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Prudential shares soar as financial position is strengthened

The Prudential has today announced a £1.1 billion cash injection to the company reserves via an asset sale in Taiwan and the receipt of future income from it's with profits fund. There had been severe fears in the market that companies such as Prudential would struggle to cope with any further downturns in the UK and worldwide stock markets but these fears seem to have been allayed, at least in the short to medium term.

The finance director of Prudential confidently boasted that "we could withstand a great depression every year for the next 10 years" which is a very upbeat statement. Shares in the company increased by over 10% as investors were boosted by this sudden improvement in financial stability and are looking for others in the sector to take similar action.

Whether this is a turning point for the insurance sector as a whole remains to be seen, but Prudential shares have responded very positively and many of the concerns which had been overshadowing the company for some time have suddenly disappeared. The comment regarding a "great depression" may have been used to express the company's strength at the moment but comments such as this seem to be focusing investor minds on that very difficult period for the US and the worldwide economies in the 1930s. Don't mention the D word!

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