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Asian century has already arrived for Prudential Asian century has already arrived for Prudential
(7 months later)
Chief executives don't employ dry sarcasm enough. Here is Prudential's Tidjane Thiam's response to the cautious remarks on Asia made by rival insurer Aviva last week: "China is expected to grow between 5% and 10% so it will be a more sensible strategy to invest in Europe right now." Nicely done.Chief executives don't employ dry sarcasm enough. Here is Prudential's Tidjane Thiam's response to the cautious remarks on Asia made by rival insurer Aviva last week: "China is expected to grow between 5% and 10% so it will be a more sensible strategy to invest in Europe right now." Nicely done.
Alternatively, Thiam could have pointed to the two companies' different versions of a "rebased" dividend. At the Pru, it means a 16% increase. At Aviva, rebased means debased, to the tune of 44%.Alternatively, Thiam could have pointed to the two companies' different versions of a "rebased" dividend. At the Pru, it means a 16% increase. At Aviva, rebased means debased, to the tune of 44%.
It's chalk and cheese, and two-thirds of the Pru's outperformance can be explained by its extraordinary rate of growth in Asia. The time has come to retire the old caricature of a cash-cow UK business funding an Asian operation with uncertain medium-term prospects. In reality, the medium-term has arrived for the Pru in Asia: for the first time, the division was the biggest remitter of cash to the centre after a 66% increase to £341m.It's chalk and cheese, and two-thirds of the Pru's outperformance can be explained by its extraordinary rate of growth in Asia. The time has come to retire the old caricature of a cash-cow UK business funding an Asian operation with uncertain medium-term prospects. In reality, the medium-term has arrived for the Pru in Asia: for the first time, the division was the biggest remitter of cash to the centre after a 66% increase to £341m.
As for the long-term, well, who knows? Thiam reckons it is possible to imagine an insurer having 200 million customers in Asia given the potential increase in the numbers of middle-class savers and buyers of health insurance policies. He didn't say it would be the Pru – currently at the head of the pack with 13m customers – but you catch his drift.As for the long-term, well, who knows? Thiam reckons it is possible to imagine an insurer having 200 million customers in Asia given the potential increase in the numbers of middle-class savers and buyers of health insurance policies. He didn't say it would be the Pru – currently at the head of the pack with 13m customers – but you catch his drift.
The market responded to this bullish talk by pushing up the share price by 9%, which was probably fair. The profits and cash from Asia are turning out better, and arriving more quickly, than expected. Of course a rapid slowdown in mainland China – impacting the Pru's larger units elsewhere in Asia – remains a real risk. But the risk is merely a reason to resist silly calls for a break-up of the company. There is no need to change a winning formula.The market responded to this bullish talk by pushing up the share price by 9%, which was probably fair. The profits and cash from Asia are turning out better, and arriving more quickly, than expected. Of course a rapid slowdown in mainland China – impacting the Pru's larger units elsewhere in Asia – remains a real risk. But the risk is merely a reason to resist silly calls for a break-up of the company. There is no need to change a winning formula.
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