Why Prudential Is Up 30% This Year


LONDON -- Prudential (ISE: PRU.L) has advanced 30% to 830 pence so far during 2012, making the share one of this year's best performers in the FTSE 100 (UKX).

The financial services group, which has operations in Asia, the U.S., and the U.K., seems to have impressed investors with a series of resilient statements.

During March, Prudential announced 2011 results that showed operating profits improve 7% to 2,070 million pounds and total profit before tax increase 33% to 1,943 million pounds. The Asia life insurance business saw its operating profit rise 32% to 709 million pounds, the largest contributor to Group operating profit for the first time. A dividend increase of 5.6% to 25.19 pence per share was also revealed.

During May, Prudential's first-quarter statement revealed that asset management net inflows increased 12% to 2,116 million pounds and that new business profits rose for the 11th consecutive quarter of year-on-year growth, up 8% to 536 million pounds. With limited exposure to the eurozone and the continued strength of the Asian business, the company was well placed to ride out turbulence in the global economy.

Then in August, Prudential disclosed half-year results that showed operating profits rising by 13% to 1,162 million pounds, shareholders' funds increasing 8% to 9.3 billion pounds, and a half-year dividend rising 5.7% to 834 pence per share. Commenting on the results, Tidjane Thiam, group chief executive, said:

Prudential has produced a strong performance across our key financial metrics during the first six months of 2012 -- IFRS, NBP, and cash, despite the considerable global macroeconomic challenges. Our track record of profitable growth has continued as we have delivered our highest-ever first half new business profit and IFRS operating profit of 1.14 billion [pounds] and 1.16 billion [pounds] respectively. Net cash remittances from our business units to the Group have grown in line with our strategy and we retain one of the strongest capital positions in the sector. ... Asia delivered a 21% rise in IFRS operating profit and [an] 18% rise in new business profit. Importantly, Asia's cash contribution to the Group was 126 million [pounds], an increase of 20%, and evidence that our business in Asia continues to deliver both growth and cash for our shareholders.

Prudential's next trading update will be published on Nov. 14, which may reveal further encouraging news that can impress investors.

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