Asia sales slump 24% at Prudential

Prudential saw first-quarter sales slide by nearly a quarter in Asia, after the region was rocked by the Covid-19 pandemic.

The London-listed life insurer said annual premium equivalent sales in Asia outside Hong Kong and China were ahead 1% in the first three months of 2020, but down 24% year-on-year across the entire region, at $986m.

“We continue to see challenging sales environment in the second quarter of 2020, as social distancing measures are stepped up in other Asian markets,” Prudential added.

Prudential’s main businesses are in Asia and the US, after it spun off its British unit last year. In the US, APE sales rose 25% to $631m, and by 43% in Africa to $30m.

Mike Wells, chief executive, said: “Over the first quarter of 2020, the world has seen substantial disruption caused by Covid-19, alongside related market volatility.

“In some markets, such as China, we are seeing some easing social distancing rules, while in others, lockdowns are expected to continue for some time.

“While we cannot say with certainty how the Covid-19 outbreak will impact the global economy, and hence how Prudential may be impacted, we believe we are well positioned over the long term both to weather the disruption caused by the pandemic, and to support our customers and communities in the recovery to come.”

The company added that it was continuing with plans to float a minority stake in its US business Jackson, “alongside active evaluation of other options" with respect to creating an independent company.

Richard Hunter, head of markets at Interactive Investors, said: “Prudential’s Asian exposure has been both a blessing and a curse over recent months, but for the long term, the proposition remains firmly intact.

“Even prior to the pandemic, Asia had become something of a minefield with political unrest in Hong Kong and the ongoing trade spat between the US and China. The subsequent economic shock resulted in overall Asian sales declining by 24%, with Hong Kong and China contributing dips of 50% and 19% respectively.”

But he added: “From an investment perspective, the strength of the balance sheet is unquestionable, with a solvency surplus of 302%, and a dividend yield of 3.5% also attractive in an interest rate environment which is now at all-time historical lows.

“Despite the inevitable disappointment of recent trading, the longer term strategy of tapping into the health, protection and savings markets of a burgeoning region remains appealing.”