Prudential records 57% drop in fund flows

Prudential has today (8 November) released its interim results for the third quarter, which reveal that the business’ investment units have suffered a 57 per cent drop in net inflows in the first nine months of 2011.

With net flows for the three months to September standing at just £0.5bn, down almost four-fold from the £1.9bn recorded over the same period of 2010, total net inflows for the year to date came in at £3.4bn, less than half of last year’s £7.9bn over the nine months to September.

As reported by FTAdviser sister title Investment Adviser, fund management subsidiary M&G reported a new outflow for the third quarter of £288m, which dragged year-to-date inflows to £2.6bn, 58 per cent lower than last year’s figure of £6.2bn.

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The firm blamed the outflows on the ongoing crisis in the eurozone hitting investor confidence and prompting many to withdraw funds from funds that invest in the region.

Tidjane Thiam, Prudential’s group chief executive, said: “Inflows have remained strong particularly in the UK however we are seeing outflows on M&G’s European funds, reflecting the difficulties within the eurozone.”

Overall the Prudential business recorded an increase in profit for the first nine months of 2011 compared to 2010, with new business profit of more than £1.5bn representing a rise of 14 per cent on last year.

Total insurance sales stood at £2.7bn for the year to end September, up from £2.4bn in 2010, with the third quarter witnessing an increase from £809m last year to £880m.

Asia continues to be the core driver of sales growth, with new business profit for the continent excluding India rising 20 per cent from £588m to £709m, off the back of a 19 per cent growth in sales from £899m to a little less than £1.1bn.

UK sales and profit rose by four per cent and one per cent respectively and stood at £569m and £194m for the period.

Mr Thiam said: “Prudential has delivered strong results in the third quarter in a volatile and challenging environment.

“Our strong balance sheet, proactive risk management and our leading position in Asia have allowed us to continue to grow profitably.

“Our sizeable and unique presence in the growing and developing markets of Asia; our product, geographic and channel diversification; our risk management discipline across the Group; and the strength of our balance sheet position us well to continue to outperform over the medium term.”