Prudential Shifts China Business to Lower Risk

Int’l Desk: Prudential is shifting its China business away from interest rate sensitive savings products, and that move is helping lower its cost of equity. The change also makes it less likely the company will need to put more capital into its Citic Prudential Life joint venture, as it did in late 2023, according to a Jefferies Equity Research note.

The strategy involves replacing capital heavy non-participating savings policies with participating products that carry less risk. By the end of July, participating products made up 80 percent of gross written premium volume among Prudential’s five largest offerings. That compares with 40 percent in the full year 2025 and just 15 percent in 2024.

Lower risk comes with tighter margins. The shift is expected to create a group level margin headwind of about two percentage points. First half overall margin is projected near 32 percent, down from roughly 45 percent in the same period a year earlier.

Elsewhere in Asia, the company still saw solid growth. New business profit in Hong Kong rose by double digits in the first quarter, even as industry premiums fell three percent. Five month sales in Thailand climbed 41 percent to 157 million dollars, while six month sales in India increased 11 percent to 139 million dollars. Earnings forecasts also reflected the effect of an Indian initial public offering on Eastspring operating profits.