Prudential bounces back from failed takeover with 41 per cent profit boost Go compare with our comparison table

Prudential bounces back from failed takeover with 41 per cent profit boost

13 August 2010 / by Lois Avery

Prudential has pleased its investors with a profitable result despite losing billions of pounds in June following the failed AIA takeover bid.

Just two months ago the insurer lost £24 billion when its bid to takeover AIG’s Asian business fell through after shareholders failed to support the acquisition.

But yesterday their fortunes were reversed when they announced profits of 968 million for the first half of 2010, a 41 per cent surge and higher than analysts’ predictions.

The good news means that dividend payments for Prudential’s shareholders will rise by 5 per cent.

Speaking to the Telegraph Jonathan Jackson, head of equities at Killik & Co, commented:  "This is a good set of results and provides reassurance that the group remained focused on running the business... in spite of the distractions surrounding the AIA bid.

"The results were comfortably ahead of consensus on all metrics. The cost of the deal was still very high though and I don't get the impression that Tidjane, Harvey McGrath (Prudential's chairman) and the rest of Prudential's management team are quite of the hook yet. However, there's nothing to suggest that the costs will significantly affect the company on issues like dividends, which is very important."

Despite Prudential’s better than expected results The Share Centre has said it’s backing Aviva as the number one stock market pick of Britain’s insurers.

Nick Raynor, investment advisor at The Share Centre says that although Prudential’s figures are positive investors should still shop around: “Looking ahead, Prudential's management is confident that this momentum can continue until at least the end of the year.

"The costs of failing to buy Asian business AIA stands at £377m, down from the original figure of £450m. The failure of this venture was disappointing for investors and Prudential will be looking to regain support by increasing the interim dividend by 5% to 6.61p per share.

"This is a healthy dividend, however Aviva, our preferred play for investors looking at the insurance sector, is offering just under 8%. Investors seeking income could do worse than to take a closer look at the sector as a whole."

© Fair Investment Company Ltd

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