Prudential soothes nerves on China after stock market plunge …

Concerns about Prudential’s exposure to China helped push the company’s shares down 10% from late May. Photograph: Reuters

Prudential says turbulence on the Chinese stock market has had little effect on its business there as it reported first-half profit ahead of City forecasts.

The British insurer sought to soothe City concerns by saying its Chinese operation had performed consistently for 15 years and that demand for its products was largely independent of short-term moves in share prices.

Operating profit for the six months to the end of June increased 17% to £1.9bn, easily beating a consensus of £1.74bn. Prudential increased the interim dividend by 10% to 12.31p.

The results were first presented by Mike Wells as Prudential’s chief executive. Wells, former boss of the insurer’s US operation, took over in June as Chinese shares began to plunge from dizzying heights achieved as consumers borrowed to buy shares.

So far we have not seen any significant negative impact either in China or in Hong Kong

Tony Wilkey

Concerns about Prudential’s exposure to China helped send the company’s shares down 10% from late May. They rose 1.4% to £15.27 on Tuesday.

Tony Wilkey, who took over running the Asian business in June, said Prudential sold mainly low-cost products such as life and health insurance in China and Hong Kong. “So far we have not seen any significant negative impact either in China or in Hong Kong,” he said.

Wells said Prudential’s business in China was less dependent on the wider economic climate than some people realised and that with a large population, a growing economy and low market penetration by insurance companies, “we remain fairly confident” in the long run.

Operating profit in Asia for life insurance and asset management rose 17% to £632m In the US, Prudential’s Jackson Life business reported an 11% profit increase to £834m.

Wells replaced Tidjane Thiam, whose management of Prudential was lauded by investors as the company’s business in Asia boomed before he left to run Credit Suisse. Wells said the company’s management team had remained steady and the group’s strategy would stay the same.

Prudential’s UK life insurance business reported a 19% increase in operating profit to £436m.

Original article – 

Prudential soothes nerves on China after stock market plunge …