Prudential's after-tax profits halved to US$1bn in 2022

Hong Kong-headquartered Prudential Plc has reported a plunge of 53% (at constant exchange rates) in IFRS profit after tax, from 2021's $2,184m to $1,007m in 2022, which was the first full year for the Group as an Asia and Africa-focused business.

This net result reflected short-term volatility from the impact of higher interest rates and lower equity markets on the valuation of investments and insurance liabilities, offset in part by the benefit from refinements to the reserving basis following adoption of the Hong Kong Risk-Based Capital regime (HK RBC), said Prudential.

However, the insurer’s adjusted operating profit, grew by 8% to $3.375m in 2022. ‘Adjusted operating profit’ refers to adjusted IFRS operating profit based on longer-term investment returns from continuing operations and excludes the effect of short-term fluctuations in investment returns against long-term assumptions and other corporate transactions.

APE sales rose by 9 %to $4,393m, reflecting growth in the second half of 2022 from both agency and bancassurance channels. New business profit was down by 11% to $2,184m with the impact of higher APE sales offset by increased interest rates, most significantly in Hong Kong, and business mix effects. Outside of Hong Kong, new business profit grew by 5% to $1.8bn.

Commenting on the results, Mr Anil Wadhwani, Prudential’s CEO, said, “We have delivered a resilient performance against a backdrop of Covid-19-related disruption and broader macroeconomic volatility. The results reflect the advantage of our diversified business model across the Asia region, highlighted by a balanced contribution to APE sales and new business profit from Hong Kong, the Chinese mainland and Taiwan and from Southeast Asia, including Singapore, Indonesia and Malaysia.

"The removal of the bulk of COVID-19-related restrictions across the region and the progressive opening up of the Chinese Mainland economy has meant that 2023 has started well with encouraging progress in year-on-year sales, with Group-wide APE sales for the two months ended February 2023 up 15% over the prior year.

“In Hong Kong, we have seen a gradual increase in cross-border traffic from the Chinese Mainland as travel restrictions are eased. Demand for savings products across the Hong Kong business is driving the increase in APE sales in the first two months of 2023.”

Prudential also said, “We continue to build on our success in the Chinese mainland where we see substantial opportunity to deepen our presence across a nationwide footprint. With the newly set up Macau branch of the Hong Kong business, we are strengthening our operations to capture the opportunities in the Greater Bay Area and to fully prepare ourselves for the increase in opportunities following the reopening of the border between Hong Kong and the Chinese mainland.

“We also see large growth opportunities in Southeast Asia, particularly in Indonesia and Thailand, and also in India. Our focus on selected markets in East and West Africa has provided us with exposure to a growing and fast-changing continent since we re-entered Africa in 2014.”

The following table summarises the financial performance of the insurer by segment: