When I think of life insurer Prudential (LSE: PRU) (NYSE: PUK.US), two factors jump out at me as the firm’s greatest strengths and top the list of what makes the company  attractive as an investment proposition.
1) Expansion in Asia
Prudential’s CEO reckons Asia is at the heart of the firm’s future prospects. So, it’s satisfying to see the full-year results report a 16% up tick in operating profits in the Asia region. Around 34% of operating profit now comes from Asia, which is enough to make growth there significant and exciting for Prudential’s investors.
The firm is tapping into a growing demand for protection products from the rapidly expanding middle class in the region. The directors think the Asian business is capable of delivering long-term value for shareholders and the perky profit-growth figures that the firm is throwing out seem to underpin that prediction.
2) Steady growth in revenue
When it comes to monitoring Prudential’s financial performance, one indicator that it’s hard to argue with is revenue growth:
| Year  to December | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Revenue  (£m) | 20,299 | 24,568 | 25,706 | 29,113 | 30,502 |
Consistent upwardly moving revenue is essential for any long-term growth proposition. Firms of any shape or size can only grow profits by a finite amount by sharpening up operations and cost cutting. In the end, new business is needed and one indicator of that is revenue-growth. However, such growth needs to be at a rate above price inflation for the measure to be meaningful.
The challenge going forward is to grow profits and cash flows along with revenue.
What now?
Prudential is performing well in Asia but it’s worth bearing in mind that the firm operates in a cyclical sector. It’s best to consider growth expectations within the frame of such cyclicality.