TIDMPRU
RNS Number : 6450W
Prudential PLC
16 November 2017
16 November 2017
Prudential plc investor conference and business performance
update
Prudential plc ("Prudential") is holding a conference for
investors and analysts on 16 November 2017 at the InterContinental
Park Lane Hotel in London. The event will start at 8.00am UK time,
with presentations covering the Group and our life insurance and
asset management operations in Asia, the US, and the UK and
Europe.
Mike Wells, Group Chief Executive, said: "In today's
presentations our management teams will highlight the scale of the
opportunity ahead of us in our three key geographic regions and the
quality of our execution.
"In Asia, we are meeting the health, protection and savings
needs of a rapidly growing middle class. In the US, we are
addressing the savings and retirement income requirements of the
baby-boom generation, and in the UK and Europe we are focused on
the opportunity presented by the converging life assurance and
savings markets.
"The presentations will demonstrate the strength of our
positioning, our disciplined capital allocation and our
market-leading capabilities, which all combine to drive profitable
growth - and the ability of the Group to respond with pace to new
opportunities."
Business performance update(1)
The Group continues to benefit from powerful and enduring demand
drivers and its established platforms in Asia, the US, and the UK
and Europe. Over the first nine months of 2017, life insurance new
business profit(2) increased by 17 per cent to GBP2,469 million,
reflecting higher sales and more favourable economics. In asset
management, both M&G Prudential and Eastspring(3) have
delivered a positive performance, with combined third-party retail
and institutional net inflows of GBP12.8 billion, compared to net
outflows of GBP8.0 billion in the same period in 2016.
In Asia, our diversified portfolio of market-leading businesses
continues to benefit from the fast-growing demand across the region
driven by an increasingly affluent, growing population.
New business profit increased 15 per cent (24 per cent on an
actual exchange rate basis) to GBP1,616 million in the first nine
months, as a result of higher sales volumes, a richer health and
protection mix and the overall beneficial effect of higher interest
rates. The performance remains broad-based, with at least
double-digit growth in seven countries(4) , including China, Hong
Kong and Singapore, highlighting the strength of the regional
portfolio.
In the first nine months, APE sales increased by 5 per cent
overall (14 per cent on an actual exchange rate basis) and by 13
per cent (23 per cent on an actual exchange rate basis) excluding
our reduced participation in the Hong Kong broker channel. The
quality of this growth is underpinned by double-digit increases in
seven countries(4) , higher contributions from both agency and
bancassurance channels, and a 16 per cent uplift in health and
protection sales. Outside Hong Kong, we have delivered diversified
sales growth of 24 per cent.
Eastspring's external assets under management(3) increased to
GBP44.3 billion at 30 September 2017 (31 December 2016: GBP38.0
billion(5) ), reflecting year-to-date external net inflows(3) of
GBP2.8 billion and the impact of positive markets. Total assets
under management, including internal insurance assets and money
market funds, increased to GBP130.9 billion (31 December 2016:
GBP117.9 billion(5) ), benefiting additionally from a continuation
of strong inflows from our life operations.
In the US, Jackson's new business profit increased 17 per cent
(28 per cent on an actual exchange rate basis) to GBP619 million in
the first nine months, primarily reflecting the benefit of higher
interest rates compared to the prior year. Separate account assets
are up 13 per cent year-to-date to GBP125.5 billion (31 December
2016: GBP120.4 billion(5) ), driven by continued positive net flows
of GBP2.7 billion and favourable market movements in the period.
While the near-term outlook for industry sales of variable
annuities remains uncertain pending clarification of regulatory
reforms in the US retirement market, Jackson's market-leading
variable annuity product proposition positions the business well
for new longer-term growth opportunities in the sizeable fee-based
adviser market.
In the UK & Europe, M&G Prudential has delivered
external asset management net inflows of GBP9.9 billion in the
first nine months across a broad range of Wholesale and Direct, and
Institutional asset strategies. In addition, continued demand for
risk-managed solutions has driven life insurance APE sales growth
of 25 per cent over the same period, with new business profit up 31
per cent to GBP234 million. This includes APE sales growth of 32
per cent from PruFund-backed products, which generated net inflows
of GBP6.6 billion. M&G Prudential's total assets under
management(6) increased to GBP336.5 billion (31 December 2016:
GBP310.8 billion), including growth of 12 per cent in external
asset management business to GBP153.5 billion and 32 per cent in
PruFund assets to GBP32.6 billion.
M&G Prudential, formed by the combination of our UK
businesses, will leverage its scale, financial strength, and
complementary product and distribution capabilities to enhance the
development of capital-light, digitally enabled, customer-focused
solutions. The integration of these businesses is progressing
according to plan.
The estimated Group shareholder Solvency II surplus(7) at 30
September 2017 was GBP12.8 billion, equivalent to a cover ratio of
201 per cent (31 December 2016: GBP12.5 billion, equivalent to a
cover ratio of 201 per cent).
Outlook
Prudential's strategy remains centred on the clear structural
opportunities in each of its three key markets in Asia, the US, and
the UK and Europe. The Group's leading market positions, combined
with significant product and distribution capabilities, mean our
businesses are well placed for long-term growth and the continued
delivery of value for both customers and shareholders.
1 Year-on-year percentage changes are stated on a constant
exchange rate basis unless otherwise stated.
2 New business profit on business sold in the period, calculated
in accordance with EEV principles as defined in our Annual
Report.
3 Excludes Asia Money Market Fund investment flows and assets under management.
4 Excludes Laos where amounts are immaterial.
5 As reported (on an actual exchange rate basis).
6 Total assets managed by M&G Prudential include internal
insurance funds of GBP183 billion (31 December 2016: GBP174
billion), including PruFund-backed products.
7 The Group Solvency II surplus represents the shareholder
capital position excluding the contribution to Own Funds and the
Solvency Capital Requirement from ring-fenced with-profits funds
and staff pension schemes in surplus. The estimated solvency
position includes the impact of recalculated transitionals at the
valuation date, which has reduced the Group shareholder surplus
from GBP13.6 billion to GBP12.8 billion. The formal Quantitative
Reporting Templates (Solvency II regulatory templates) include
transitional measures without this recalculation.
Contact:
Media Investors/Analysts
Jonathan Oliver +44 (0) 20 7548 3537 Chantal Waight +44 (0) 20 7548 3039
Jonathan Miller +44 (0)20 7548 2776 Richard Gradidge +44 (0)20 7548 3860
William Elderkin +44 (0)20 3480 5590
Notes to Editors:
Investor conference
Today's investor conference is available to view via live
webcast from 8.00am UK time and the presentation materials can also
be viewed on the Group website from the same time. To register for
the webcast please follow the link below or visit the Group website
at www.prudential.co.uk.
Link to webcast:
http://www.investis-live.com/prudential/59de142115637311008541ca/hddh
Agenda
Time (UK time) Topic Speaker
From 07.30 Registration
08.00 - 08.20 Introduction and Group overview Mike Wells
08.20 - 08.40 Group financial update Mark FitzPatrick
08.40 - 10.00 Asia Nic Nicandrou, Lilian Ng, Guy Strapp
10.00 - 10.15 Break
10.15 - 11.30 M&G Prudential John Foley, Clare Bousfield, Anne Richards, Miguel Ortiz, Grant
Speirs
11.30 - 11.45 Break
11.45 - 12.45 US Barry Stowe, Chad Myers
12.45 - 13.30 Group Q&A Mike Wells and management team
From 13.30 Lunch
--------------- -------------------------------- -------------------------------------------------------------------
New business performance Q3 year to date
Actual Exchange Rate Constant Exchange Rate
------------------------------------------------------------- ----------------------------------------
Q3 2017 GBPm Q3 2016 GBPm Change % Q3 2016 GBPm Change %
------------------- ------------------- ------------------- ------------------- -------------------
New New New New New
Business Business Business Business Business
APE Sales Profit APE Sales Profit APE Sales Profit APE Sales Profit APE Sales Profit
----------- --------- -------- --------- -------- --------- -------- --------- -------- --------- --------
Asia(1) 2,788 1,616 2,454 1,301 14% 24% 2,660 1,408 5% 15%
US 1,301 619 1,148 485 13% 28% 1,252 529 4% 17%
M&G
Prudential 1,085 234 871 179 25% 31% 871 179 25% 31%
----------- --------- -------- --------- -------- --------- -------- --------- -------- --------- --------
Total
Group(1) 5,174 2,469 4,473 1,965 16% 26% 4,783 2,116 8% 17%
----------- --------- -------- --------- -------- --------- -------- --------- -------- --------- --------
1 The Q3 2016 comparatives exclude the contribution from the
sold Korea life business (APE: GBP77 million; NBP: GBP5 million on
an actual exchange rate basis).
M&G Prudential and Eastspring external funds under management
2017 GBPm 2016 GBPm
------------------------------------------------ --------------------------------------------------
Actual Exchange Rate Actual Exchange Rate
------------------------------------------------ --------------------------------------------------
Market and Market and
At Net other At At Net other At
1 Jan 2017 flows movements 30 Sep 2017 1 Jan 2016 flows movements 30 Sep 2016
-------------- ----------- ------ ------------- ------------ ----------- ------- -------------- ------------
M&G Prudential
Wholesale and
Direct 64,209 7,770 2,724 74,703 60,801 (7,195) 8,408 62,014
M&G Prudential
Institutional 72,554 2,172 4,039 78,765 65,604 (940) 9,476 74,140
-------------- ----------- ------ ------------- ------------ ----------- ------- -------------- ------------
Total M&G
Prudential(2) 136,763 9,942 6,763 153,468 126,405 (8,135) 17,884 136,154
-------------- ----------- ------ ------------- ------------ ----------- ------- -------------- ------------
Eastspring(3) 38,042 2,830 3,467 44,339 30,281 165 5,999 36,445
-------------- ----------- ------ ------------- ------------ ----------- ------- -------------- ------------
Total 174,805 12,772 10,230 197,807 156,686 (7,970) 23,883 172,599
-------------- ----------- ------ ------------- ------------ ----------- ------- -------------- ------------
2 The results exclude the contribution from PruFund products
(net inflows of GBP6.6 billion in the first nine months of 2017;
funds under management of GBP32.6 billion at 30 September 2017,
GBP24.7 billion at 31 December 2016). Total funds under management
including internal life operations were GBP336.5 billion at 30
September 2017, GBP310.8 billion at 31 December 2016.
3 The results exclude the contribution from internal life
operations and money market funds (net inflows of GBP5.5 billion in
the first nine months of 2017). Total funds under management
including internal life operations and money market funds were
GBP130.9 billion at 30 September 2017, GBP117.9 billion at 31
December 2016.
Solvency II capital surplus
The estimated change in Group shareholder Solvency II surplus
over the first nine months of 2017 was driven by operational
capital generation of GBP2.3 billion, partially offset by adverse
currency movements net of other market and non-operating impacts of
GBP0.8 billion and by payment of the 2016 second interim dividend
and the 2017 first interim dividend, totalling GBP1.2 billion.
Financial calendar
2017 full-year results: 14 March 2018
2018 half-year results: 8 August 2018
Basis of Preparation
Period-on-period percentage increases are stated on a constant
exchange rate basis unless otherwise stated. All amounts are
comparable to the nine months ended 30 September 2016 unless
otherwise indicated.
Average Rate(*) Closing Rate
---------------------------------- --------------------------------------
Local Currency : GBP Q3 2017 Q3 2016 % Change(**) 30 Sep 2017 30 Sep 2016 % Change(**)
--------------------- --------- --------- ------------ ----------- ----------- ------------
Hong Kong 9.94 10.81 9% 10.48 10.08 (4)%
Indonesia 17,013.41 18,547.39 9% 18,070.69 16,953.25 (6)%
Malaysia 5.54 5.69 3% 5.67 5.37 (5)%
Singapore 1.77 1.91 8% 1.82 1.77 (3)%
US 1.28 1.39 9% 1.34 1.30 (3)%
--------------------- --------- --------- ------------ ----------- ----------- ------------
* Average rate is for the 9 month period to 30 September.
** Change represents the appreciation (depreciation) of local currency against GBP.
The key economic assumptions are as follows:
Risk discount rate % Government bond yield(1) %
------------------------ ----------------------------
30 Sep 2017 30 Sep 2016 30 Sep 2017 30 Sep 2016
----------------------------------- ----------- ----------- ------------- -------------
Asia operations:
Hong Kong(2) 3.6 3.1 2.3 1.6
Indonesia(3) 10.9 11.1 6.6 7.2
Malaysia(3) 6.9 6.0 4.0 3.6
Singapore 3.8 3.4 2.2 1.8
US operations: Variable Annuity(4) 6.7 6.1 2.3 1.6
UK operations:(5) 4.8 4.3 1.8 1.3
------------------------------------- ----------- ----------- ------------- -------------
(1) For Asia and US operations the risk-free rates shown are
10-year government bond yields. For UK operations 15-year gilt
rates are shown.
(2) For Hong Kong the assumptions shown are for US
dollar-denominated business. For other business units, the
assumptions are for local currency-denominated business.
(3) As stated in our Half Year 2017 interim report (Note 13 in
the EEV basis financial statements), in order to reflect
Prudential's most recent assessment of the growth prospects of Asia
operations, we increased equity risk premiums in a number of
business units at 30 June 2017.
(4) For US operations the pre-tax expected long-term nominal
rate of return for US equities was 6.3 per cent at 30 September
2017 and 5.6 per cent at 30 September 2016.
(5) For UK business, single implied risk discount rates based on
the Solvency II yield curve are shown, mostly related to
with-profits business.
The Solvency II estimate at 30 September 2017 has been prepared
on a consistent basis with that set out in the 2017 Half Year
Financial Report under 'Additional Financial Information' Section
II (c), which should be read in conjunction with the 'Risk Factors'
also set out in the 2017 Half Year Financial Report.
About Prudential plc
Prudential plc and its affiliated companies constitute one of
the world's leading financial services groups, serving around 24
million insurance customers, with GBP635 billion of assets under
management (as at 30 June 2017). Prudential plc is incorporated in
England and Wales and is listed on the stock exchanges in London,
Hong Kong, Singapore and New York. Prudential plc is not affiliated
in any manner with Prudential Financial, Inc., a company whose
principal place of business is in the United States of America.
Forward-Looking Statements
This document may contain 'forward-looking statements' with
respect to certain of Prudential's plans and its goals and
expectations relating to its future financial condition,
performance, results, strategy and objectives. Statements that are
not historical facts, including statements about Prudential's
beliefs and expectations and including, without limitation,
statements containing the words 'may', 'will', 'should',
'continue', 'aims', 'estimates', 'projects', 'believes', 'intends',
'expects', 'plans', 'seeks' and 'anticipates', and words of similar
meaning, are forward-looking statements. These statements are based
on plans, estimates and projections as at the time they are made,
and therefore undue reliance should not be placed on them. By their
nature, all forward-looking statements involve risk and
uncertainty. A number of important factors could cause Prudential's
actual future financial condition or performance or other indicated
results to differ materially from those indicated in any
forward-looking statement. Such factors include, but are not
limited to, future market conditions, including fluctuations in
interest rates and exchange rates the potential for a sustained
low-interest rate environment, and the performance of financial
markets generally; the policies and actions of regulatory
authorities, including, for example, new government initiatives;
the political, legal and economic effects of the UK's decision to
leave the European Union; the impact of continuing designation as a
Global Systemically Important Insurer or 'G-SII'; the impact of
competition, economic uncertainty, inflation and deflation; the
effect on Prudential's business and results from, in particular,
mortality and morbidity trends, lapse rates and policy renewal
rates; the timing, impact and other uncertainties of future
acquisitions or combinations within relevant industries; the impact
of
internal projects and other strategic actions failing to meet
their objectives; the impact of changes in capital, solvency
standards, accounting standards or relevant regulatory frameworks,
and tax and other legislation and regulations in the jurisdictions
in which Prudential and its affiliates operate; and the impact of
legal and regulatory actions, investigations and disputes. These
and other important factors may, for example, result in changes to
assumptions used for determining results of operations or
re-estimations of reserves for future policy benefits. Further
discussion of these and other important factors that could cause
Prudential's actual future financial condition or performance or
other indicated results to differ, possibly materially, from those
anticipated in Prudential's forward-looking statements can be found
under the 'Risk Factors' heading in its most recent Annual Report
and the 'Risk Factors' heading of Prudential's most recent annual
report on Form 20-F filed with the U.S. Securities and Exchange
Commission, as well as under the 'Risk Factors' heading of any
subsequent Prudential Half Year Financial Report. Prudential's most
recent Annual Report, Form 20-F and any subsequent Half Year
Financial Report are available on its website at
www.prudential.co.uk.
Any forward-looking statements contained in this document speak
only as of the date on which they are made. Prudential expressly
disclaims any obligation to update any of the forward-looking
statements contained in this document or any other forward-looking
statements it may make, whether as a result of future events, new
information or otherwise except as required pursuant to the UK
Prospectus Rules, the UK Listing Rules, the UK Disclosure and
Transparency Rules, the Hong Kong Listing Rules, the SGX-ST listing
rules or other applicable laws and regulations.
This information is provided by RNS
The company news service from the London Stock Exchange
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