Prudential CEO to step down, company not bidding for AIG

Prudential shares soar after insurer beats forecast, ups dividend: "Shares in U.K. insurance giant Prudential Plc soared over 20% Thursday after the group reported better-than-expected results, lifted its dividend and said it won't bid for a division of American International Group.

PUK 8.13, +0.50, +6.5%) said it swung to a 396 million pound ($562 million) overall net loss in 2008 from a profit of 947 million pounds a year earlier, due to a loss on investments of 1.78 billion pounds, mainly from its U.S. operations.

However, the group said that operating profit using European embedded value accounting standards (EEV) rose 17% to 2.96 billion pounds, beating the consensus forecast of 2.56 billion pounds. Operating profit doesn't include any short-term investment losses.

It also announced the departure of CEO Mark Tucker, who will step down at the end of September after four-and-a-half years in the role. He will be succeeded by Chief Financial Officer Tidjane Thiam.

'Prudential is likely to be one of only a few insurers that can afford to raise its dividend as it has strong cashflow and a strong capital base,' said Societe Generale analyst Michael van Wegen, who added that Thiam has made 'a good impression' since joining the firm in April last year.

Shares in Prudential, which is not affiliated with the U.S. company of the same name, jumped 22% in London following the announcements. See London Markets for more.

The gains were also part of a broader rally for the insurers -- which are significant holders of corporate bonds -- following the Federal Reserve's plan to buy up to $300 billion of long-term Treasurys, which sent bond prices soaring.

Prudential said operating profit growth was strongest in Asia -- its largest market -- and the U.K., while earnings shrank in the U.S.
The company reportedly may replace American International Group as the sponsor of Manchester United Football Club, which has a strong fan-base in Asia.

However, CEO Tucker confirmed on a conference call with analysts that Prudential will not be bidding for AIA, the Asian arm of AIG, saying the potential terms simply didn't make financial sense for the group. Ruling out an AIA bid removes one of the worries that Prudential could overpay for the business and end up having to launch a massive rights issue, said Keefe, Bruyette & Woods analyst Greig Paterson."

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