Prudential Earnings: Marches on With a Continued Rebound in Sales; Shares undervalued

Prudential PRU is continuing its strong rebound in sales and new business as it has come out of the prolonged China coronavirus lockdown. At constant exchange rates, the company has announced $4.4 billion in annual premium equivalent sales in the first 9 months of 2023. Against the $3.1 billion reported for the first 9 months of 2022, that stacks up very well. Prudential has generated new business profit of $2.1 billion over the same time frame. Again, this is versus $1.6 billion over the same period in 2022, so the business is performing well again.

This continued rebound has been driven partially by a return of visitors to Hong Kong that is going well. However, there is still some way to go before these visitor numbers return to prepandemic levels. Against that backdrop, the firm continues to focus on health and protection products through proprietary agency channel sales.

The mainland China environment that Prudential is operating in is a challenging one. Citic Prudential Life sales have declined as the Chinese financial services regulator National Financial Regulatory Administration issued a notice to life insurance firms to regulate their bancassurance operations. This has resulted in a cycle of product revisions to meet new cost constraints.

Eastspring Investment’s third-party net flows are strong at $2.1 billion so far for 2023. That is ahead of our $1.7 billion full-year forecast. Though, with declining assets managed on behalf of M&G, total assets under management have declined to $216 billion.

We maintain our GBP 13.20 fair value estimate and no moat rating.