Prudential Plc · LSE:PRU
Prudential — Prudential Asia Investor Conference 2017
74 slides from Prudential's conference presentation, Nov 24, 2017
Slide 1: Asia Investor Meeting, 24th November 2017
MEETING Gah & 24th November 2017
Slide 2: Group
MEETING Gah & Group
Slide 3: 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 Prudenti
Slide 4: Agenda
Agenda 09.30 – 09.55 Introduction & Group Overview Nic Nicandrou & Mike Wells video 09.55 – 10.55 Asia overview Nic Nicandrou, Lilian Ng & Guy Strapp 10.55 – 11.15 Break 11.15 – 11.40 UK and US overview Raghu Hariharan 11.40 – 12.30 Summary and Q&A Nic Nicandrou & Management Team Lunch ASIA INVESTOR
Slide 5: Prudential Plc
Prudential Plc Providing financial security since 1848 Life insurance customers worldwide 25m Total funds under management £ 635bn Prudential enters its first African life insurance market 2014 The first UK life insurer to enter the China market. 2000 Prudential acquires M&G, founded in 1931 1999 PC
Slide 6: Premium franchises
Group Premium franchises Asia US UK Premier retirement income Well recognised brands with Leading pan regional franchise player strong track record In Asia since 1923 Founded in 1961 169 years of providing financial security 15m life customers with Top 3 4m life customers 7m customers position in 9
Slide 7: Clear strategy aligned to significant demand
Group Clear strategy aligned to significant demand Insurance penetration1 Mutual fund penetration2 Significant ASIA Penetration Penetration protection gap and investment needs of the middle class UK 7.5% Europe 75% 2.4% 12% US retirement advisor assets3 Transition of US Other ‘baby-boomers’ VA Wireh
Slide 8: Strategic priorities
Group Strategic priorities Leverage scale Accelerate Expand health & protection Asia Penetrate wealth Capture fee based opportunity Develop Deliver customer value proposition US Proactive risk management Customer led Enhance UK Enhance Solutions focused UK Capital light ASIA INVESTOR MEETING 8
Slide 9: Custodians of capital, active portfolio managers
Group Custodians of capital, active portfolio managers Active portfolio management Group earnings mix Asia earnings mix Eastspring IFRS operating IFRS operating profit, £m profit, £m 19% Singapore UOB 31% US Realic 20163 4,256 26% 33% 1,644 21% Indonesia US Elite Access 20087 Thanachart 41% Asia 17%
Slide 10: Disciplined execution, growing value
Group Disciplined execution, growing value Shareholders equity (EEV), £bn 40.5 39.0 32.4 29.2 24.9 22.4 18.2 19.6 14.6 15.0 15.3 11.9 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 HY17 Return on Embedded 15% 15% 14% 15% 18% 16% 16% 19% 16% 17% 17% 15% Value, %2 Dividend, pence per share £ 7
Slide 11: Long-term track record
Group Long-term track record IFRS operating profit1,2,5, £m New business profit1,2,3,4, £m Free surplus generation1,2,3,4, £m 3.9x 4.3x 5.4x 2,358 1,845 1,689 CAGR CAGR CAGR 1,615 2,044 +15% +16% +18% 1,862 1,406 1,257 1,186 1,220 1,504 1,150 1,407 1,001 1,101 1,024 899 1,149 917 806 1,013 740 616 8
Slide 12: Summary
Group Summary Significant opportunity underpinned by long term structural drivers Custodians of capital with proactive portfolio management Market leading capabilities, disciplined execution Clear strategic priorities Well positioned to deliver long-term profitable growth ASIA INVESTOR MEE
Slide 13: Asia
MEETING GUA 4 Asia 13
Slide 14: CEO perspective: Opportunity, Scale, Capability, People
Asia CEO perspective People Capability Opportunity Scale Industry ASIA INVESTOR 14 MEETING
Slide 15: Significant growth runway underpinned by strong structural trends
Opportunity Significant growth runway underpinned by strong structural trends Working age population1,2 Out of pocket healthcare spend4 +1m 42% a month 2.3bn Asia 12% 2015 9% 2.5bn 2030 US UK Growth runway Private financial wealth3 Insurance penetration5 +$4tr a year $78tr $53tr 2016 2021 1 United N
Slide 16: Leading pan-regional franchise
Footprint Leading pan-regional franchise Pru Asia footprint Life Asset Management 15m Top 3 China3 India4 Indonesia Philippines Pru life customers Position in 9 of 12 2.0% 4 2.7% 1 1.3% 1 1.4% 3 markets1 1,391m 1,327m 262m 106m Mutual fund Retail fund penetration8 manager ranking9 12% 1 Vietnam Thai
Slide 17: Strategic priorities
Strategic priorities Asia Accelerate Leverage scale Expand health & protection Penetrate wealth Create ‘best-in-class’ Accelerate Expand presence Enhance the core health capability Eastspring in China Broaden flagship product range Narrow mortality protection gap Strengthen and expand Grow into foot
Slide 18: Fast expanding capability set
Capability spectrum Fast expanding capability set STRATEGY PRODUCTS >600,000 39% Data Agents Repeat sales analytics DIGITAL Leverage scale + 10,000 Optical Character Bank branches Recognition Expand health & 9 12 DISTRIBUTION protection Top 3 position in of Life markets1 Pop-up Prudential Penetrate
Slide 19: Strategic priorities in motion
Strategic priorities in motion China Opportunity Financial performance CIRC Insurance penetration target of 5% by 2020 APE (3Q YTD) NBP (3Q YTD) IFRS (HY YTD) 37k 5-yr cumulative net new flows1 (2017-21) + Japan Agents 3.8x 4.3x 2.6x Rest of Other China forecast to account for APAC 45% of global net
Slide 20: Strategic priorities in motion: Eastspring
Strategic priorities in motion Eastspring Key distribution markets Singapore US & & Hong Malaysia Korea Taiwan Japan China EMEA Latam Kong Equity 1 Strengthen investment offering Fixed Income Products 2 Diversify investment styles Multi-asset EMD 3 Enhance distribution capabilities QIS / Alternative
Slide 21: 2017 Q3 trading update
Performance 2017 Q3 trading update Scale (per month) Performance, 2017 Q3 YTD CER 15,000 112,000 APE Ex HK broker + 13 % H&P APE + 16 % Rest of Asia (ex HK) +24 % Countries with at least double digit growth1 7 199,000 211,000 NBP + 15 % H&P NBP + 16 % >2 366,000 7 Double digit growth in Countries wi
Slide 22: Delivering from position of strengths
Delivering from position of strengths Customer Experience Digital Business Platform Operations Optimisation Agility Continuous intelligence Customised, friendly solutions Salesforce productivity Flexible and automated gathering Anytime, Anywhere Service effectiveness Rule-based decision making Innov
Slide 23: CITIC PRU – China: Accelerating value creation
CITIC PRU – China Accelerating value creation Extensive footprint Building sustainable scale Ahead on all fronts Agency: Building an active and performance 76% driven sales force CITIC PRU China GDP Footprint Bancassurance: proposition-led solutions to Ranking National JV/Foreign broaden and deepen
Slide 24: CITIC PRU – China: Extensive footprint - branches
CITIC PRU – China Extensive footprint - 18 branches Sichuan Hubei Population: 87.3m Population: 58.5m GDP/Capita: £3.6K GDP/Capita: £5.3k Liaoning Population: 43.8m GDP/Capita: £6.8k Hebei Population: 74.3m GDP/Capita: £4.2k Tianjin Population: 15.5m Beijing GDP/Capita: £11.0k APE Population: 21.7m
Slide 25: CITIC PRU – China: Building sustainable scale
CITIC PRU – China Building sustainable scale Agency: Disciplined Growth Recruitment APP 37,000 Consistently Active Agents +31% FNA on Xin-Yi-Tung +38% # of MDRTs +58% # of Agents Training APP Bancassurance: Scale and Quality Regular premium sales +77% Proposition-led solutions 2572,906283 Regular pr
Slide 26: CITIC PRU – China: Making it easy
CITIC PRU – China Making it easy E-claims solution Before 1 2 3 4 5 6 7 7 days (Hospital) 7 days (Customer - Hospital) 3 days (Customer - Insurer) 8 days (Insurer) Admitted to Report claims Payment / hospital Collect File an Claims Payment hospital discharge information application verification Serv
Slide 27: Pru Hong Kong: Fit for Growth platform
Pru Hong Kong Fit for Growth platform Drivers of Demand Comprehensive Platform Translating to value and 24% growth1 > 1.4x market agent productivity # earnings Onshore Channel of choice 7m population 23% p.a. Access to NBP growth^ IFRS Profits +24% p.a. +45% (2011-16) H1’17 Unique customer solutions
Slide 28: Pru Hong Kong: Drivers of demand
Pru Hong Kong Drivers of demand What consumers need Onshore demand1 Offshore demand2 51% 76% Retirement rely on advice face to face of target customers visited Saving Hong Kong past 12 months 27% 58% Health and used online insurance Protection come to Hong Kong to planning tool manage personal wealt
Slide 29: Pru Hong Kong: Making it easy
Pru Hong Kong Making it easy Real-time suitability validation Analytics-driven Next Best Offer Solutions for the digital customers Our promise – seamless customer experience ASIA INVESTOR MEETING 29
Slide 30: Customer solutions – making a difference
Pru Hong Kong Customer solutions – making a difference 45,000 units “I found I was fat-sensitive…. I learned to change my eating habits with the help of myDNA 70% made positive changes to their diet and dietitians... ” [Tiffany (age: 34)] lifestyle after using myDNA “I suffered from severe headache
Slide 31: Pru Indonesia: Building on success
Pru Indonesia Building on success The place to be Best in class agency management Sustaining future growth Below 30 50% Investing in agency workbench Prudential franchise: > 260m Themed recruitment #1 in both Conventional & Sharia population Muslim 87% # In-force Disciplined performance management 2
Slide 32: Pru Indonesia: Market-leading agency management
Pru Indonesia Market-leading agency management SEAMLESS RECRUITMENT 20 Days to 2 Days ONLINE TRAINING Capacity to train 5,000 new recruits per week +30,000 user IDs created since launch Agency workbench with modular solutions ASIA INVESTOR MEETING 32
Slide 33: Pru Indonesia: Enhancing customer experience
Pru Indonesia Enhancing customer experience PRUcheers Care at the moment of truth PRUcentres Getting closer to the customer Analytics-driven Pro-active reach Claims scoring model Enhanced training Quality assurance Bringing service to the customer +15% improvement in Claim TAT > 400,000 policies ser
Slide 34: Pru Singapore: Transforming customer experience
Pru Singapore Transforming customer experience Leveraging exclusive distribution Headroom for selected growth Stable profit and cash delivery Seeks face to face advice Professional agency: Growing manpower and 1,689 productivity Established strategic bank partnerships +12% p.a. 11 Singaporeans confi
Slide 35: Pru Singapore: Leveraging exclusive distribution
Pru Singapore Leveraging exclusive distribution +45% protection cover per policy 33% of industry’s agent recruits >70% of new recruits below age 30 >80% banca mix regular premium ASIA INVESTOR MEETING Internal data as of YTD Sep 2017; Market related statistics as of H1 2017 35
Slide 36: Pru Singapore: Next digital wave
Pru Singapore Next digital wave 1st Insurance chatbot with Real time information 24/7 available >50% Adoption rate since launch ASIA INVESTOR MEETING 36
Slide 37: Pru Singapore: Next digital wave
Pru Singapore Next digital wave 4th generation point-of-sales portal SmartData capture and fingerprint authentication Detailed quotation in just 3 minutes Instant underwriting outcome SMS to customers ASIA INVESTOR MEETING 37
Slide 38: Pru Malaysia: Optimising platform for growth
Pru Malaysia Optimising platform for growth xx Expand Insurance Lead Takaful Core proposition – Linked Protection PRUMuslim agents Holistic platform for growth Next-gen entrepreneurial agency Bespoke Takaful solutions Interactive FNA# – 1st in market Leading edge digital 2.2m customers 21k agency fo
Slide 39: Pru Scaling up: Diversified business portfolio
Pru Scaling up Diversified business portfolio Vietnam Philippines Cambodia PRUElite agents + 24% 91% 30% 33k +52% New recruit active rate 45% Regular APE from new New customers Protection cover premium mix products per policy PruCompanion: 1st in market Thailand Taiwan + 23% 0 APE growth 30% ILP mix
Slide 40: Summary: Delivering from position of strengths
Summary Delivering from position of strengths Position of strength Setting us apart Consistent, resilient delivery Customer experience for growth Customer-led innovative solutions Prevent, postpone & protect to enhance value proposition Adaptive capacity and disciplined choices Future-pr
Slide 41: Eastspring: Market opportunity
Market opportunity Eastspring Accelerate Potential in Asia Opportunities in China Asia AuM1 (£tn) China AuM1 (£tn) 2016-2021e CAGR 11% 2016-2021e CAGR 13% 3.8 1.9 2.3 1.0 2016 2021e 2016 2021e 9% 12% 43% 49% Asia as % in global AuM China as % in Asia AuM ASIA INVESTOR 1. From Cerulli reports; retail
Slide 42: Eastspring: Well diversified
Well diversified Eastspring Accelerate Total FUM £131bn Country mix Client mix Asset mix (Third party1) Alternatives 3% Malaysia 0.4% Others2 7% Money market 5% 6% Hong Kong Third party 7% 40% Taiwan (Retail & Institutional) Fixed income 10% Singapore 41% 11% China 13% UK Life 13% Japan 10% Asia Lif
Slide 43: Eastspring: Our priorities
Our priorities Eastspring Accelerate Strengthen offering in existing asset classes and diversify styles Deepen investment capabilities Develop strategic product partnerships to complement gaps Capture opportunities in China Enhance distribution and coverage Strengthen institutional capability Expand
Slide 44: Eastspring: Deepen investment capabilities
Deepen investment capabilities Eastspring Accelerate Our strength Our expertise Recent success Asia REITs £900 mn Operating in Quantitative Equity (Japan) FUM Raised2 10 Asian markets solutions IFC MCPP £380 mn (1st Asian Investor) Committed capital3 Ability to work closely Fixed income Alternatives
Slide 45: Eastspring: Enhance distribution and coverage
Enhance distribution and coverage Eastspring Accelerate In process of establishing a wholly foreign owned presence in China Capture opportunities Actively recruiting to establish onshore investment team in China Establish China client coverage Flagship institutional clients across Asia and Americas
Slide 46: Eastspring: Transform the way we work
Transform the way we work Eastspring Accelerate Best-in-class tools Improve our ability Common operating platform to scale at pace Agile ways of working TOM supports rapid growth Improved data quality Enhance risk management Strengthen investment oversight and control Uniform risk reporting ASIA INV
Slide 47: Eastspring: Record FUM and strong results
Record FUM and strong results Eastspring Accelerate Margin based on Funds Under Management1 (£bn) operating income 33bps HY2017 131 118 Cost/income ratio 55% 89 HY2017 77 PBT growth +20% HY2016-HY2017 IFRS profit 2014 2015 2016 Q3 2017 contribution to 8% 9% Asia HY2016 HY2017 UK/Jackson Life Asia Li
Slide 48: Compounding revenues
Asia Compounding revenues Prudential growth New & renewal premiums Life weighted premium income1,2, £bn CER Prudential customers4 4x 2x 15m 12.6 7m MSCI Asia 10.4 ex Japan3 2007 2016 8.8 Renewal 7.5 9.1 Prudential insurance 6.4 7.6 penetration5 5.6 4.8 6.6 4.0 5.5 20 3.6 4.7 3.1 4.1 3.5 + bps 2.5 2.
Slide 49: Compounding profits
Asia Compounding profits IFRS operating profit1, £m 2017 2x3 objective2 1,644 1,286 1,058 1,108 2x 959 757 579 2x 476 953 266 728 199 226 504 508 613 350 427 2H 237 285 1H 109 89 111 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 NBP 2013 2017 objective3 objective3 objective2 1. Co
Slide 50: Growing value
Asia Growing value Shareholders’ Equity EEV basis1,2, £bn 6.7x 20.2 CAGR 16.9 +21% 13.3 11.4 11.2 9.3 8.3 7.2 5.4 4.0 3.0 HY 2007 HY 2008 HY 2009 HY 2010 HY 2011 HY 2012 HY 2013 HY 2014 HY 2015 HY 2016 HY 2017 1 Comparatives have been stated on an actual exchange rate basis ASIA INVESTOR 2 As report
Slide 51: Long-term track record
Asia Long-term track record IFRS operating profit1,2,4, £m New business profit1,2,3, £m Free surplus generation1,2,3, £m 7.3x 10.7x 7.7x 553 953 CAGR CAGR 1092 CAGR +22% +27% +23% 425 728 821 613 344 660 303 504 508 290 427 229 488 486 350 194 402 285 334 151 239 284 124 194 198 76 68 112 142 89 HY
Slide 52: Key messages
Asia Key messages Structural trends anchor positive industry outlook Leading pan-Asian life and asset management franchise Clear strategic roadmap Proven ‘best-in-class’ execution capabilities Prudential is well positioned to drive shareholder and customer value ASIA INVESTOR MEETING 52
Slide 53: Update: UK
Update UK 53
Slide 54: M&G Prudential: Creating a simple, modern savings and investments business
M&G Prudential Creating a simple, modern savings and investments business Market trends Leading provider of savings and retirement income products Established 1848 Core strengths in with-profits and retirement Self-reliance for savings, investment and retirement Expertise in areas such as longevity,
Slide 55: M&G Prudential: Market Context
M&G Prudential Creating a simple, modern savings and investments business Market Context 1,2,3 +£0.9tn by 2023 Other4 Retail £1.2tn 337 Private Equity4 +£0.9tn Commercial property4 UK AUM £ billion AUM Customer-centric Year-on-year £ 7tn +£1.6tn by 2023 growth of 8% 2015-16 Institutional £4.6tn Simp
Slide 56: M&G Prudential Business Mix
M&G Prudential Business Mix Diversified across five customer groups, all contributing significantly AUM (9M 17) Customers Top 5 UK retail asset manager1 Investment 180k direct with scale in FI and solutions £35bn customers Providing scale in key funds asset classes UK customers Savings & Underlying
Slide 57: M&G Prudential Gross Flows
M&G Prudential Gross Flows Structural opportunity translates into strong traction across all customer groups Gross flows (£bn) UK customers 18% market share in life and pensions retail investments in H1 14.5 171 14.3 10.4 M&G gross sales up 45% 9M 17 vs 9M 16 FY 2016 9M 2016 9M 2017 European I
Slide 58: M&G Prudential: Long-term track record
M&G Prudential Long-term track record IFRS operating profit1,2,5, £m New business profit1,2,3,4, £m Free surplus generation1,2,3,4, £m 3.3x 1.9x 2.1x 751 741 CAGR 730 CAGR 706 711 CAGR +7% +13% 627 +8% 161 155 581 552 552 139 518 125 481 473 451 459 462 116 432 432 108 419 391 97 100 92 86 342 78 22
Slide 59: M&G Prudential Growth Strategies
M&G Prudential Growth Strategies Leverage combined strengths to drive growth in UK, European and global markets UK European Institutions customers customers Support retirement Broaden reach and Differentiated and flexible opportunity proposition capabilities Invest in intermediated and Respond to gr
Slide 60: M&G Prudential Mix by Asset Class
M&G Prudential Mix by Asset Class Breadth of M&G Prudential investment capabilities M&G Prudential AUM by asset class (%) Combining our wider range of investment capabilities to Multi-asset provide multi-asset solutions 30% Fixed A leading European bond manager with one of the income largest credit
Slide 61: Why We Are Transforming
Why We Are Transforming Environmental factors create need and opportunity Investing to grow the breadth and reach Becoming an externally-focused of our capital-light solutions for business, that puts the consumers, intermediaries customer at the centre and institutions of everything we do Capital Cu
Slide 62: Conclusion
Conclusion Uniquely positioned for growth in capital- light business – strong brands, scale, and investment capabilities Combination is about building a business that can better meet customer needs Driving asset growth through a diversified set of wrappers, offerings and channels Investing fro
Slide 63: Update: US
Update US
Slide 64: Jackson: Capabilities aligned to significant opportunity
Jackson Capabilities aligned to significant opportunity Median Net Worth by Age Cohort1 Key consideration for Retirement Investor $7.5tr Jackson Mutual Fixed Fixed index Variable 232.1 funds annuity annuity annuity 165.9 194.8 Guaranteed lifetime income (without annuitization) 105.3 Guaranteed d
Slide 65: Jackson: Capabilities aligned to significant opportunity
Jackson Capabilities aligned to significant opportunity Jackson Capabilities IFRS operating Profit VA market share1 (2016) Leading cost efficient player2 (32bps) 18% £2,048m Market leading fund performance & Separate account assets, $bn range3 162.0 Cumulative net flows $78.8bn Largest & most effici
Slide 66: Jackson: Capabilities aligned to significant opportunity
Jackson Capabilities aligned to significant opportunity Advisor Distributed Assets1 Capabilities (in $billions) Leading cost efficient player2 (32bps) Wirehouses $16tr National and regional B/D RIA Market leading fund performance & range3 Independent B/D $14tr Largest & most efficient wholesale Inde
Slide 67: Jackson: Capabilities to succeed in the advisory market
Jackson Capabilities to succeed in the advisory market Long-term success in the advisory world will require more than just developing desirable products, it will require investment in several different areas over multiple timeframes Product launches Changing the Narrative New Selling Agreements Tech
Slide 68: Jackson: RBC & Cash Remittance History
Jackson RBC & Cash Remittance History RBC & Cash Remittances (~$4.3 billion total over period) ASIA INVESTOR MEETING 68
Slide 69: Jackson: Long-term track record
Jackson Long-term track record IFRS operating profit1,2,3, £m New business profit1,2, £m Free surplus generation1,2, £m 3.1x 5.6x 4.6x 551 CAGR 544 CAGR 1,073 CAGR 436 +12% 484 +19% +17% 456 876 376 371 846 411 401 391 311 311 298 681 288 315 616 235 258 459 190 357 175 318 219 94 89 192 199 100 HY
Slide 70: Jackson: Superior Operating ROE
Jackson Superior Operating ROE 35% Jackson continues to return well above the cost of capital as well as significantly 30% above industry ROEs 25% Well hedged VA book coming into 2008 crisis means that profitability of back 20% book is intact 15% Post crisis pricing environment has been favora
Slide 71: Summary
Summary Americans need guaranteed income more than ever DOL has accelerated an industry evolution This evolution extends across both distribution and products Investment freedom is key to the variable annuity value proposition Product design matters Jackson’s discipline continues to deli
Slide 72: Summary
MEETING Gah & Summary
Slide 73: Group Summary
Group Summary Significant opportunity underpinned by long term structural drivers Custodians of capital with proactive portfolio management Market leading capabilities, disciplined execution Clear strategic priorities Well positioned to deliver long-term profitable growth ASIA INVESTOR MEE
Slide 74: 2018 Investor Conference, Singapore, November 2018
2018 Investor Conference, Singapore November 2018 ASIA INVESTOR MEETING
Prudential — Prudential Asia Investor Conference 2017 on 6ix