Prudential is back in black with US$1.71 billion profit in 2023 as return of mainland China visitors to Hong Kong drives new sales

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 at the time of the Covid-19 outbreak.

Net profit, which Prudential calls IFRS profit after tax, reached US$1.71 billion in 2023, turnaround from a loss of US$1.0 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, it added. Prudential’s new business profit, a key measure of sales and future growth, surged 45 per cent to US$3.13 billion, the report showed.

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,” Anil Wadhwani, CEO of Prudential, said in the stock exchange filing. He will meet the media this afternoon.

“Sales growth has continued in the first two months of 2024. Given the relentless execution focus in implementing our strategy, we are increasingly confident in achieving our 2027 financial and strategic objectives and in accelerating value creation for our shareholders.”

The stock rose 1 per cent to HK$77.2 at the lunch break, limiting the loss this year to 12 per cent. It fell 20 per cent in 2023 and 17 per cent in 2022, more than the Hang Seng Index which fell 14 per cent in 2023 and 15 per cent in 20.

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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Travellers praise restriction-free movement as last closed Hong Kong-mainland China borders reopen

Travellers praise restriction-free movement as last closed Hong Kong-mainland China borders reopen

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 there in June to complete its ­presence in all 11 cities in the Greater Bay Area

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, up 9 per cent than a year earlier.