By Chris Vellacott
LONDON, May 7 (Reuters) - Insurer Prudential has reaffirmed a commitment to its British home market as a source of financial strength and profit even as Asian units romped ahead as the main driver of sales.
Speaking on Tuesday after posting 8 percent first quarter sales growth largely fuelled by Asia, Chief Executive Tidjane Thiam called the Pru’s commitment to the UK “real and for the long term.”
The rising importance of its Asian business has fuelled speculation that Prudential could change its domicile to Hong Kong to escape tough new European capital standards.
Thiam said the firm’s ongoing presence in the UK, where it was founded 165 years ago, provided an “anchor” to its A+ credit rating - crucial to the credibility of insurers.
“The strength of the balance sheet of the group and part of why we are able to grow in Asia is that anchor in the UK, so it is very important,” he said.
Prudential has avoided much of the economic turbulence afflicting Europe on account of a strong focus on fast-growing Asia, the source of nearly half its sales.
The success of its Asian operations has also triggered speculation the company could look to hive off its international business, though recent strong performance across the group has quelled talk of an imminent structural revamp.
Prudential’s shares have climbed more than 23 percent this year and are up more than four times since 2009.
“Given the share price rally we think it is unlikely that a break up option would be seriously contemplated,” said Barrie Cornes, analyst at Panmure Gordon.
Total sales in the first three months of 2013 were 1.038 billion pounds, of which 495 million pounds came from Asia, 358 million pounds from the U.S. and 185 million pounds from the UK.
Overall performance was ahead of consensus. New business profit for the group’s insurance business rose 5 percent from a year earlier to 563 million pounds against 555 million pounds predicted by analysts.
But a weak performance in the United States, where new business profit fell 10 percent, attributed in part by the company to low interest rates, spooked investors and the share price fell around 2 percent.