Slide 1: Prudential plc Debt investor pack - H1 2020
Prudential plc Debt investor pack -H1 2020 11 August 2020 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: Our business model
Group Our business model Why? Who? What? How? Our Purpose Customers Products Distribution Help people get the most out of life Asia Africa Health & Protection insurance Agents Banks Giving them the freedom to face the future with confidence Broad income bands Savings Value-added (Emerging, mass, aff
Slide 4: Key take-aways
Group Key take-aways 1 Resilient HY20 results despite challenging and volatile environment. Business is adapting and evolving well 2 Intention to fully separate Jackson 3 Group to be focused exclusively on high growth Asia & Africa businesses 4 Long-term structural demand drivers remain intact 5 Wel
Slide 5: HY20: Drivers of financial performance
Group HY20: Drivers of financial performance Asia: Quality + diversification COVID-19 disruption + response Macro volatility + resilience 2019 HY20 91% 95% 87% 3600 3 US10Y 3400 APE regular Retention IFRS life income fee + 2.5 3200 premium rate insurance margin 2 3000 Others Others 2800 1.5 Link HK
Slide 6: HY20 financial highlights
Group HY20 financial highlights Asia NBP Asia embedded value Group LCSM2,3,4 45% - 37.3bn 334% Asia total -6% Asia ex HK $ HY20 NBP vs HY19 CER1 FY19: 309% Asia earnings JNL RBC5 Group RoE + 14% > 425% 21% Growth on prior year IFRS FY19: 366% HY20 Operating return on equity6 operating profit1 to $1.
Slide 7: Strategic and operational delivery during the COVID-19 affected period
Group Strategic and operational delivery during the COVID-19 affected period Strategic Integrating Technology as Pulse “business as usual” JNL reinsurance & equity 90%1 of our products in Asia 8.1m installs3, up from 1.3m transactions completed can now be sold virtually reported at FY19 result
Slide 8: New dividend policy
New dividend policy New dividend policy aligned with revised Group strategy New dividend policy To apply with immediate effect Reflecting the Group’s capital allocation priorities, dividends will be determined primarily based on Asia’s 2020 total dividend: c16.10 cents per share operating capital ge
Slide 9: Path to full separation and divestment of Jackson over time
Path to full separation and divestment of Jackson over time Next steps and capital structure considerations Path to full separation and divestment of Jackson (commence separation by way of a minority IPO1) Debt Pre Athene management separation Minority IPO1,2 Sell-downs1 transactions (US) return of
Slide 10: Post-separation investment case
Group Post-separation investment case Key attributes Attractive shareholder proposition Enduring, multi-decade structural 1 growth levers Diversification across Asian 2 markets Focus on capital- Resilient, predictable & Leadership positions in chosen 3 distribution channels & products efficient H&P
Slide 11: Key take-aways
Group Key take-aways Strategic priority: drive Asia growth Clear path to full US separation and divestment over time COVID-19 acting to disrupt new sales, in-force business resilient, quality maintained Robust local and group capital positions, capital generation in-line with expectations New divide
Slide 12: Debt Investor pack - H1 2020: Financial materials
Debt Investor pack- H1 2020 Financial materials 2020 HALF YEAR RESULTS 12
Slide 13: Selected performance metrics
Group Selected performance metrics $m HY19 (CER1) HY20 Change % Embedded Value ($bn) 39.22,3 37.34 (5) New business profit 1,673 912 (45) Sales disruption EEV operating profit6 2,853 2,036 (29) Asia Operating FSG5,6 871 988 13 Resilient in-force Adjusted IFRS operating profit6 1,526 1,733 14 Shareho
Slide 14: On track to deliver annual central expense savings of $180m
Group On track to deliver annual central expense savings of $180m a year from start 2021 Group IFRS result, $m HY19 HY20 Change (CER)1 % Completed plans to deliver $160m annual Asia 1,526 1,733 14 savings from 1/1/21 US 1,572 1,266 (19) Total segment profit continuing operations 3,098 2,999 (3) Grou
Slide 15: Strong liquidity position/continuing to support Asia growth
Group Strong liquidity position/continuing to support Asia growth Movement in holding company cash $m HY19 HY20 Group continues to support Asia strategic growth Hold co. cash period start 4,121 2,207 Net remittance to Group Jackson is not currently expected to pay regular Asia excluding ICICI Pruden
Slide 16: Robust and resilient LCSM capital generation supporting investment in growth
Group Robust and resilient LCSM capital generation supporting investment in growth HY20 movement in estimated LCSM shareholder LCSM shareholder surplus estimated capital surplus1, $bn sensitivities1,4,5,6 Cover ratio Impact on solvency ratio 31 December 2019 2 9.5 309% HY20 estimated surplus1,3,4,5
Slide 17: Medium term bond maturity profile
Group Medium term bond maturity profile Balanced call date/maturity profile EEV, IFRS Equity & Debt at amortised cost, $bn (As at 30 Jun 2020) Facilitates group debt management Prudential plc: debt maturity schedule2, 30 June 2020 Maturity Next Call Date Callable Currency Coupon Amount (m) Type 4.6
Slide 18: Recent rating summary
Group Recent rating summary Senior debt ratings • “The rating affirmation reflects Prudential Asia’s strong financial profile and Moody’s view that the sale of Jackson is not expected to have any material impact on the Asian operations, given that the operations are run separately, or to the ` group
Slide 19: GWS progress and timeline
Group GWS progress and timeline • On October 21, 2019, the date of the M&G demerger, the HKIA has assumed the role of Prudential’s group-wide supervisor and Prudential ceased to be subject to Solvency II regulation. − Ultimately, Prudential plc will become subject to the HKIA Group Wide Supervision
Slide 20: IAIS Instrument Guidelines
Group IAIS Instrument Guidelines Financial instruments criteria for Tier 1 and Tier 2 Paid-Up capital Tier 1 Limited Tier 2 Paid-Up Subordinated to policyholders and other non-subordinated As an Internationally Active Subordination Subordinated to policyholders, other non-subordinated creditors1 c
Slide 21: Prudential plc - H1 Debt pack: Business Unit detail
Prudential plc -H1 Debt pack Business Unit detail 2020 HALF YEAR RESULTS 21
Slide 22: Asia: Growth, diversification and resilience
Asia Growth, diversification and resilience Regular premium (% of APE) Renewal premiums ($m)2 IFRS operating profit, $m +6% Recurring premium 91% Sticky 9,702 Hong Kong +21% business model business 9,115 Singapore +20% HY19 HY20 HY20 Product mix (% of NBP) Insurance margin ($m)2 Indonesia (1)% 1,733
Slide 23: Asia: Resilient, broad-based in-force growth drives IFRS operating profit
Asia Resilient, broad-based in-force growth drives IFRS operating profit IFRS operating profit, $bn Insurance margin & fees Strong market contributions, drive life IFRS income2 at scale +14% 1.7 HY20 IFRS operating profit 0.1 9% 1.5 +10% % growth3 $m Eastspring 0.1 8% Hong Kong +21% 412 4% Singapore
Slide 24: HY20 new sales reflect COVID-19 related disruption
Asia HY20 new sales reflect COVID-19 related disruption APE sales, $bn New business profit, $bn 2.5 1.7 Asia Asia 1.7 (34)% 0.6 1.4 ex HK ex HK 0.9 (45)% 1.3 (12)% Hong 1.1 0.5 (6)% Hong 1.1 Kong Kong 0.4 (64)% 0.4 (67)% HY19 HY20 HY19 HY20 (CER)1 (CER)1 New business APE trends driven by timing of C
Slide 25: 11% operating RoEV in challenging new business environment
Asia 11% operating RoEV in challenging new business environment Movement in embedded value, $bn1 0.1 41.2 1.0 (0.4) 39.2 0.9 37.3 EEV Operating return $2.0bn, RoEV 11%2 (3.0) (0.5) FY19 closing NBP In-force return Asset management HY20 post Net remittances Non operating FX HY20 closing operating 11%
Slide 26: Compounding in-force drives OFSG supporting higher underlying remittances
Asia Compounding in-force drives OFSG1 supporting higher underlying remittances Renewal premiums, $m Operating FSG, $m1 Remittances, $m +6% +13% 988 871 Asset 126 10% management 115 ICICI Prudential 249 proceeds 9,115 9,702 In-force 1,075 1,160 8% return Net 400 remittances 329 HY19 HY20 New busines
Slide 27: US IFRS: resilient operating performance
US IFRS: resilient operating performance US IFRS result, $m HY19 HY20 % Fee 1,601 1,596 0 Fee income stable in volatile market conditions Spread 298 273 (8) Other income/expenses, incl. ordinary DAC (534) (581) (9) Core administration cost ratio broadly flat at 35bps1 Sub Total 1,365 1,288 (6) DAC d
Slide 28: Resilient new VA sales, expected reduction in FA/FIA sales following repricing
US Resilient new VA sales, expected reduction in FA/FIA sales following repricing New APE, $bn New business profit, $bn 1.1 1.0 (9)% 0.6 QoQ Growth 1% Variable Annuity 0.3 (45)% 0.5 (incl. EA) 0.2 (45)% FA+FIA (17)% (16)% Wholesale (38)% (83)% 1Q20 2Q20 HY19 HY20 HY19 HY20 VA sales stable over HY20,
Slide 29: Resilient statutory performance in volatile macro conditions
US Resilient statutory performance in volatile macro conditions US statutory surplus & RBC ratio development1, HY20 ($m/%) 366% >400% +24%p >425% Hedging performed as expected Reinsurance transaction added 69%p to RBC ratio 500 809 RBC cover ratio >425%2 1,130 587 (60) 6,261 1Q20 general account sal
Slide 30: High quality asset exposure, credit risk reduced
US High quality asset exposure, credit risk reduced Shareholder cash & invested assets, $bn Shareholder cash & invested assets, Corporate bonds, by rating $bn1 by asset class, $bn 78.1 <BBB 3% <BBB (25%) Derivative assets, other 3% Policy loans 58.5 Other gov. Sovereign Corporate bonds BBB A & above