Prudential New Business Profit Climbs 13 Percent on Asia, United Kingdom

Income drawdown sales more than trebled in the three months between 1 July and 30 September, hitting £71 million compared to £23 million in the same period in 2014.

The outflows combined with negative market movements lead to a £10bn to a decline in funds under management over the past year.

In July, the company’s M&G Optimal Income fund was reported to have seen outflows of £2.7 billion between March and July due to concerns about a fall in performance under fund manager Richard Woolnough.

However, funds under management at Prudential’s asset management business, M&G, slipped 5pc to £1217.3bn as a wave of retail customers withdrew their investments.

It also cautioned it expects “high levels of volatility and macroeconomic uncertainties” to continue into the fourth quarter.

Inflows of £1.2 billion from institutional investors in the third quarter wasn’t enough to convince shareholders, and shares in Prudential dipped 1.6 per cent in early Tuesday trading.

The overall increase came about as new business profit in the USA increased by 21% to GBP186.0 million from GBP154.0 million, while new business profit in Asia rose by 11% to GBP312.0 million from GBP281.0 million. Overall, M&G’s funds under management fell to GBP247.5 billion at the end of September from the GBP257.3 billion recorded at the same stage the prior year.

In the United Kingdom, new business profit rose 16% to £231 million in the first nine months, lifted by demand for flexible retirement products in the wake of the pension reforms announced by Chancellor George Osborne last April.

“In total across all products, PruFund APE sales of £395m increased by 84% per cent”.

“In Asia, we continue to target the huge opportunity offered by the growth of the middle class”, Chief Executive Mike Wells told reporters, adding that the size of China’s middle class now outstripped that of the United States.

Prudential’s shares slid 1.7pc on the third quarter update, but analysts said the results indicated solid performance at the insurer.