Prudential Plc · LSE:PRU
Prudential — FY2018 Earnings Presentation
34 slides from Prudential's earnings presentation, Mar 19, 2019
Slide 1: Prudential plc 2018 Full Year Results
Prudential plc 2018 Full Year Results 1
Slide 2: 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 3: Agenda
Agenda Group Asia Deep Dive Summary 3 2018 FULL YEAR RESULTS
Slide 4: Group key highlights
Group Key highlights Growth Cash Embedded value + 11% FY2018 New business profit vs £ 4.0bn FY2018 Operating free surplus £ 50bn FY2018 Embedded value +11% vs FY2017 CER1 generation FY2017 AER2 Earnings Dividend Capital £ 4.8bn FY2018 IFRS operating profit + 5% Growth on prior year to 232% FY2018 So
Slide 5: Progress towards demerger
Group Progress towards demerger Completed the legal transfer of the HK business Completed reinsurance of £12bn UK annuity book to Rothesay Life Good progress with Part VII transfer HKIA announced as future Group-wide supervisor Raised £1.6bn of new subordinated debt Established new holdi
Slide 6: Prudential plc post demerger: ambition and operating principles
Prudential plc post demerger Ambition and operating principles Capturing structural Capturing structural opportunity opportunity • Long-term positioning in growing target markets • Creating financial solutions to meet distinct customer needs • Growing and diversifying distribution | Operating with d
Slide 7: Structural opportunity in the world's largest and fastest growing markets
Prudential plc post demerger: structural opportunity Prudential’s positioning in world’s largest and fastest growing markets Asian growth +1million US wealth 17.4 $ trillion Total advisor distributed assets1 People entering the working population every month2,3 Leading Pan Asian business Leading pro
Slide 8: Agenda
Agenda Group Asia Deep Dive Summary 8 2018 FULL YEAR RESULTS
Slide 9: Leading pan-regional franchise
Asia Leading pan-regional franchise Pru Asia footprint Life >600k Japan Eastspring Agents 127m China >300 1,416m Korea Life & asset management Taiwan distribution partnerships India3 51m 24m 1.4m 1,354m Top 3 Top 10 New Pru life customers8 Hong Kong Top 3 Laos 7m Top 3 Top 10 Position in
Slide 10: Favourable dynamics
Asia Favourable dynamics Population2 Market GDP1 GDP (m) penetration3 ($bn) growth1 (%) (%) Cambodia (2013) 16 0.1% 24 7.0% China (2000) 1,416 2.7% 13,457 6.6% Hong Kong (1964) 7 14.6% 360 3.8% India (2000) 1,354 2.8% 2,690 7.3% Indonesia (1995) 267 1.9% 1,005 5.1% Laos (2015) 7 0% 18 6.8% Malaysia
Slide 11: Unique asset benchmark
Asia Unique asset Individual medical reimbursement1 Eastpring2 Par Fund3 (FY2018 APE) ID MY SG VN TH CH IN JP KR TW HK Eastspring A 5.7 5.8 6.0 H&P Medical B 5.0 4.6 4.4 4.7 4.2 Life/Other 17% Benchmark C 28% 21% D E Fund F Group 11% G £1,044m H I J 3Y 5Y 3Y 5Y K Singapore Hong Kong 51% Critical Top
Slide 12: Clear set of strategic priorities
Asia Clear set of strategic priorities Strategic priorities Key Achievements Broaden flagship product range Upgraded EGS (HK); revamped PRUlink (ID) Enhance the Expand distribution and drive efficiency Renewed UOB; 9 new banca deals; OPUS core Collaborate with non-traditional partners DirectAsia & H
Slide 13: Delivering strong and broad-based financial results
Asia Delivering strong and broad-based financial results Double-digit growth in Value & Profit Broad-based and high-quality growth New 2,604m 14% Broad based High quality business £ + profit1 10 LBUs >10% NBP growth 70% NBP margin 151bn Eastspring AUM1 £ + 6% 9 LBUs margin increase + 8ppt margin +14
Slide 14: FY and Q4 2018 performance
Financial Update FY and Q4 2018 performance APE, £m (CER) NBP, £m (CER) Sales quality FY2018 2 + % + 14% Drivers of growth Regular premiums H&P mix +9% + 8% Favourable Mix, Operational3 & Others 12ppt + 94% 28% 9% 9% Regulatory & Economics 2ppt + Q3 17 Q3 18 Q4 17 Q4 18 + 1 ppts FY2017 FY2018 High Q
Slide 15: Balanced portfolio and strong relative performance
Asia Balanced portfolio and strong relative performance Multinational / regional peer comparison of NBP / EV Equity1 IFRS operating profit2 and market position (£m)3 IFRS operating profit CAGR Market position 1,064 2,164 +15% Eastspring 8% 8% +18% 12.2% Philippines, Taiwan, Thailand 21% 23% 9.8% Vie
Slide 16: Execution of strategic priorities
Asia Execution of strategic priorities Engagement Purchasing Servicing 9 new banca 1.4m AskPru E-submissions Channel partnerships New Zhong An ePOS & Claims Banca NBP >7,000 life Enhance the core +19% qualifiers customers1 Unit linked IDR2 1tn of >160 70% E submissions1 Jet claim Product focus APE a
Slide 17: Best-in-class health and protection capabilities
Asia Best-in-class health and protection capabilities Health & Protection H&P NBP +15% Individual medical reimbursement2 (FY2018 APE) % NBP (FY2018) margin +16pts1 H&P Medical Life/Other 21% 28% 17% 70% Group 11% £1,044m 2017 2018 51% Critical illness Credentials Opportunities Medical insurance3 >5m
Slide 18: Eastspring Investments
Asia Eastspring Investments Funds under management1,3, £bn Capabilities 4.1x Equity Operating in 11 Asian markets Total net inflows: £68bn 46.4 Quantitative solutions Alternatives2 10.2 Ability to work closely 22.0 with our clients Fixed income 151.3 35.7 Global Asset Allocation Strong value offerin
Slide 19: Country highlights – Hong Kong
Asia Country highlights – Hong Kong Structural trends Platform Execution Domestic Agency Ageing Significant Gov’t initiatives Unrivalled agency capabilities Continuous product PRUhealth critical population1 Protection gap2 upgrades & innovation illness multi-care >30% market share 7 43 52 $ 23bn V
Slide 20: Country highlights – Hong Kong
Asia Country highlights – Hong Kong Growth in value & profit Quality of new business Quality of inforce NBP (£m)1,2 MCH Domestic PHKL Value of inforce3 5x Average case 4.8 5.7 6.4 size (£‘000)3 Savings 38% No. of policies 176 122 298 62% 74% (‘000)3 74% H&P 51% H&P APE Mix3 26% 23% 25% 2013 2018 (+6
Slide 21: Country highlights – China
Asia Country highlights – China Structural trends Platform Execution Expansion into footprint Strategic opportunity 10.2% Growth in GDP1 (CAGR % 2017 – 2023) Access to: Access to: Approval for tax deferred pension 75% 78% Application for pension company Established WFOE7 of population China GD
Slide 22: Track record of profitable growth of provincial branches
China Track record of profitable growth of provincial branches Well-established branches forming the bedrock Key success factors for provincial branches 4 Top 7 branches1 CPL2 2013-2018 CAGR3 • Competitive pressure 59% • Selection of sub-branch locations • Investment in brand visibility 79% • Speed
Slide 23: Citic-Pru's expansion (2000-2018)
China Citic-Pru’s expansion (2000-2018) 2000 2005 2010 2015 2018 Penetration % (GWP) Penetration % (GWP) Penetration % (GWP) 0.0% 0.5% 0.6% Penetration % (GWP) Penetration % (GWP) Branches 1 Branches 12 Branches 19 0.3% 0.4% Cities / CSB1 81 Cities 1 Cities 32 Agents N/A Agents 12,477 SSO2 214 Agent
Slide 24: Citic-Pru's expansion – 2018
China Citic-Pru’s expansion – 2018 2018 2018 Presence in: 19 Branches 87 Cities Access to: > 80 % GWP 48k Agents >5k bank branches penetration (inc Hunan & Shaanxi) SARMRA 97% (85.75%) Access to: regular premium #1 in industry (% APE) > 70% population Planned expansion (Shaanxi) 2018 FULL YEAR RESUL
Slide 25: Citic-Pru's expansion – 2018
China Citic-Pru’s expansion – 2018 2018 2018 Province GWP (Rmb mn) CPL GWP MS% (RHS) Year Penetration 350,000 5% No Branch Established (% GWP) 300,000 1 Guangdong 2000 1.5% 4% 250,000 2 Beijing 2003 3.4% 3 Jiangsu 2004 0.2% 3% 200,000 4 Suzhou 2005 n/a1 150,000 5 Shanghai 2005 0.8% 2% 6 Shenzhen 200
Slide 26: Citic-Pru's expansion – Henan branch
China Citic-Pru’s expansion – Henan branch (2015-2018) 2015 2016 2017 2018 2019 Henan Province1 95m population Branch Established in Dec 2015 Penetration % (GWP) Penetration % (GWP) Penetration % (GWP) 0.0% 0.1% 0.2% CSB2 1 CSB2 6 CSB2 9 :Expanded APE RMB80m APE RMB188m APE RMB318m :Planned Agents 7
Slide 27: China: benefits starting to come through
China Benefits starting to come through New Business Profit (£’m)1,3 H&P APE (£’m) 1,4 2018 APE mix 2018 6x 137 5x 149 Non-Par Par 14 H&P + % H&P 45% 30 23 Par Linked 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Life gross written premium income (£’m)1,2 IFRS operating profit (£’m)1,4
Slide 28: Country highlights - Indonesia
Asia Country highlights - Indonesia Structural trends Platform Execution Enhancing distribution capabilities Broadening product range Population of1 267m Agency initiatives New launches Segmentation + 19% Revamped flagship RP unit linked product Insurance penetration2 1.9% ‘Elite’ agents APE of
Slide 29: Country snapshots
Asia Country snapshots Malaysia1 Singapore1 Thailand1 Vietnam1 +15% NBP +37% APE +29% NBP ~20,000 agents +22% IFRS +75% NBP +16% IFRS #1 (Conventional & Takaful) Successful partnership 23% regular premium launch Optimising market share 42% H&P Mix (APE) partnerships >1,000 branch access Optimising I
Slide 30: Agenda
Agenda Group Asia Deep Dive Summary 30 2018 FULL YEAR RESULTS
Slide 31: Compounding growth driving a growing earnings base
Asia Compounding growth driving a growing earnings base Renewal premium income1, £bn Life IFRS operating profit1,3, £m +18% +22% 10 year 10 year CAGR CAGR 1,982 269 MSCI Asia ex Japan2 12.9 2008 2018 11.1 9.2 Scale and diversification of portfolio driving value 7.7 across the cycle 6.6 5.6 4.1 4.7
Slide 32: High quality and diversified portfolio
Asia High quality and diversified portfolio High quality Compounding Diversified Hong Kong +33% +15% +12% 443 Indonesia 0% 416 16.4 14.6 FY18 2,164 329 Singapore 7% +22% £ m 194 Malaysia +9% 1,481 Renewal 11.1 12.9 182 149 Eastspring +6% 143 1,293 Vietnam +16% China +20% New 3.5 3.5 Thailand +5% Tai
Slide 33: Upscaling the profit curve across markets
Asia Upscaling the profit curve across markets IFRS Operating Profit (£m)1 IFRS profit contribution by entity2 2.3x £’m 2013 2018 Hong Kong 2,164 >400 Indonesia 1,898 182 2.3x 300-400 Singapore 1,654 Indonesia 171 200-300 Singapore 1,438 145 Malaysia 1,219 150-200 132 Eastspring 1,064 104 Vietnam 80
Slide 34: Summary
Asia Summary Channels Core products Customer segment • Delivering high quality profitable growth NEW Estate Robo- planning investing Consultants HNW • Well positioned to benefit from long-term Multi-care multi- stage medical Affluent structural opportunities EXISTING Agency Unit linked cover Critica