March 12, 2014 / 9:26 AM / in 4 years

UPDATE 2-Prudential buoyed by Asian middle classes, US baby boomers

* 2013 IFRS op profit up 17 pct to 2.95 bln stg

* Shares climb to record high

* Agrees new bancassurance deal in Asia with StanChart (Adds detail, more CEO comment, shares)

By Chris Vellacott

LONDON, March 12 (Reuters) - Insurer Prudential has seen off worries about its exposure to volatile emerging markets, posting annual profit at the top end of forecasts thanks to demand from Asia’s growing middle classes and America’s baby-boomers reaching retirement.

Shares in the UK-based group rose as much as 5.8 percent to a record high of 1,440 pence on Wednesday, with investors also cheered by a 15 percent increase in the full-year dividend.

The stock took a hit earlier this year when emerging markets were rattled by the United States’ decision to reduce its monetary stimulus. Prudential makes about a third of its operating profit in Asia, based on the IFRS accounting measure.

“The Asian business is proving resilient in the face of Asian EM (emerging market) currency volatility and macro-economic growth concerns, whilst the U.S. business has benefited from rising equity markets and strong flows,” said analysts at Bernstein Research.

Prudential reported a 17 percent rise in IFRS operating profit for 2013 to 2.95 billion pounds ($4.91 billion).

Chief Executive Tidjane Thiam said the group had achieved a series of growth targets set in 2010 and would continue to focus on harnessing trends such as rising affluence in Asia and America’s post-war baby boomers reaching pension age.

“The Asian pie is growing faster than we can eat it,” he told journalists on a conference call.

Thiam also said the group was eyeing further international expansion with Saudi Arabia and Africa in its sights.

“Our business, which used to rely on the UK for IFRS earnings and to fund all its cash needs, is now well diversified not only in terms of IFRS earnings but also in terms of cash,” he said.

Prudential also announced it had agreed to extend and expand a bancassurance partnership in Asia with Standard Chartered . The new agreement, whereby Standard Chartered distributes Prudential life products, will last 15 years and cover 11 markets, starting in July, Prudential said.

The deal follows one agreed by Citigroup and AIA in December, which also runs for 15 years and covers 11 countries.

Standard Chartered, which makes more than 90 percent of its profits in Asia, Middle East and Africa, last week said it wanted to lift its profits from wealth management by doubling assets under management to $300 billion by 2020.

In December, Prudential set itself a goal of at least 10 billion pounds of cumulative cash generation by the end of 2017, which it sees being driven by its Asian businesses.

“At the heart of our future prospects is Asia. We are pursuing the increasing demand for protection products from the rapidly growing middle class in our chosen markets across the region,” Thiam said.

At 1150 GMT, Prudential shares were up 3.2 percent at 1,404 pence, the biggest rise on the UK’s benchmark FTSE-100 equities index.

$1 = 0.6014 British Pounds Additional reporting by Steve Slater; Reporting by Chris Vellacott. Editing by Matt Scuffham and Mark Potter

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