Headquartered in London, UK, Prudential Plc is a financial services company with the stated purpose of helping its customers to get the most out of life. The company offers life and health insurance products, as well as asset management services to over 17 million customers who are primarily based in Asia and Africa. Prudential has regional operating offices in Hong Kong (for Asia) and Nairobi, Kenya (for Africa). The company was founded in 1848 in Hatton Garden, London.
Prudential is a storied company and it started its journey at a time when Europe was engulfed in a wave of political instability. It was a perfect time to offer insurance services, with customers craving safety in a period of uncertainty. As well, insurance was a preserve of upper-class members of society, and there was an opportunity to offer inclusion to all other rungs in society. Prudential engaged in aggressive marketing strategies in its early days, with its army of direct sales agents earning the moniker ‘Man from the Pru.’ In the 1990s, Prudential worked hard to clean this reputation, but a tough business environment in the UK coincided with global expansion opportunities in Asia and Africa. The company has operations in 15 Asian countries as well as 8 countries in Africa as of February 2022.
Prudential has been a conservative M&A player, with recent notable deals being the purchase of Shield Assurance in Kenya and Express Life Company in Ghana. The company has always pursued organic growth by offering local innovative products such as providing insurance products for tropical diseases such as Malaria; terminal illnesses such as cancer; as well as accident income support.
Prudential Plc is listed on the LSE, trading under the ticker symbol PRU (LSE: PRU). PRU is a component of the FTSE 100. Prudential also has a secondary listing in NYSE (ticker: PUK) and the Hong Kong Exchange (ticker: 2378).
Prudential Stock History
PRU shares are quoted in British pence on the LSE. The stock traded around 900p at the turn of the millennium, but it entered into a downtrend that reached a trough of around 270p by February 2003. A steady recovery then followed that peaked above 660p by May 2007. The pressures of the 2007/8 Great Recession then weighed heavily on the PRU share price, which tumbled to below 180p by March 2009.
However, the PRU share price LSE posted an impressive recovery, embarking on a long-term rally that saw Prudential shares print their all-time rally above 1685p in January 2018. A period of market retracement then followed for the Prudential stock, and it was further overextended in 2020 due to the Great Lockdown. By March 2020, PRU had drifted to below 870p. The stock has since recovered and is well supported above 1200p as of February 2022.
Prudential Plc is a willing dividend payer, and in recent years has averaged annual yields of between 0.5% and 3.5%.
How to Trade Prudential Stock
Here are some of the factors to consider when trading PRU stock:
- Legislative and Taxation Issues
In recent years, the government has imposed stricter regulations on companies that offer financial services. The regulatory pressure is even greater for insurers, with governments advocating for affordable premiums, expanded coverage, and minimal exclusions or conditions. This increases the overall risk proposition of insurers. Additionally, Prudential has to face different forms of premium and franchise tax structures in the different jurisdictions it operates in.
- Economic Conditions and Monetary Policy
As a financial services company, Prudential stock is very sensitive to underlying economic conditions. Good economic conditions will tend to support higher PRU stock prices, whereas overall bad economic conditions will tend to trigger lower stock prices. As well, monetary policies such as higher interest rates that imply a strong economy will tend to inspire higher stock prices, while low-interest rates will weigh heavily on the PRU stock.
Prudential operates in a highly competitive industry where it has to face off with rivals that include established insurance companies, asset managers, and other firms that offer diversified financial services. Some of the company’s biggest competitors include MetLife, AIG, Progressive Insurance, and Personal Capital. Competition is based on pricing, nature, breadth of services, investment return, as well as the ability to offer locally oriented products.
- Periodic Earnings Reports
Prudential’s fiscal year runs from January 1st and December 31st. The company releases quarterly, semi-annual and annual reports to update shareholders on the health and performance of its business. Some of the important metrics investors look out for in Prudential earnings reports include total revenues, new business profits, operating profits, earnings per share, and dividend payout. Strong numbers will tend to support higher prices for the PRU stock, whereas weak numbers can pressure the stock lower.
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