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Prudential posts capital ratio of 190 percent at end-June 2015

Published 01/19/2016, 12:33 AM
Updated 01/19/2016, 12:40 AM
© Reuters. The sun reflects in a window above the raised lettering of the former Prudential Assurance building in the City of London
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LONDON (Reuters) - British insurer Prudential Plc (L:PRU) said on Tuesday its solvency capital ratio was 190 percent on June 30, 2015 under new European rules for insurers.

The company's estimated Group Solvency II surplus at end-June, 2015 was 9.2 billion pounds ($13.11 billion), Prudential said in a statement ahead of an investor day.

A ratio of 100 percent shows insurers have sufficient capital to cover underwriting, investment and operational risks.

Prudential is the first British insurer to release details of its capital ratio under the Solvency II rules, which came into effect this month.

The insurer, however, did not disclose how the same solvency capital ratio fared at the end of 2015.

Analysts say insurers may cut back on dividend payments if their ratios fall below around 130 percent, even though regulators say 100 percent is an acceptable capital ratio.

Regulators are concerned, however, that investors could use the ratios as a buy or sell signal for listed insurers across Europe.

The Bank of England said in an open letter last week that "great care is required when attempting to draw comparisons on relative capital levels".

Prudential, which has been focusing on expanding its Asian business, has seen its shares falling 20 percent from a multi-year high reached last April.

Chinese and other global stocks have also fallen sharply in that time. However, the FTSE 100 index (FTSE) fell 17 percent over the same period.

In addition to concerns about the performance of Asian markets, analysts are also eyeing possible regulatory changes in the United States that could affect sales of annuity products by Jackson, the company's U.S. business.

Prudential also said it appointed John Foley as chief executive of Prudential UK & Europe and as an executive director on its board. He was appointed interim chief executive of the unit in October last year.

© Reuters. The sun reflects in a window above the raised lettering of the former Prudential Assurance building in the City of London

Mike Wells took over as chief executive of Prudential last year after running Jackson.

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