Prudential sees UK profits fall offset by Asia growth

Insurer Prudential has credited a seventh year of growth in Asia for helping it to overcome a slump in UK profits.

UK life operating profits tumbled 32% to £799 million in 2016 after it was hit by a decision to stop offering annuity deals to company pension schemes, as well as a £175m charge amid a review into past sales practices for individual annuities.

Pru’s UK result was also hit by a tough year for its M&G fund management business, which saw profits fall 4% to £425m.

However, CEO Mike Wells cheered a seventh year of double-digit profit growth in Asia.

Operating profits rose 28% to £1.5 billion in 2016, while US earnings were up 21% to £2.1bn.

The results were flattered by the weak pound, but even stripped out earnings rose 15% across Asia and 8% in the US.

Mr Wells said Prudential delivered a “strong financial performance” despite “continued low interest rates, market volatility and dramatic political change.”

Group-wide total operating profits rose 7% to £4.3bn although, with the currency boost stripped out, earnings were 2% lower.

The results showed a challenging UK market, with earnings falling despite a 33% rise in life new business profits.

It saw profits from new annuity business plunge from £123m to £41m in 2016 after it deliberately scaled back its bulk annuity sales.

The group added that it is “continuing to work to ensure we put things right” after the UK’s Financial Conduct Authority last month ordered a number of providers to review their past non-advised individual annuity sales dating back to July 2008.