Prudential will see strong first-half earnings, outgoing CEO says

By Carolyn Cohn

LONDON, May 6 (Reuters) - Prudential will post "very strong" first-half earnings, outgoing chief executive Tidjane Thiam said on Wednesday, as the insurer reported an 11 percent decline in new business profit in the first quarter.

Thiam, who leaves at the end of the month to run Credit Suisse, said a healthy performance in protection insurance across the company's Asian, U.S. and British divisions would boost the broader earnings numbers when they are reported in three months.

"IFRS (International Financial Reporting Standards) earnings will be very strong ... even in this challenging environment of low interest rates," Thiam told reporters on a conference call.

Low interest rates, a negative for insurers' investment returns and for demand for savings products, contributed to the 11 percent drop in first-quarter new business profit to 496 million pounds ($750 million) on a constant exchange rate basis.

Thiam stands down at the end of the month and will be replaced by U.S. unit boss Mike Wells.

Wells told reporters the focus at the company would be for "current strategy plus", without elaborating.

Analysts and investors expect little immediate change from Wells' leadership. Prudential set out medium-term targets in 2013, focusing on growth in its Asian business, which currently contributes a third of the company's operating profit. Prudential is also listed in Asia.

Ahead of closely-fought British elections on Thursday, Thiam said a British exit from the European Union would be harmful for the country's economy.

"Is the EU perfect? No ... the benefits for the UK of being in the EU outweigh the disadvantages in the long term."

Britain's Conservative party, which is neck-and-neck in the polls with Labour, has promised to hold a referendum on Britain's membership of the EU if it is elected.


In the United States, new business profit at Prudential's Jackson business fell 28 percent to 153 million pounds.

UK retail new business profit dropped 11 percent to 34 million pounds, and Prudential wrote no new bulk annuity business in the quarter.

Insurers have been looking to bulk annuities, which transfer the risk of defined benefit -- or final salary -- pension schemes, from companies to insurers, to make up for a shortfall in individual annuity sales following recent UK pension reform.

Asian new business profit rose 22 percent, however, to 309 million pounds, and the Asian asset management arm saw third party net inflows of 2.3 billion pounds, up 106 percent.

JP Morgan analysts said the overall new business profit figure beat its expectations and "flags strong Asian growth".

M&G, the group's UK investment arm, saw net inflows of 700 million pounds, down from 1.4 billion the previous year. But the fund manager's external assets under management rose 8 percent to 139.5 billion pounds.

Prudential's shares were down 0.6 percent at 1,603 pence at 1146 GMT, underperforming rival Legal & General, which rose 1.1 percent after the company announced record cash generation in the first quarter.

($1 = 0.6590 pounds) (Editing by Ruth Pitchford and Mark Potter)

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