Prudential posts strong life insurance sales in 1Q2023

Pru plc reported strong sales in the first quarter of 2023 (1Q23), with its annualised premium equivalent (APE) surging by 35% from $1,212m in 1Q22 to $1,559m in 1Q23.

The increase was driven by rising cross-border traffic between China and Hong Kong, stronger domestic demand in Hong Kong, and recovery of other business units, say Mr Pramod Shenoi, co-head of Asia-Pacific Research, and Mr Trung Tran, analyst – APAC Insurance, at CreditSights, in a commentary. CreditSights is a division of the Fitch Group.

As COVID-19-related social restrictions were gradually removed, Pru plc’s agency channel has maintained its growth momentum, with APE sales increasing every quarter since mid-2022. While APE sales through the bancassurance channel decreased by 4%, it should be noted that the company recorded a double-digit growth rate for this channel in the prior year. Overall, with stronger sales and a stable new business margin (48%), the company reported higher total new business profit, which increased by a considerable 30%.

Hong Kong

Continuing the growth momentum gained in the second half of 2022, Hong Kong APE became the biggest single market contributor to the group’s stronger sales in 1Q23. This was attributed to improving sales to both domestic customers and Chinese mainland visitors, particularly after Hong Kong reopened its border in February 2023 which led to a jump in inbound mainland Chinese visitors.

As a result, new business profit in Hong Kong more than doubled to $293m, while APE sales tripled to $455m, accounting for 28.5% of the group’s APE. However, the new business profit margin of Hong Kong business was 64% in 1Q23 as compared to 74% in FY22 and 134% in FY21, a declining trend which was due to a shift to savings products.

Mainland China

In China, total new business profit grew despite an overall fall in APE sales. Although CITIC-Prudential Life’s bancassurance channel reported negative growth, APE sales of the agency channel increased and thus helped to deliver higher new business profit overall. This was because the new business profit margin of the agency channel (65% in FY22) was generally much better than the bancassurance channel (43% in FY22). CITIC–Prudential Life is a 50-50 joint venture between state-owned investment company CITIC and the Pru Group.

Southeast Asia

APE sales in Southeast Asia reported a mixed picture. While Singapore and Malaysia experienced a moderation in APE sales and new business profit growth, Indonesia and Growth markets (particularly Thailand and the Philippines) performed well. Overall, this region contributed about a third of the group’s total new business profit in the quarter. Meanwhile, ICICI Prudential Life has continued to grow strongly in 1Q23 with double-digit growth in APE sales and new business profit. ICICI Prudential Life, which is listed in India, is a life insurance joint venture between ICICI Bank and the Pru Group.