Pru and Standard Life enjoy increase in profits

INSURERS Prudential and Standard Life expressed their confidence about the year ahead, growing profits despite an increasingly regulated environment.

The Prudential met forecasts with a seven per cent increase in 2011 operating profits to £2bn, helped by strong growth in its Asian arm. The Asian division was for the first time the biggest contributor to group earnings with profits of £709m, up 32 per cent.

“Our long-term success rests on our substantial presence in fast-growing economies across Asia,” said the Pru.

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The insurer said it is well positioned to help UK ‘baby-boomers’ as they reach retirement, and grew UK profits one per cent to £683m.

But it warned the European Union’s strict Solvency II capital regime for insurers could destroy its lucrative American business if EU regulators do not recognise US capital rules as equally rigorous.

“I can tell you, fighting US competitors who don’t have to worry about Solvency II, we just won’t have a market, we won’t be able to sell any products at all,” said Prudential chief executive Tidjane Thiam.

“We think that the US is a reasonable place, and that they have a reasonable solvency regime, and all we want is for the EU to accept that.”

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The Pru warned last month that it could move its headquarters out of London to escape Solvency II if Europe does not give the US capital regime ‘equivalent’ status.

The rules, due to come into force in 2014, could oblige European insurers to hold extra capital against operations in countries with more lenient regimes, making it more difficult for those units to compete with local rivals.

Standard Life said UK profits dropped six per cent to £220m last year as economic uncertainty and volatility hit confidence.

But the decline was offset by cost cuts and a much stronger result in Canada, helping it to a 28 per cent rise in full-year profits to £544m.

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Chief executive David Nish said the results showed the company is on track to transform its “operational and financial performance”.

“While the economic backdrop remains uncertain, we are confident of the strong capital position of the group,” he said.

Standard Life also said former Yorkshire and Clydesdale Bank chief executive Lynne Peacock will join as a non-executive director on April 1. Ms Peacock left Yorkshire Bank last summer after seven years as CEO.

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