Prudential's boom has analysts scratching their heads

Prudential produced a strong trading update today, unveiling numbers which indicate the business is in good shape.

That left some analysts scratching their heads as to why the company had felt the need to pursue such a risky deal as the AIA transaction in the first place.

In the first five months of 2010 sales across the group were up 27% to £1.35 billion. The Asian business in particular is booming — sales rose 33% to £579 million.

Some critics of Thiam's $35 billion (£24.25 billion) pursuit of AIA say he would be better served by spending a fraction of that amount to build up Pru's own Asian operation rather than buying a competing brand.

Thiam said: "We have been consistent in our commitment to our strategy and the proposed acquisition of AIA was intended to accelerate this strategy."

The weakest part of the operation appears to Prudential's UK arm, most usually described by Thiam as a "source of capital".

UK sales ticked up 4% to £322 million, perhaps showing why the Pru thinks faster growth will come from Asia.

Panmure Gordon said in a note: "Despite the obvious corporate distraction of the doomed AIA deal, sales in April/May have improved from an already impressive first quarter. Management trust may take time to restore but the business at least remains on track."

Pru's shares lost 9p to 547p.