UK's Pru hikes dividend as profit beats forecast

By @ibtimes on

Insurer Prudential will pay out a bigger-than-expected dividend on forecast-beating 2010 results, as it seeks to dispel lingering shareholder resentment over the group's bungled and costly bid for rival AIA last year.

Prudential, Britain's biggest insurer, said on Wednesday that investors would get a payout of 23.85 pence per share, up 20 percent and outstripping the 21 pence expected by analysts, and said it aimed to keep dividends rising, helped by strong growth at its flagship Asian operations.

The board will maintain a focus on delivering a growing dividend from this new higher base, it said in a statement.

Prudential shares were up 3.7 percent at 740.75 pence by 0855 GMT, making the company the biggest riser in the FTSE 100 share index, which was 0.5 percent lower.

Prudential has sworn off big acquisitions and set itself ambitious cash generation and profit targets in an effort to mend relations with investors, which were heavily dented last year by the botched $35.5 billion bid for AIA.

Analysts had expected the company to outline plans to benefit shareholders from its growing ability to generate cash.

Confirmation of the dividend increase came as Prudential said its 2010 operating profit rose 24 percent to 1.94 billion pounds ($3.13 billion), beating the consensus analyst forecast of 1.73 billion pounds.

The company was forced to pull its bid for AIA in June last year after shareholders baulked at the price, leaving it to shoulder 377 million pounds in costs and prompting calls for chief executive Tidjane Thiam and chairman Harvey McGrath to quit.

Prudential shares fell steeply on news of the AIA deal in March last year, but had recovered to pre-AIA levels by September, and have since risen a further 18 percent, outperforming a 15 percent increase in the Stoxx 600 European insurance share index.

(Editing by Will Waterman)

($1=.6194 Pound)

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