Prudential Plc · LSE:PRU
Prudential — Investor Presentation (September 2021)
44 slides from Prudential's investor presentation, September 2021
Slide 1: Proposed Equity Raise
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Slide 2: Disclaimer
No representation, warranty or undertaking, express or implied, is made herein by Prudential or its directors, supervisors, management, employees, agents, affiliates, advisers or representatives (collectively, the “Representatives”) in respect of the fairness, reliability, completeness or accuracy o
Slide 3: Deal summary
Deal summary 5% primary equity raise in Hong Kong Item Description Issuer • Prudential plc (HKEX: 2378, LSE: PRU.L, SGX-ST: K6S) • Main Board of the Stock Exchange of Hong Kong (“SEHK”) Listing venue – Hong Kong-listed shares are fully fungible with London-listed shares HKPO Maximum Offer Price • HK
Slide 4: Leading pan-Asia & Africa focused life & health insurer and asset manager
Leading pan-Asia & Africa focused life & health insurer and asset manager Why? Who? What? How? Our Purpose 17m customers c.100 new and revamped Multi-channel distribution products in 1H21 We help people get the most out of life We make healthcare Large Pan- Expanding Asian footprint business in Afri
Slide 5: Compelling investment case
Compelling investment case Core characteristics Distinctive shareholder proposition Business model aligned to structural growth drivers 1 Set to deliver long Growth rates of NBP are Diversification across Asia term growth expected to substantially 2 & Africa with H&P focus outperformance exceed GDP
Slide 6: Track record of consistent growth
Track record of consistent growth Prudential Asia has delivered compounding growth across all metrics New business profit (AER)1,3,5, $m IFRS operating profit (AER)2,3,6, $m 2.2x 29% 4.1x 14% 3,667 10Y CAGR 10Y CAGR 8% 15% 2,201 1,729 1,969 1,176 1,011 912 895 FY10 FY20 HY20 HY21 FY10 FY20 HY20 HY21
Slide 7: Growth is underpinned by rising unmet consumer needs
Growth is underpinned by rising unmet consumer needs External megatrends create a long runway for future growth Low levels of insurance cover Significant need for protection Life premiums per capita1, $m Penetration1, % of GDP Out of pocket expenditure4 UK 3,383 UK 8.0 Asia health & protection gap2
Slide 8: Well positioned for further long-term profitable growth
Well positioned for further long-term profitable growth Diversified pan-Asian franchise, with leading presence in markets with favourable macro backdrop HY21 IFRS Life Eastspring Insurance Total health GDP growth adjusted position1 position5 penetration6 protection forecast8 operating gap7 profit Ma
Slide 9: Distinct competitive advantages
Distinct competitive advantages 1 Mainland China: Access to nearly whole of China 5 Pulse: Compelling digital strategy All-in-one, GDP & personalised and >80% on-demand GWP1 AI-powered app Engage Onboard Fulfilment 2 India: Top 3 Life and Asset Manager2 6 Agency: Leading agency force across the regi
Slide 10: New business profit drives embedded value growth
New business profit drives embedded value growth Two-thirds of embedded value growth generated by NBP Increase in Life Embedded Value driven by NBP 2.1x 7.9 2.8 43.2 16.2 (2.1) Consistent positive experience variances 20.1 reflecting prudent increase in assumptions 70% EV from NBP from H&P 2015 clos
Slide 11: Capital is allocated to maximise shareholder value
Capital is allocated to maximise shareholder value Compounding capital generation and strong record of delivering superior returns Proven capital management framework Consistent strong returns Operating return on IFRS shareholders’ equity(1) Meeting central costs and dividend 30% Disciplined 27% 26%
Slide 12: Diversified pan-Asia portfolio
Diversified pan-Asia portfolio Balanced sales and in-force business mix PCA financial performance by segment Growth China New Business Adjusted IFRS JV mkts $m (CER)1 Profit Operating Profit EEV for LT Business4 New Business Profit, 1H21 1H21 1H20 1H21 1H20 30- Jun-21 31- Dec-203 Sing. HK Malaysia M
Slide 13: Well placed to deliver growth for our investors
Well placed to deliver growth for our investors • Leading positions in key high growth markets and segments • Breadth of product and distribution – digital, agents, banks – to capture growth opportunity • Enhancing capabilities to build on substantial competitive advantages • Clear capital alloc
Slide 14: Supporting Materials
Supporting Materials
Slide 15: Our Strategic Themes and Growth Initiatives
Our Strategic Themes and Growth Initiatives
Slide 16: A clear, purpose-led strategy to drive growth
A clear, purpose-led strategy to drive growth Key objectives Focus on China, India, Indonesia and Thailand Grow H&P by providing access to affordable health Delivering Position Eastspring to lead in Asia & drive ESG agenda Profitable Growth & Social Impact Our Objectives Make it easy for cus
Slide 17: Mainland China
Mainland China Leveraging strong strategic platform Distinct strengths Execution (Size of bars represents actual in $m; XX% indicates YoY growth) H&P: 26% Banca: Agency: Par: 3% PRODUCT CHANNEL 47% 53% Well Linked: 17% diversified +29% +45% -5% Traditional: APE businesses 54% NBP by channel NBP by p
Slide 18: Mainland China: Our City Cluster Model
Mainland China Our “City Cluster” Model CPL GWP CPL GWP CPL Banca GWP Mix %2 Agency Citic-Prudential Life (CPL) GWP, $bn1 CAGR Market Share % Channel3 Channel3 (1H16- China May-21 # of # of CPL 1H16 # of Agents 1H21) Market YTD Partners6 Outlets 3.2x $2.2bn $2.0bn Rest 41% 27% 54% 0.09%4 0.32%4 7,37
Slide 19: India
India Strong performance in both life and asset management ICICI-PRU Life: Market leading franchise with strong momentum ICICI-PRU AMC: Top-3 player with diversified distribution • Strong YoY rebound for APE (+33%) and NBP (+41%) in 1H21 supported • Multi-channel distribution – retail customer Retai
Slide 20: Indonesia
Indonesia Resilience supported by broadening and strengthening capabilities Distinct strengths Execution • Total new policies up +67% YoY from higher standalone protection sales (Size of bars represents actual in $m; XX% indicates YoY growth) Growth amid • Standalone protection APE up 2.5x YoY; #1 r
Slide 21: Thailand
Thailand Capitalising on new distribution opportunities Distinct strengths Execution Launched Jan 1, 2021 (Size of bars represents actual in $m; XX% indicates YoY growth) • Covers 685 bank branches New • 5,500+ trained bank sellers distribution +44% +8% – TTB • Doubled our sales support team to 240
Slide 22: Eastspring
Eastspring Accelerating Eastspring’s development to position it as a leader in Asia % mix Funds under management3,6 $bn % mix: Top 10 position in 7 out of 11 markets1 External: 42% External: 44% Internal: 58% Internal: 56% 3.1x >300 investment professionals; >300 distribution partnerships 80.6
Slide 23: Distribution capabilities
Distribution capabilities Enhancing multi-channel distribution capabilities to accelerate growth Agency Bancassurance Digital Leading >130 >28,000 agency c.560,000 Agents1 >60k Agent recruits2 Large network Bank Bank branch 17 (15)6 Markets7,8 partnerships4 access1,4 force >11,600 +19% 11 8 Improvin
Slide 24: Pulse by Prudential
Pulse by Prudential End-to-end Health and Wellness platform Engage Onboard Fulfilment Enable consumers’ to take Bite-sized, direct insurance Digital, on-demand 24/7 self-service personal control of their health & products and other services wellness Electronic access to hospital Gateway to
Slide 25: Translating Strategy into Value
Translating Strategy into Value
Slide 26: High quality in-force book generating strong IFRS earnings growth
High quality in-force book generating strong IFRS earnings growth Insurance margin is largest source of IFRS operating profit Regular premiums1 H&P product mix1,2 Insurance margin Retention rate1 % of APE % of VIF % of total life income3 88% 94% 60% 79% 1. HY 2021 2. Excludes Eastspring 3. Total lif
Slide 27: Low sensitivity insulates business from macro volatility
Low sensitivity insulates business from macro volatility Robust NBP and EV are resilient to macro movements Sensitivity of Asia NBP from long-term business (US$m) (% of NBP) Interest rates – 2% increase 59 5.0% Interest rates – 1% increase 42 3.6% Interest rates – 0.5% decrease (41) (3.5%) Equity /
Slide 28: Resilient balance sheet supports growth
Resilient balance sheet supports growth GWS transition in-line with expectations Building track record Capital generative Estimated shareholder % LCSM/GWS cover ratio ex Jackson1, 2018-HY21 Estimated shareholder GWS surplus development ex Jackson, HY21 $bn1 370% 383% Cover ratio (%) 2,3 LCSM (includ
Slide 29: Resilient balance sheet supports growth
Resilient balance sheet supports growth Resilient GWS position GWS resilient to macro stress High quality shareholder asset exposure Estimated group capital surplus ex Jackson, 30 June 2021 $bn1,2,3 Shareholder asset exposure, 2018 Group vs HY21 Asia, $bn Group Impact on HY21 estimated surplus1,3 $1
Slide 30: Resilient balance sheet supports growth
Resilient balance sheet supports growth Clear route to enhancing financial flexibility Targeting reduced debt leverage Moody’s total leverage ratio (%)1 31% Moody’s ‘AA’ 30% threshold 30% 25% 20% End 30June June2021, ex US 2021, Potential new equity Potential Potential debt redemption Potential debt
Slide 31: Current trading
Current trading APE reflects the timing & scale of Covid-related restrictions Asia & Africa APE, % of prior year1 • Significant Covid restrictions continue – including in Indonesia, Malaysia, Thailand and the Philippines Momentum as More stringent • More stringent movement conditions recently introd
Slide 32: Other Markets
Other Markets
Slide 33: Hong Kong
Hong Kong Pivoting to domestic protection and managing all value levers Distinct strengths Execution (Size of bars represents actual in $m; XX% indicates YoY growth) • QDAP: Top 3 with c.15% market share1 Focus on • VHIS: APE >3X higher, following mid-tier VHIS product launch quality +7% • Domestic
Slide 34: Singapore and Malaysia
Singapore and Malaysia Continued momentum supported by strong market positions Singapore Malaysia Continued focus on quality Continued focus on quality • H&P APE +31%, driving +65% overall NBP growth • IFRS operating profit +12%, driven by +10% renewal premium growth • Strong customer retention of 9
Slide 35: Vietnam and Philippines
Vietnam and Philippines Continued momentum supported by strong market positions Vietnam Philippines Enhancing distribution capabilities Enhancing distribution capabilities • A leader in banca with 17% market share1 • Active agents up +53% • SeABank partnership launched & MSB partnership expanded in
Slide 36: Africa
Africa Ongoing business momentum despite more challenging backdrop $66 million of APE sales Agency Bancassurance +15% >13,000 agents +57% APE sales growth1 Distribution +29% APE sales All markets working towards Optimising APE sales growth1 growth1 MDRT qualification strategic partnerships Refreshed
Slide 37: Embedded Value
Embedded Value
Slide 38: PCA EV is built on prudent assumptions as demonstrated by our track record
PCA EV is built on prudent assumptions as demonstrated by our track record PCA Operating experience1 as % of opening EV PCA Economic experience2 as % of opening EV 2011 1.1% 2011 1.2% 2012 1.1% 2012 2.4% 2013 0.9% 2013 -0.5% 2014 0.9% 2014 1.7% 2015 0.7% 2015 -2.8% 2016 1.2% 2016 -0.2% 2017 1.9% 201
Slide 39: Prudential EV methodology
Prudential EV methodology EEV vs. TEV approach Prudential adopts EEV principles which: • Increase the transparency and consistency of reporting; • Measure the risk at product group level to better reflect the inherent market risk associated with products; and • Improve disclosure around the degree o
Slide 40: Prudential Overview, and Transferring (Shunting) Shares
Prudential Overview, and Transferring (Shunting) Shares
Slide 41: Shareholder information and Group Executive Committee
Shareholder information and Group Executive Committee Shareholder Information Group Executive Committee • London Stock Exchange (PRU) • Hong Kong Stock Exchange (2378) Listing locations • Singapore Stock Exchange (K6S) • New York Stock Exchange – ADR (PUK) Mike Wells Mark FitzPatrick James Turner No
Slide 42: Operational management team committed to further transformation
Operational management team committed to further transformation Strong bench of experienced, dedicated regional and divisional executives Lilian Ng Boon Huat Lee Michellina Laksmi Dennis Tan Nimesh Shah Wilf Blackburn Eng Teng Wong Lim Eng Seong Chief Executive, Insurance PCA Chief Digital Officer T
Slide 43: Transfer of Prudential shares between UK and HK share registers
Transfer of Prudential shares between UK and HK share registers UK Shares removed from the UK Register. Removal request sent to Computershare update the issued Shares deposited into CCASS and Form of Request lodged with EQ Computershare for completion share capital on the HK register ready for tradi
Slide 44: Glossary
Glossary • Annual premium equivalent. A measure of new business sales, which is a key metric for the Group’s management of the development and growth of the business. APE is calculated as the aggregate of annualised regular premiums from new APE business and one-tenth of single premiums on new busin