Prudential sales drop 9%

Oct 29 2009 by Iain Laing, The Journal

PRUDENTIAL has announced a 9% drop in worldwide sales after a weak domestic performance overshadowed the insurer's third quarter results.

The figures - the first for new chief executive Tidjane Thiam since taking the helm this month - revealed a 22% fall in UK revenues to £157m as it concentrated on value over volume and building up its capital buffer.

But the fall in groupwide sales to £700m on an annual premium equivalent basis was lower than feared thanks to a marked recovery in Asia and a record result in the United States.

Pru said it saw 75% of sales come from outside the UK for the first time in its history after a 66% surge in revenues from the US and a 4% rise in Asia business.

It benefited from a “once-in-the-cycle event“ as many US competitors withdrew from writing new businesss.

Insurer balance sheets were hammered by last autumn’s stock market turmoil as equity price falls hit their capital reserves.

Regulators have since insisted the industry rebuilds capital reserves to ensure firms have the ability to weather any potential further shocks. Pru said its capital surplus had increased further to £2.8bn, but the group has taken drastic steps to preserve capital .