Prudential has shrugged off the impact of George Osborne's pension reforms as it beat market expectations with a 17% increase in first-half profits.
The insurance group's first-half operating profits – the figure most closely watched by the market – rose to £1.5bn before tax. Prudential welcomed the Chancellor's shake-up of the UK pensions market, which scrapped the requirement for pensioners to swap their pension pots for an annuity.
Under the reforms, instead of being provided with an annuity – a regular income from the pension pot that a person has accumulated during their working life – workers will be able to spend their pension pots on whatever they wish. That caused a 43% slump in sales of personal annuities to £63m, which was in line with Prudential's peers.
Tidjane Thiam, Prudential's chief executive, said the pensions overhaul, announced in the budget, had caused "considerable disruption to the market for annuities". But he welcomed the changes, which he said would "be beneficial both for customers and Prudential in the long term".
The UK division still posted a 10% increase in operating profits, lifted by Pru's life and retirement division, which wrote more pension insurance deals with corporate schemes.
The US business boasted the healthiest performance, with operating profits up 28%, as stronger stock markets and an improving economy lifted consumer confidence. Thiam said the Pru's US division was focused on meeting the needs of 77 million baby boomers as they enter retirement.
In Asia, Prudential continued to enjoy strong demand from the region's rapidly growing middle class, offsetting political instability and floods in Indonesia, as well as the military takeover in Thailand.
Thiam said: "The strategy has been, is and will remain, to grow fast and aggressively in Asia. How we do it is really a function of opportunity." He took the opportunity to rage against shareholders that stood in the way of the insurer's $35.5bn (£21bn) bid for rival AIA back in June 2010. "That opportunity has passed. There was one opportunity; we managed to get it and we didn't conclude it. My only frustration is that we didn't succeed."
Thiam said the group would not change "aggressive" expansion plans in Asia, despite challenging conditions.
"In the first half of this year, some of our markets experienced headwinds as a result of political and economic events such as the uncertainty over the outcome of presidential elections in Indonesia or the military takeover in Thailand. These shorter-term cyclical pressures do not detract from the long-term structural trend of growing demand for our products and services from the rapidly growing and underinsured middle classes."
Richard Hunter, head of equities at Hargreaves Lansdown Stockbroker said: "Even set against high expectations, Prudential continues to storm ahead, leaving many of its rivals in its wake. Its strategy is bearing fruit in each of its geographies, in particular Asia and the US."
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