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As the Man from the Pru Knocks on Your Portfolio, You Might Want to Let Him in

By Malcolm Stacey | Friday 11 August 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Hello, Share Twiggers. Let’s have another look at the Man from the Pru. Prudential (PRU) has just announced that six month operating profits are up by 5%. Not brilliant, but, never mind, an increasing profit usually means a climbing share price.

When the results were declared, the share price fell a bit, which means we can, if the market doesn’t collapse on the North Korean situation, expect the share price to rise over the next few weeks. Ironically, speaking of Korea, the better profits were led by performance in Asia and the US. Growth was slower in Blighty. And it's Asia which is exciting the City most because it now generates a third of the company’s profit.

One of the main reasons for this is that there is little by way of national health provision in that continent. So the rapidly growing middle classes there are keen to buy health insurance.

Now back to the half year figures. For the Prudential group as a whole, operating profit was a tasty £2.4 billion. And the interim dividend is 12.5% better than last time. The Pru has M&G asset management under its wing. And that arm posted an increase in profits: up by 10% to £248 million.

An encouragement to buy shares in British insurance companies is that recent history favourably compares their progress to UK banks, which never seem to get going. And haven't done so, since the big crash of nearly 10 years ago.

Several insurance companies, like Legal & General (LGEN) and RSA (RSA) have seen their share prices rocket over the last year, and the Prudential is up there with them. Last October, the shares were less than 1300p a throw. Today they are 1826p, but I think there is still room for improvement. Most brokers currently see the share as a buy and I agree.

Now it’s time for the Punter’s Return.


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