Wednesday preview: Prudential reports full year results

Insurance giant Prudential is expected to report a 14% increase in full year operating profit to £3.64bn on Wednesday.

UBS said operating profit in 2015 was likely to have been driven by continued double-digit growth in the Asia business and the US.

The Asia division is projected to achieve 14% year-on-year growth in operating profit to £1.19bn while the US, supported by positive foreign exchange movements, is expected to see a 17% gain to £1.66bn.

Hong Kong will be a key area of focus as it represents about 50% of new business profit for the Asia division. UBS added that “any evidence of a slowdown in sales from economic slowdown and/or lower flows from mainland China” will come under scrutiny.

The UK unit is forecast to report a 4% increase in operating profit to £805m. However, UBS said this is less than the 17% growth posted at the half year as large bulk annuity deals skew the year-on-year comparisons.

Prudential in January signalled a pull-back from the UK annuity market, saying that new Solvency II rules made it harder to generate decent returns from the business.

Capital requirements under the new Solvency II insurance regulation are higher than they were under the previous regime. Solvency II came into effect on 1 January following an EU Parliament vote on the Omnibus II Directive on 11 March 2014.

The capital needed for an individual annuity is 50% higher now than it used to be, affecting Prudential which had £1.7bn worth of bulk annuities in 2014.

“Following the Solvency II update, our outlook for sustainable growth in cash generation and dividends remains intact and we expect 10% growth in underlying cash generated to £2.8bn and an interim dividend of 38.80p up 5% year-on-year," said UBS analyst James Shuck.

“Qualitatively, any update on the progress of Department of Labour ('DOL') new proposed fiduciary standards for the sale of annuities will be of particular interest, expect a material update until the second quarter of 2016.”

Wednesday 09 March

QUARTERLY PAYMENT DATE
Unilever

FINALS
4Imprint Group, 4Imprint Group, Breedon Aggregates Ltd., Hill & Smith Holdings, InterQuest Group, Mincon Group , Portmeirion Group, Prudential, SIG, Tri-Star Resources

AGMS
Geiger Counter Ltd., New City Energy Ltd NPV

FINAL DIVIDEND PAYMENT DATE
Fenner, OMG