UPDATE 1-UK's Prudential goes cool on break-up option

Wed Mar 13, 2013 8:11am EDT

Related Topics

* Benchmark for break-up option "very high" - CEO

* 2012 operating profit 2.53 bln stg vs 2.33 bln consensus

* Total dividend 29.19 pence vs 26.65 pence consensus

* Shares up 4 percent, top FTSE riser

LONDON, March 13 (Reuters) - A strong profit and share price performance from Prudential have made it unlikely Britain's biggest insurer will pursue mooted disposals next year, its chief executive said on Wednesday.

"The current strategy is working very well as evidenced by today's results, and it's a very high benchmark when you think about exercising any of these options," Tidjane Thiam told reporters on a conference call.

"The fact that things are going so well sets the bar very, very high on any change to that strategy."

In 2010 Prudential set out to make its units in Asia and the United States financially independent within three years, saying this would give it the option of breaking itself up if its share price did not reflect the full value of its businesses by then.

The move fuelled speculation Prudential could launch major disposals as soon as next year, with analysts saying the group could sell a stake in its Jackson National Life unit in the U.S. to stock market investors as a first step.

"Having an option doesn't mean you have to exercise it," Thiam said.

He was speaking shortly after Prudential said its 2012 operating profit rose 25 percent to 2.53 billion pounds ($3.77 billion), helped by strong growth at its flagship Asian operation, and surpassing the 2.33 billion expected by analysts in a company poll.

The 165 year-old insurer also said it would pay investors 29.19 pence per share from 2012 earnings, an increase of 16 percent, and ahead of the 26.65 pence pencilled in by analysts.

Insurers' dividends have been under scrutiny after British rivals RSA and Aviva reduced their payouts, triggering concern that years of ultra-low interest rates were taking their toll on the sector's finances.

All other big European insurers to have reported 2012 results so far have at least maintained their investor handouts.

Prudential shares were up 4 percent by 1200 GMT, the top riser in the FTSE 100 share index.

Shares have risen 43 percent in the past year, double the rise of the wider European insurance sector, reflecting Prudential's lack of exposure to crisis-hit Europe and strong presence in fast-growing Asia, source of half its sales.

"Prudential has been transformed since 2010 into a strongly cash-generative business; the outperformance of the stock is likely to continue," Investec analyst Kevin Ryan wrote in a note.

Operating profit at Prudential's Asian arm, which sells life insurance and savings policies to the region's emerging middle class, rose by a over a quarter to 988 million pounds last year.

That beat a target Prudential set itself in 2010 of doubling Asian earnings between 2009 and 2013 a year ahead of schedule.

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