Prudential chair admits ‘frustrating and disappointing’ share performance

Prudential’s share price slide has been “frustrating and disappointing”, the insurance group’s chair has told participants in its first annual meeting to be held in Hong Kong instead of London.

“There are headwinds that continue to impact us,” Baroness Shriti Vadera told the sparsely attended in-person meeting on Thursday, referring to inflationary and interest rate pressures as well as weak consumer confidence.

“Market sentiment [on] companies involved in Greater China in particular has been volatile,” Vadera told the meeting, which was held in the Chinese territory for the first time in Prudential’s nearly 176-year history but was also open to online participants.

“Some of these factors have had an impact on our share price, which I’m sure has been as frustrating and disappointing to you as it has been for us,” she said.

Shares in the dual-listed insurer have fallen about 30 per cent in Hong Kong over the past year, while insurance sector rival AIA’s Hong Kong share price has dropped about 20 per cent.

Prudential retains a UK domicile and a joint primary listing in London, with UK investors representing about 40 per cent of its shareholder base.

Prudential said it had “no current plans” to change its dual primary listing. An informal shareholder meeting would be held in London in September, it said.

Asked by a shareholder at Thursday’s meeting about low trading volumes in its Hong Kong shares, Vadera said Prudential had spent a “considerable amount of time and effort” to improve liquidity.

The company had also undertaken “a number of roadshows” and had been in discussions with the Hong Kong government about how to boost local trading volumes, she said. Prudential said this might be done by making it easier to swap shares between London and Hong Kong.

Vadera’s remarks come after the company’s first-quarter results last month, which were generally viewed as disappointing by analysts. Prudential’s new business profit, a measure of expected earnings from newly written policies, was up 11 per cent at constant exchange rates, a much slower growth than at AIA.

“Whereas the debate had been on whether management should launch a buyback or focus on growth, investors got neither,” analysts at Jefferies wrote in a note this week.

Prudential has said it will update its capital management plans by the time it reports half-year results.

The broader Asian life insurance sector has been knocked by investor concerns about the strength of demand from Chinese consumers, and exposure to credit and real estate risks.

Prudential completed a restructuring in 2021 in which it dispensed with operations in US and Europe to focus on Asia. It also has a smaller base in Africa.

It was then hit by pandemic restrictions, in particular the closing of the border between Hong Kong and mainland China, which interrupted sales of insurance and savings products to visitors crossing into the city.