Speaking to the Financial Times, Anil Wadhwani, who announced last week that he would “do things differently” at the insurance group, said the drivers of growth in Africa were “very similar” to those it has experienced in its core Asian markets, with fast-growing populations and rising appetite for insurance products.

“We believe that over a period of time, Africa will provide us with that growth opportunity, as the markets mature, as the customers get a lot more aware of wanting and needing insurance as part of their protection, health coverage, as well as savings needs”, he said.

Over the next five to 10 years, Wadhwani added, Africa could be “absolutely a growth engine that could complement” the growth in its Asian business. He pointed to Vietnam, which has grown from a small operation to one that provided $298mn of sales last year, or 7 per cent of the group total. “If I could find the next Vietnam in Africa, that would be awesome.”

Wadhwani began his role in February, but has only started publicly outlining his plans for Prudential in the past week, after the company published half-year results.

Prudential has been through a major transformation in recent years, shedding its businesses in the UK and the US following pressure from shareholders to focus on faster-growing markets in Asia. It completed the restructuring in 2021.

That left it with a large exposure to Hong Kong and China at a time when Covid-19 restrictions cut off an important revenue stream, in stopping mainland Chinese customers from crossing the border to buy insurance policies in Hong Kong. Prudential’s steep fall in new business profits in the territory last year highlighted the risks of its new, smaller footprint.

Prudential currently operates in eight African countries, all of which grew their sales by a double-digit percentage in the first half of this year. But the entire continent provided just 3 per cent of 2022 sales. Wadhwani highlighted Kenya, Ghana, Nigeria, Uganda and Zambia as examples of countries that could provide outsized growth.

The start of Wadhwani’s tenure as CEO was marred just a few months in by the resignation of the group’s chief financial officer James Turner in the wake of a conduct investigation. The company issued a strongly worded statement at the time, saying Turner’s conduct “fell short” in relation to “a recent recruitment situation” and that he would miss out on some bonus payments. The former CFO declined to comment.

Fostering a positive workplace culture at Prudential would be crucial, Wadhwani said in the interview. “I’ve always believed culture is absolutely fundamental. It is a key differentiator,” he said, adding that Prudential was announcing a new set of corporate values in the coming weeks that had been co-created with employees.

He encouraged staff to “voice an issue if they see it” through whistleblowing channels. “The greater transparency and the greater openness our employees experience, I think that’s going to be very important for us to drive the culture that’s going to help us execute or accelerate our strategy.”

Despite a retrenchment from western markets that has seen the group left solely as an Asian and African insurer with a management team split between Hong Kong and Singapore, Prudential has retained a UK domicile, a joint listing in London and Hong Kong and a joint headquarters in the two cities — even while jobs at its base in London have been scaled back.

“We have talent in London which we’d like to preserve,” Wadhwani said. “London, pretty much, we will maintain, and have talent that will help us stand out, attract and manage the different stakeholders.”

Wadhwani added any questions over the status of its London headquarters, or its UK domicile, were “not my priority right now”. 

This story originally appeared on: Financial Times - Author:Kaye Wiggins

It is the first time Wadhwani, who took over the group in February, has publicly set out his plan for the company, which has gone through a turbulent restructuring and shed its US and European operations.

His remarks came as Prudential reported its results for the first half of the year on Wednesday. New business profits, an important measure of predicted earnings on newly sold products, rose 39 per cent to $1.5bn, slightly above analysts’ expectations.

The figure surged in Hong Kong, rising 218 per cent to $670mn after Covid-19 restrictions ended, allowing mainland visitors to travel to the territory. But it dropped in mainland China, falling 16 per cent to $171mn because of lower sales and “averse economics”, Prudential said.

Prudential’s shares were little changed in Hong Kong at HK$98.2.

Wadhwani is under pressure to generate growth at Prudential, since its rationale for breaking away from its UK and US businesses was to focus on fast-growing Asian markets. The insurer said it was “highly optimistic of the medium- to long-term growth potential” of China, despite the country’s sluggish economic growth.

The insurer announced an interim dividend of 6.26 cents per share, up from 5.74 cents a year ago, and said adjusted operating profits rose 6 per cent on a constant currency basis to $1.5bn. 

Prudential, the UK’s largest insurer by market value, whose history dates back to 1848, holds a joint primary listing and headquarters in London and Hong Kong and retains its UK domicile. Wadhwani is the company’s first chief executive to be based in Asia. 

The Asia pivot has left the group, which has a market cap of £27bn, focused on mainland China and other Asian markets, with a smaller business in Africa. The company said there were “huge opportunities” to grow its franchise in India.

But the shift has raised questions about the future of its London headquarters and it has been pressed by activist shareholder Third Point to change its UK domicile.

The strategic shift took place at an awkward time as pandemic restrictions stopped the flow of mainland Chinese visitors into Hong Kong, an important source of life insurance sales for the group. With the border reopened earlier this year, analysts expected the rebound in sales to help the group’s fortunes.

New business profits rose in Prudential’s markets of Indonesia and Malaysia, though they fell 20 per cent in Singapore, it said. 

Wadhwani was confronted with a scandal just three months into his tenure when Prudential’s chief financial officer James Turner resigned following an investigation into his conduct.

Prudential said it was linked to “a recent recruitment situation” where Turner’s actions “fell short” of its standards, without setting out details.

This story originally appeared on: Financial Times - Author:Kaye Wiggins

Hong Kong-based Turner, who has held the role for just over a year, will be replaced by Ben Bulmer, chief financial officer of Prudential’s insurance and asset management business, but will remain “available” to the company for four months.

Wadhwani said in a statement that Bulmer, who joined the group in 1997, is “a highly experienced finance leader who has developed a deep understanding of our business and markets”.

This story originally appeared on: Financial Times - Author:Kaye Wiggins

The vehicles are known as “collateralised fund obligations” and echo the “collateralised debt obligations” that played a central role in the 2008 financial crisis. They parcel up stakes in hundreds of private equity-owned companies into products that are meant to diversify risk and win stellar credit ratings as a result.

But the National Association of Insurance Commissioners is moving to take over assessment of the products for US insurers, some of the main investors in the vehicles.

Fitch and KBRA rate CFOs, and S&P Global has rated ones set up by a unit of the Singapore state-owned investor Temasek. Typically, the ratings are paid for either by the organisations that issue the CFOs or by the investors in them.

Greg Fayvilevich, a senior director in Fitch’s funds and asset management business, said that while “some of the riskier structures may fall out” he thought “more diversified, traditional” deals were likely to continue.

KBRA said it was “aware of the NAIC’s efforts” and added: “We are always transparent and welcome the opportunity to discuss our rigorous analytical approach with the market.” S&P Global Ratings declined to comment.

This story originally appeared on: Financial Times - Author:Kaye Wiggins