WHEN Tidjane Thiam pledged to double Asian profits by 2013, there were more than a few raised eyebrows. He set the target in December of last year, soon after his disastrous attempt to buy the Asian operations of AIG for $35.5bn. Having pulled the plug on the transformational deal, he quickly became a convert to the opportunities offered by organic growth rather than mega acquisition. If the Pru could hit such gruelling targets alone, why bid for AIA in the first place?
It appears he was right, second time round at least. Asian operating profits according to the IFRS accounting standard were up 29 per cent last year, much higher than the 19 per cent compound annual growth implied in Thiam’s ambitious targets. New business profits in the region were up 24 per cent, also ahead of target.
Looking East for growth is a familiar strategy, but it’s worth reiterating just why Asia is such a hot property for the likes of Prudential. In India and China the life insurance penetration rate is just four per cent, compared to 13 per cent in the UK while McKinsey estimates that the compound annual growth rate in China will exceed 15 per cent for the next five years.
Elsewhere, the results beat expectations on just about every measure. IFRS operating profit was up 24 per cent year-on-year to £1.941bn, beating consensus by 24 per cent; new business sales were up by 23 per cent to £3.485bn. And this was all without sacrificing the margin, which widened by 100bps to 58 per cent. After the AIA farce, Thiam faced an uphill struggle to rehabilitate his reputation. According to yesterday’s figures, he has made an excellent start.