3 Mar, 2021

Prudential PLC's FY'20 profit surges YOY as Asia business grows

Prudential PLC's IFRS profit for 2020 jumped to $2.19 billion from $792 million a year ago.

Basic EPS based on total profit after tax from continuing operations grew year over year to 81.6 cents from 75.1 cents.

Total adjusted operating profit before tax went up to $5.51 billion from $5.31 billion, reflecting the continued growth of its Asia businesses, offset by lower U.S. profits.

Adjusted operating profit based on longer-term investment returns before tax from continuing operations in Asia increased to $3.67 billion from $3.28 billion, driven by a 14% increase in life insurance adjusted operating profit, alongside a 2% increase at its Asia asset manager Eastspring.

Adjusted operating profit based on longer-term investment returns before tax from continuing operations in the U.S. declined to $2.80 billion from $3.07 billion. This reduction largely reflects the impact of deferred acquisition cost adjustment effects in the current and prior year, alongside the expected reduction in spread related earnings following the reinsurance contract with Athene Life Re Ltd. in June 2020. Offsetting these falls, fee income was $3.39 billion, 3% higher than the prior year as result of higher average account balances.

Central expenses were 8% lower than the prior year reflecting a reduction in interest expense on core borrowings following the transfer of debt to M&G PLC in 2019, partly offset by increased restructuring costs of $208 million, compared to $110 million in 2019. Restructuring costs reflect the group's substantial and ongoing IFRS 17 project and costs associated with actions to reduce central costs post the demerger of M&G.

During 2020, head office activities incurred costs of $417 million, versus $460 million a year earlier. In addition, as a result of the separation of Jackson Financial Inc., head office costs are targeted to reduce further by about $70 million from the start of 2023.

The company announced its 2020 second interim dividend of 10.73 cents per ordinary share. The dividend is payable to U.K., Hong Kong and American depositary receipt holders May 14 and on or about May 21 in Singapore. The record date is March 26.