Prudential Plc (LSE:PRU) saw its shares climb on Wednesday after reporting first-half results that exceeded analyst expectations and unveiling plans to return over $5 billion to shareholders through 2027.
The London-listed insurer posted an Annual Premium Equivalent (APE) of $3.29 billion, slightly above the $3.27 billion forecast. New Business Profit reached $1.26 billion, 1.3% higher than expected, with a margin of 38.3%, compared with the 38% estimate.
Life and asset management gross operating free surplus generation came in at $1.56 billion, 6% above the $1.47 billion consensus, supported by a 10% rise in returns on excess surplus and in-force transfer, along with a 23% increase in assumption and experience variances. Adjusted operating profit before tax stood at $1.64 billion, slightly above the $1.63 billion forecast.
Insurance business profit totaled $1.80 billion, 2.6% above the $1.76 billion estimate, while Eastspring, Prudential’s asset management division, posted $158 million, 3.1% below expectations due to marking shareholder assets to market. Other income and expenses were negative $317 million, versus an anticipated negative $291 million, reflecting lower cash balances and yields. Operating profit after tax per share reached 49.3 cents, beating the 48.5 cents forecast. The dividend per share of 7.71 cents aligned with market expectations.
Alongside the results, Prudential outlined a capital management program exceeding $5 billion through 2027. The plan includes annual ordinary dividend growth of 10% from 2025 to 2027, additional returns of $500 million in 2026 and $600 million in 2027, and distribution of net proceeds from a potential initial public offering of ICICI Prudential Asset Management.
“In our view, these proposed capital returns are attractive, although we are surprised to find that these capital returns were not expressed in the form of a payout ratio on the group’s net free surplus generation, unlike Prudential’s close peer, AIA (which targets 75%),” said analysts at Jefferies in a note.
Using consensus net free surplus, the implied payout ratio is around 50%, below what some market participants had expected.
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