Prudential CEO: China is misread by the West

Prudential CEO: China is misread by the West

China's economic situation is being "misread" by the West, the chief executive of insurance giant Prudential told CNBC on Wednesday as the group reported a 22 per cent rise in full-year operating profit, and hiked its dividend for 2015.

Operating profit for 2015 rose to £4.01 billion (S$7.87 billion). The group said its ordinary dividend increased by 5 per cent to 38.78 pence per share and also announced a special dividend of 10 pence per share.

"We had a dividend policy of raising our dividend by 5 per cent...and we had pulled forward some earnings in anticipation of Solvency II in the UK, and those earnings belong to the shareholders," CEO Mike Wells told CNBC in an interview. Solvency II refers to a new set of EU rules governing the European insurance sector, including requirements on how much capital insurers should hold.

He sought to reassure shareholders over business in Asia, and China in particular in 2016.

"I think China and Asia in general are misread by the West," CEO Mike Wells told CNBC. "The consumers have money, are spending...all of the key metrics around our average client are very resilient."

The group's life and asset management businesses in Asia recorded a 17 per cent rise in operating profit last year. Eastspring, its Asian asset management business, achieved record third-party net inflows of £6.0 billion, bringing total funds under management to a new high of £89.1 billion.

The British insurer announced the appointment of Wells in May last year to replace CEO Tidjane Thiam who moved to Credit Suisse. He started his new role the month afterwards. Wells was the head of Prudential's US business, Jackson, before replacing Thiam.

In 2014, Jackson's operating profit grew 21 per cent to £1.4 billion ($1.99 billion), according to the company's reports, which highlighted increased income from higher fees.

Wells has worked in life insurance, retirement services and asset management for 29 years since but first joined the company in 1995. After his promotion, Wells relocated from the US to London and has a basic salary of £1.07 million.

Prudential's European asset manager M&G had a tougher year, with retail net outflows more than offsetting positive flows from institutional new business, the group said.

Wells said he expected the UK asset management space to become much more competitive.

"I think the advice model is going to evolve and we fully intend to compete in that effectively," he said.

That could include robotic asset allocation, Wells said. "They actually provide a valuable service."

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