LONDON: Prudential, Britain’s biggest insurer, wants to expand its foothold in emerging southeast Asian economies after the region drove a better than expected 13 percent increase in its half-year profit.
The 160-year old insurer, which relies on fast-growing Asia for 45 percent of its sales, plans to enter Cambodia and is also considering a move into Myanmar, Chief Executive Tidjane Thiam said.
“We are going to enter new markets like Cambodia,” he said.
“We are looking all the time at global opportunities, Myanmar is on our radar.”
Thiam said less developed Asian economies where take-up of insurance is low had the potential to drive “double growth” as rising economic expansion encouraged more people to insure themselves as well as others to take on more cover.
Profits at Prudential’s Asian division, which spans 13 markets including Hong Kong, Indonesia and Malaysia, rose 20 percent in the first six months of the year, fueling a 13 percent increase in group operating profit to 1.16 billion pounds ($ 1.81 billion).
That was just ahead of the 1.13 billion pounds expected by analysts according to the company’s own poll.
Prudential shares were down 0.6 percent, underperforming the Stoxx Europe 600 insurance sector share index, which was 0.2 percent lower.
The stock is still up 27 percent since the start of the year, outpacing the sector’s 15 percent increase.
“They’ve modestly beat consensus, and Asia is powering ahead,” said Investec analyst Kevin Ryan.
Thiam, who oversaw a failed $ 35.5 billion bid for Asian arch-rival AIA in 2010, also said he was not worried that AIA might buy some of Dutch bancassurer ING’s Asian insurance businesses which are up for sale.
“There’s plenty of room for growth,” he said.
“We’re not really worried about AIA because there’s so much headroom that what the competition does doesn’t really affect our ability to grow.”
AIA, led by Prudential’s former chief executive Mark Tucker, is among the bidders for parts of ING’s Asia business, being sold off as payback for state aid the Dutch group received in the 2008 financial crisis.
Meanwhile Prudential, which warned in February it might quit Britain to avoid the European Union’s proposed new Solvency II capital rules for insurers, said it was still weighing up a potential move in case the new regime proves too onerous.
Prudential is concerned the new regulations could force it to raise capital requirements at its Jackson National Life business in the US, making it uncompetitive against local rivals.
There has long been speculation Prudential could move to Hong Kong, irrespective of Solvency II, in recognition of its growing focus on Asia.
Thiam said the company was on track to achieve its target of doubling its 2009 operating profit in Asia by 2013.
That would allow the Asian business to fund itself securely, giving Prudential the option of breaking itself up, analysts have said.
Prudential is paying an interim dividend of 8.4 pence per share, an increase of 4.7 percent.
