Prudential PLC (Prudential) reported deterioration in its insurance business in 1Q 09, primarily driven by weak performances from its Asian and UK businesses. However, the company’s asset management business recorded strong growth due to increasing fund inflows and a strong performance from the European sub-segment, M&G;Investments (M&G;). We believe the recent increase in stock price leaves the stock fairly valued given that…

Forecast contraction in the economies from which the company generates the majority of its premiums (the UK and the US) and volatility in global financial markets are expected to continue to impact performance in the near to medium term. Consequently, we expect investment losses to remain high in FY 2009. However, moderate growth in Asian economies is expected to provide some support to the company’s top-line. Moreover, Prudential has maintained a strong capital…

In January 2009, the IMF forecast the US economy to contract by 1.6% in 2009 and 2010, and the UK economy to contract by 2.8% in 2009 and grow at 0.2% in 2010. This contraction and realized/unrealized investment gains/losses are expected to continue to impact the company in the near to medium term, while moderate Asian economic growth should provide some support to top-line. We believe Prudential is fundamentally…