Prudential is back in black with US$1.71 billion profit in 2023 as mainland Chinese visitors to Hong Kong drive new sales
- The value of new business, a key measure of sales and future growth, surged 45 per cent to US$3.13 billion
- With sales growth continuing in the first two months of 2024, the growth prospects in Hong Kong continue to be solid, CEO Anil Wadhwani says
UK insurer Prudential reported a strong set of operating results for 2023 as the return of mainland Chinese visitors to Hong Kong boosted life insurance policy sales after the city eased the curbs imposed during the Covid-19 pandemic.
Net profit, which Prudential calls IFRS profit after tax, reached US$1.71 billion in 2023, reversing a loss of US$1 billion on a constant exchange rate basis, the company said in a Hong Kong stock exchange filing on Wednesday.
Operating profit, or income excluding one-off items and valuation changes of investment portfolio, rose 8 per cent to US$2.89 billion. New business profit, a key measure of sales and future growth, surged 45 per cent to US$3.13 billion.
Prudential adopted the new IFRS17 accounting standards this year and adjusted its results from a year earlier for comparison purposes.
“These are a very strong set of results while operating in a challenging macro environment,” CEO Anil Wadhwani said in a media briefing.
“Sales growth has continued in the first two months of 2024. We believe that the growth prospects in Hong Kong continue to be solid.
“Despite the strong growth that we witness, the traffic of mainland Chinese visitors into Hong Kong last year was still about 60 per cent of what we had witnessed in 2019.”
With visitors from mainland China likely to return to, or exceed, the level in 2019, policy sales could rise further, he added.
Prudential’s shares rose 2.2 per cent to HK$78.2, trimming the year-to-date loss to 10.5 per cent. It fell 20 per cent in 2023 and 17 per cent in 2022, exceeding the Hang Seng Index’s loss of 14 per cent and 15 per cent, respectively, in the same period.
Hong Kong reopened its borders in January 2023, after Beijing abandoned its anti-pandemic curbs to shore up the sputtering economy. Some 26.8 million mainland Chinese thronged the city last year, reaching 61 per cent of the level seen in 2019. They make up about 80 per cent of all arrivals in Hong Kong annually.
Mainland visitors spent HK$59 billion (US$7.6 billion) on insurance policies in Hong Kong last year, representing about 33 per cent of all industry sales, according to data compiled by the Insurance Authority. They topped sales of HK$43.4 billion in 2019 and HK$47.6 billion 2018, bolstering peers like AIA Group and Manulife.
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AIA reported an 82 per cent jump in new business in Hong Kong to US$1.43 billion in 2023, while Manulife Hong Kong and Macau enjoyed a 20 per cent gain to HK$4.2 billion.
Prudential said most of the 22 markets it operates in Asia and Africa achieved strong growth in new sales. Hong Kong generated the biggest growth of new business profit at 267 per cent jump year on year to US$1.41 billion in 2023, while the city contribute 45 per cent of all new business profit of the group. Other notable gains in policy sales were recorded in Indonesia, Philippines, Malaysia and Singapore. Declines were seen in Vietnam.
AIA’s 2023 profit jumps 15% on insurance sales to mainland visitors
Wadhwani, who joined Prudential from Manulife early last year, is the insurer’s first global head to be based in Hong Kong since its establishment 175 years ago. The UK insurer uses both London and Hong Kong as its headquarters.
Prudential entered the Macau market last year to compete with AIA, AXA and FWD, among others. The insurer set up its first branch in the gaming hub in June to complete its presence in all 11 cities in the Greater Bay Area.
“Greater Bay Area is a fabulous opportunity for Prudential,” Wadhwani said, adding that Africa will be the next growth engine for the company.
“In five to 10 years’ time, if I can find the next Vietnam or the next Philippines in Africa, the growth opportunities would be quite tremendous.”
In asset management, Prudential’s unit Eastspring Investment boosted its funds under management by 7 per cent to US$237 billion in 2023 from a year earlier, while the net profit rose 9 per cent to US$254 million.
The insurer declared a second interim dividend of 14.21 US cents per share, bringing the full-year dividend to 20.47 US cents, an increase of 9 per cent from a year earlier.
