Asian growth helps UK's Pru beat Q1 forecasts

LONDON (Reuters) - British life insurer Prudential Plc (PRU.L) reported a 14 percent rise in first-quarter sales on Thursday, above analysts' forecasts, as momentum in Asia more than offset the negative impact of jittery U.S. investors.

Prudential, which competes with Aviva Plc (AV.L) for the top spot in the UK sector, said insurance sales for the three months totalled 729 million pounds ($1.4 billion), against an average forecast of 703 million from 17 analysts polled by the Pru.

Excluding the impact of dollar and other currency fluctuations, sales would have risen 13 percent.

"The numbers came in towards the better end of the range, with a particularly good performance out of Asia. The UK saw a good performance too, with no lumpy lines of business," analyst Youssef Ziai at ABN AMRO said. "Overall, I thought it was a good set of figures."

Asia, which accounts for more than half the group's new business, remained a key driver in the first months of the year, posting higher-than-expected sales of 375 million pounds, up 35 percent -- above the momentum needed for Pru to meet its target of doubling 2005 new business profit in 2008, a year early.

Prudential had warned that the region would see growth soften towards longer-term growth rates, around 25 percent, after posting a 37 percent jump in sales in 2007.

But growth remained strong in the quarter, thanks to the recurring nature of most Asian sales and strong growth in India and Indonesia, where it continues to add agents. Only Taiwan business dipped as investor sentiment turned negative.

Pru's shares, which trade at the highest multiple in the UK sector, were down 1.5 percent at 1122 GMT, below a 0.3 percent dip in the blue-chip FTSE 100 index.

U.S. DEALS?

At Pru's U.S. unit Jackson National Life, sales dropped 8 percent at actual exchange rates to 165 million pounds, slightly worse than expected, hit by a drop in variable annuity sales.

Pru had said earlier this year it had seen U.S. sales slow, as investors shift out of variable and into fixed annuity products, though a blip in January has since eased. It still expects to outperform the market over the longer term.

But Prudential also reiterated on Thursday it remained interested in bolt-on deals to grow its U.S. business, helped by current market volatility and changes in the pricing cycle.

"The opportunities ... mean that overall it is more likely we will do a deal in the next six to 12 months than over the last six to 12 months, but we have very strong economic discipline," Chief Executive Mark Tucker told reporters.

He said some small U.S. rivals were struggling to fund new business growth through securitisation since the credit crunch hit last year, opening opportunities for Prudential.

In its domestic market, where the UK insurer has pulled back in several major products, sales were up 4 percent at 189 million pounds, with strength in with-profits products helping to offset a drop in individual annuities, as customers defer investment decisions.

Prudential said it wrote minimal bulk annuity business in the first quarter -- unlike rival Legal & General (LGEN.L) -- with the pipeline remaining significant but competition intense.

"We still intend to do deals in this market, but we won't sacrifice value for volume," Tucker told analysts.

Prudential is looking to replace Chairman David Clementi, who has held the job since late 2002, but Tucker declined to comment on a timeline.

(Editing by David Holmes, editing by Will Waterman)