Pru UK profits drop 6% despite sales rise in Q1

Prudential's UK new business profit fell 6% in the first quarter of 2011, despite an increase in sales.

First quarter UK sales were driven 3% up to £199m by higher demand for onshore bonds and corporate pensions.

But profits for the quarter fell despite the surge, down 6% to £65m on Q1 2010.

The UK fall is against a backdrop of first quarter new business profit across the Group however, which was up 17% to £498m, with new business sales up 10% at £888m.

Prudential said the fall in its Q1 UK new business margin to 33% from 36% in the same period last year reflected lower sales of shareholder-backed annuities and higher sales of corporate pensions.

M&G, the insurer's fund management arm, also suffered over the period with retail investment business inflows down 10% on a year earlier at £1.3bn. 

The insurer said its UK focus remains on its "strengths in the with-profits and annuity market segments".

However sales of individual annuities were the biggest drag on the results, down 29% to £42m.

By comparison, sales of onshore bonds were up 30% compared to the first three months of 2010 to £43m, including with-profits bonds sales of £37m which increased by 26%.

PruFund made up 73% of with-profits bond sales, driven by customer demand for products offering smoothed investment returns and capital guarantees, Prudential said.

Unit-linked bond sales of £6m were 45% up on the first quarter of 2010, driven by PruDynamic, Prudential's risk-graded portfolio funds, the insurer said.

Corporate pensions sales of £78m were 30% higher than the same period last year.

Tidjane Thiam (pictured), group chief executive, said of the group-wide figures: "We have delivered good results in the first quarter of 2011, with double digit growth in both profits and sales against the very strong comparatives of 2010, itself a record year for Prudential on all metrics."