Prudential began to justify last October's controversial £1 billion rights issue yesterday with a resounding fullyear results, including a turnaround in its UK operation after two bad years.
Overall, Prudential achieved profits were 39 per cent ahead of 2003 at £ 1.12 billion, taking its shareholders' funds to £8.6 billion.
A combination of new sales and a worldwide stock-market recovery raised Prudential's funds under management by £22 billion to £187 billion.
At home, the M&G packaged investment subsidiary delivered an underlying profit contribution of £100 million, 57 per cent up on 2003.
Prudential's ambitious operations in Asia pushed its achieved profits from new business 19 per cent higher. In the US, it continued to outperform the market returning $120 million (£63 million) to the group.
"Prudential has built strong positions in three of the most attractive savings markets in the world," said Jonathan Bloomer, chief executive.
"In 2004, each of our three regional insurance businesses delivered double-digit growth in sales and profits."
In the UK, he added, the market is starting to recover after three years of decline, with a 40 per cent rise in achieved profits from new business.
Despite this turnaround, a final dividend of 10.65p gives shareholders only a cautious increase of three per cent on the year, allowing for the effect of the rights issue. The total pay-out is still covered no more than 1.2 times by modified statutory earnings after tax. Up 1.3/4p yesterday to 4861/2p, the shares yield 3.3 per cent.
"We intend to maintain our current dividend policy," Mr Bloomer said. "With the level of dividend growth being determined after considering the opportunities to invest in those areas of our business offering attractive growth prospects, our financial flexibility and the development of our statutory profits over the medium-to-long term."
The results included an exceptional charge of £ 120 million, largely to account for customers in the UK and Asia halting their pension payments earlier than expected. There was also a £34 million charge for UK regulatory costs.
Looking ahead, Prudential said it expects UK sales to grow by about ten per cent this year. It is targeting a 14 per cent internal rate of return on sales by 2007, against 12 per cent in 2004.
Mr Bloomer also said he expects Prudential's Asian businesses to accelerate their sales growth this year. Last year, it slowed slightly to 14 per cent.