall, while profit rose slightly and would have increased 13% excluding mainland China. Eastspring’s funds under management or advice also fell despite net inflows, as market movements and a reduced ICICI Prudential holding weighed on the total.

Confirmed

What to watch

1. Watch whether mainland China new business profit tracks the forecast 10% to 15% full-year decline, as continued weakness would weigh on group results. Analyst inference
2. Track whether stronger new business profit momentum reported for September and October continues; the supplied article text ends before the full comment is available. Confirmed
3. Observe whether growth in Hong Kong, Malaysia, Thailand and bancassurance outside China can offset weaker Chinese sales and support group profit. Analyst inference

Evidence

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