Slide 1: Prudential plc 2014 Full Year Results
Prudential plc 2014 Full Year Results Delivering ‘Growth and Cash’ 10 March 2015 1 2014 FULL YEAR RESULTS
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
Prudential plc 2014 full year results Agenda Business Review Tidjane Thiam Financial Review Nic Nicandrou Outlook Tidjane Thiam 3 2014 FULL YEAR RESULTS
Slide 4: Agenda: 2014 Performance
Agenda 2014 Performance Asia Jackson UK Life M&G Group 4 2014 FULL YEAR RESULTS
Slide 5: 2014 full year financial headlines
2014 full year financial headlines Strong performance on all key metrics Change Change £m FY 2014 FY 2013 CER1 (%) AER1 (%) IFRS operating profit 3,186 2,954 +14% +8% Growth New business profit2 2,126 2,082 +10% +2% EEV operating profit2 4,096 4,204 +4% -3% Free surplus generation 2,579 2,462 +9% +5
Slide 6: Group 2014 backdrop
Group 2014 backdrop Scottish Europe – Euro Independence vote zone deflation China – Hard UK annuities Europe – ECB landing fear regulation change cut interest rate FCA legacy review Hong Kong – Democratic protests Thailand - Political Coup Indonesia – India – Elections Elections Asia - FX Indonesia
Slide 7: 2014 dashboard
Group 2014 dashboard IFRS operating profit1,2, £m Cash remittance, $m 1,140 +17% +45% 680 ASIA US 973 470 2013 2014 2013 2014 PruFund FUM, £bn IFRS operating profit3, £m +27% 11.6 M&G +13% 446 UK 9.1 395 2013 2014 2013 2014 1 Excludes Japan Life. 2 Comparatives have been stated on a constant exchang
Slide 8: Higher quality and growing earnings
Group Higher quality and growing earnings Sources of IFRS operating income1,2, £m 2008-2014 CAGR 6,338 +14% 5,921 5,043 1,131 +13% 4,444 1,073 4,002 1,061 1,441 1,356 3,126 1,049 2,831 998 1,027 742 1,635 750 1,587 74% +19% 592 537 1,362 321 446 1,252 1,140 932 58% 914 1,618 1,391 870 1,077 458 688
Slide 9: 2017 objectives
Group 2017 objectives 2017 Objectives Asia underlying free surplus1, £m Asia IFRS operating profit2, £m Free surplus of £0.9bn to £1.1bn At least 15% CAGR from 2012-17 £1.1bn £0.9bn >£1,858m 573 592 1,075 1,140 484 924 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Objective Objective G
Slide 10: Regulation
Group Regulation IGD capital surplus1, £bn Cover ratio1 240% • Strongly capitalised and cash generative 4.7 business 2014 • Robust Solvency I and Economic solvency Economic capital surplus1,2, £bn position Cover ratio1,2 218% • Engaged with regulators to finalise position 9.7 2014 1 Before allowing
Slide 11: Agenda: Asia
Agenda 2014 Performance Asia Jackson UK Life M&G Group 11 2014 FULL YEAR RESULTS
Slide 12: Asia: Consistent performance
Asia Consistent performance APE1, £m +15% +14% +15% £2,237m +12% £1,946m +14% £1,708m £1,485m £1,323m £1,158m 681 582 550 513 510 496 456 473 437 454 385 389 393 412 390 318 302 314 332 339 358 252 240 281 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 20
Slide 13: Asia country highlights
Asia Country highlights Hong Kong1 • Overall APE up 39% • H&P APE up 50% Singapore1 • Agency APE up 16% • SCB APE up 12% Indonesia1 • IFRS earnings up 27% • Q4 APE sales up 53% on prior quarter 1 Growth rates based on comparatives stated on a constant exchange rate basis. 13 2014 FULL YEAR RESULTS
Slide 14: Asia country highlights
Asia Country highlights • IFRS earnings up 30% China1 • Overall APE up 35% • H&P APE up 43% Philippines1 • IFRS earnings up 75% • Regular premium sales up 30% Thailand1 • H&P APE up 36% • Overall APE up 36% • IFRS earnings up 10% 1 Growth rates based on comparatives stated on a constant exchange rat
Slide 15: Asia: Bancassurance
Asia Bancassurance SCB bancassurance APE1, £m +33% 2H 13 2H 14 1 Comparatives have been stated on a constant exchange rate basis. 15 2014 FULL YEAR RESULTS
Slide 16: Asia: Eastspring
Asia Eastspring Funds under management, £bn IFRS operating profit1, £m 90 +32% +28% 77 68 61 2013 2014 2013 2014 1 Comparatives have been stated on a constant exchange rate basis. 16 2014 FULL YEAR RESULTS
Slide 17: Asia: Delivering earnings and cash
Asia Delivering earnings and cash IFRS operating profit1,2, £m Free surplus generation2, £m 1,140 +17% +15% 592 973 516 2013 2014 2013 2014 1 Excludes Japan Life. 2 Comparatives have been stated on a constant exchange rate basis. 17 2014 FULL YEAR RESULTS
Slide 18: Asia: Summary
Asia Summary • Strong 2014 delivery in a challenging context • Disciplined execution • High quality Pan-Asian platform • Well positioned to deliver long-term profitable growth 18 2014 FULL YEAR RESULTS
Slide 19: Agenda: Jackson
Agenda 2014 Performance Asia Jackson UK Life M&G Group 19 2014 FULL YEAR RESULTS
Slide 20: US: Successful diversification
US Successful diversification Jackson VA sales mix, $bn 23.1 20.9 2.8 19.7 34% 17.5 5.1 14.7 10.0 15.1 6.5 1 2008 2009 2010 2011 2012 2013 2014 VA With Living Benefit Elite Access VA Without Living Benefit 1 Values may not cast to total due to rounding. 20 2014 FULL YEAR RESULTS
Slide 21: US: Proactive management
US Proactive management Fee income1, £m 7.9x 1,402 1,172 875 680 506 US 10 year Treasury yield 292 324 266 177 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 Comparatives have been stated on an actual exchange rate basis 21 2014 FULL YEAR RESULTS
Slide 22: US: Successful execution
US Successful execution Cumulative cash remittances, $m $2,548m 680 530 470 400 280 125 63 1 2008 2009 2010 2011 2012 2013 2014 RBC Ratio 438% 417% 483% 429% 423% 450% 456% 1 Net remittances from Jackson include $197m in 2011 representing release of excess surplus to the Group 22 2014 FULL YEAR RESU
Slide 23: Agenda: UK Life
Agenda 2014 Performance Asia Jackson UK Life M&G Group 23 2014 FULL YEAR RESULTS
Slide 24: UK: Steady progress
UK Steady progress IFRS operating profit, £m +6% 776 735 Bulk annuities – new business 25 105 Retail annuities – new business 110 57 With Profits 251 255 Total Total in-force profits in-force profits 600 614 Annuities 320 335 and other1 GI 29 24 2013 2014 In-force 1 Includes PruHealth & PruProtect b
Slide 25: UK: Strong product proposition
UK Strong product proposition PruFund investment performance, % PruFund FUM, £bn 80% PruFund Growth Fund Fund Comparator 1 70% +68% +27% 60% 50% +21% 40% +36% 30% 20% 11.6 10% 9.1 7.5 0% -10% -20% 0.1 -30% 2006 2012 2013 2014 2006 2008 2010 2012 2014 1 ABI Mixed Investment 20%-60% Shares TR 25 2014
Slide 26: UK: Preparing for regulatory change
UK Preparing for regulatory change 2014 2015 / 2016 Strengthen our • Flexible drawdown launched in • Operational readiness for budget changes retirement December • Revamp retirement proposition proposition Protect and grow our • PruFund now available through an ISA wrapper savings • Enhance fund ran
Slide 27: Agenda: M&G
Agenda 2014 Performance Asia Jackson UK Life M&G Group 27 2014 FULL YEAR RESULTS
Slide 28: M&G: Successful diversification
M&G Successful diversification Total FUM, £bn 264 244 228 198 201 174 1.9x External Internal 2009 2010 2011 2012 2013 2014 28 2014 FULL YEAR RESULTS
Slide 29: M&G: Strong track record
M&G Strong track record IFRS operating profit1, £m 2.5x 446 395 320 301 246 177 2009 2010 2011 2012 2013 2014 1 Excludes Prudential Capital. 29 2014 FULL YEAR RESULTS
Slide 30: Agenda: Group
Agenda 2014 Performance Asia Jackson UK Life M&G Group 30 2014 FULL YEAR RESULTS
Slide 31: Group: Long term track record
Group Long term track record IFRS operating profit1,2,3, £m 3.0x 3,186 CAGR 2,954 +15% 2,520 2,017 1,823 1,444 1,168 1,244 1,062 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 Comparatives have been stated on an actual exchange rate basis 2 Comparatives adjusted for new and amended accounting standa
Slide 32: Group: Long term track record
Group Long term track record New business profit1,2, £m 3.1x CAGR 2,126 2,082 +15% 1,791 1,536 1,433 1,143 860 767 679 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 Comparatives have been stated on an actual exchange rate basis 2 Excludes Japan Life and Taiwan agency. x.x 2014 multiple over 2006 32
Slide 33: Group: Long term track record
Group Long term track record Free surplus generation1,2,3, £m 4.1x CAGR 2,579 2,462 +19% 2,080 1,982 1,687 1,453 901 779 629 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 Comparatives have been stated on an actual exchange rate basis 2 Excludes Japan Life and Taiwan agency. 3 2012 includes £51m gai
Slide 34: Agenda
Prudential plc 2014 full year results Agenda Business Review Tidjane Thiam Financial Review Nic Nicandrou Outlook Tidjane Thiam 34 2014 FULL YEAR RESULTS
Slide 35: Key financial highlights: FY14 continued strong performance
Key financial highlights Overview IFRS operating Free surplus generation Other items FY14 continued strong performance profit FY14 vs FY13 £m FY141 FY131 AER3 CER4 IFRS operating profit 3,186 2,954 8% 14% Free surplus generation 2,579 2,462 5% 9% New business profit2 2,126 2,082 2% 10% EEV operating
Slide 36: Currency mix: Currency translation effect
Currency mix Overview IFRS operating Free surplus generation Other items Currency translation effect profit IFRS operating profit1 Movement in average FX rates by currency, % FY14 Other Asia UK sterling 6% 18 20 USD (5)% Asia - US 6% 17 dollar linked HKD (5)% 45 US dollar 1% SGD (6)% Underlying free
Slide 37: Currency mix: Currency translation effect
Currency mix Overview IFRS operating Free surplus generation Other items Currency translation effect profit IFRS operating profit1, £m New business profit1,2, £m FY13 @ FY13 av FX rate 2,954 FY13 @ FY13 av FX rate 2,082 2,954 (2)% (65) (2)% (36) Impact of translating result on Impact of translating
Slide 38: Key financial highlights: Broad based growth
Key financial highlights Overview IFRS operating Free surplus generation Other items Broad based growth profit FY14 vs FY131, constant exchange rates Group Asia US UK M&G3 IFRS operating profit 14% 17% 17% 6% 11% Free surplus generation 9% 15% 22% (12)% 12% New business profit2 10% 13% 4% 14% n/a EE
Slide 39: IFRS – Group
IFRS – Group Overview IFRS operating Free surplus generation Other items Growing profit and improving quality: 26% RoE profit IFRS operating profit1, £m (CER2) IFRS1 operating profit up 14%, £m (CER2) Operating EPS FY13 85.9p 2,787 3,186 CER Fee income 407 2,787 Insurance 298 income Spread 102 incom
Slide 40: IFRS – Asia
IFRS – Asia Overview IFRS operating Free surplus generation Other items Continued strong growth in Asia life profits profit Asia life1, sources of earnings Shareholder-backed Life operating profit, £m (CER2) policyholder liabilities, £bn IFRS operating profit1, by business unit +191 +10% 26.4 (90) 1
Slide 41: IFRS – US
IFRS – US Overview IFRS operating Free surplus generation Other items Jackson Life growth of 21% profit Jackson, sources of income2, £m (CER3) FY14 vs FY13 IFRS operating profit1, by business unit 18% 2,820 2,388 26% +4% Spread 30% 24% +20% £m, CER3 FY14 FY13 Change Technical 23% 50% +26% Fee 47% As
Slide 42: IFRS – UK
IFRS – UK Overview IFRS operating Free surplus generation Other items UK Life growth of 7% in challenging market profit IFRS operating profit1, by business unit UK Life IFRS operating profit, £m £m, CER FY14 FY13 Change FY14 FY13 Annuities new business 162 135 Asia 1,140 973 17% bulk annuities 105 2
Slide 43: IFRS – M&G
IFRS – M&G Overview IFRS operating Free surplus generation Other items M&G IFRS profit up 13% profit M&G, earnings drivers Underlying fee income2, £m Cost / income ratio2 IFRS operating profit1, by business unit 863 954 59% 58% 11% £m, CER FY14 FY13 Change FY13 FY14 FY13 FY14 Asia 1,140 973 17% M&G,
Slide 44: Net free surplus generation: Increasing free surplus generation
Net free surplus generation Overview IFRS operating Free surplus generation Other items Increasing free surplus generation profit Free surplus generation1, £m, (CER2) Life in-force result, £m (CER2) FY14 FY13 Change FY14 FY13 Change Expected return from in-force 2,276 1,912 19% Asia 860 742 16% Expe
Slide 45: Net free surplus generation: Underpinning cash to Group
Net free surplus generation Overview IFRS operating Free surplus generation Other items Underpinning cash to Group profit Movement in free surplus, £m Movement in central cash, £m x% Free surplus cover FY14 FY13 201%1 6,541 211% (6) Asia 400 400 (1,482) US 415 294 2,579 5,059 UK 325 355 M&G3 342 292
Slide 46: Expected undiscounted free surplus from life in-force
Net free surplus generation Overview IFRS operating Free surplus generation Other items Increasing free surplus generation profit Expected undiscounted free surplus from life in-force1, £bn 7.9 9.2 7.0 8.3 5.8 6.9 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 202
Slide 47: EEV operating profit (post-tax)
EEV operating profit (post-tax) Overview IFRS operating Free surplus generation Other items Operating return on EEV of 16% profit EEV operating profit1, by business unit EEV Life operating profit1,2, £m (CER3) £m, CER3 FY14 FY13 Change 4,174 3,985 FY13 FY14 Total Life2 4,174 3,985 5% Unwind 1,420 1,
Slide 48: Value creation through increasing NBP
EEV operating profit Overview IFRS operating Free surplus Other items Value creation through increasing NBP – up 10% profit generation New business profit, £m (CER1) Movement in NBP, FY14 vs FY13 Volume +9% 2,126 Bulks +4% 1,939 105 Bulks 24 165 Mix / pricing / other +1% UK +14% 213 Economic effect
Slide 49: Equity shareholders' funds
Equity shareholders’ funds Overview IFRS operating Free surplus generation Other items Summary of movement profit Movement in shareholders’ funds IFRS Equity EEV Equity FY14 % vs FY14 FY14 % vs FY14 £bn FY13 per share £bn FY13 per share After-tax operating profit 2.5 6% 97 4.1 (3)% 161 Investment va
Slide 50: Economic capital model assumptions
Economic capital Overview IFRS operating Free surplus generation Other items Economic capital model assumptions profit Implementation of risk-sensitive capital measure • Solvency II effective from 1 Jan 2016 • Prudential to seek internal model approval • Internal model application in 2Q15 • Feedback
Slide 51: Robust economic capital position
Economic capital Overview IFRS operating Free surplus generation Other items Robust economic capital position profit Economic capital surplus1, £bn Solvency 1 Jan 2014 11.3 257% 218% cover Operating experience 1.8 Market / non-operating effects (0.9) Surplus Surplus Dividend (0.9) Capital effects £1
Slide 52: Balanced risk exposures
Economic capital Overview IFRS operating Free surplus generation Other items Balanced risk exposures profit Economic capital by risk type (before diversification)1,2 Operational/Expense Balanced risk exposures mainly arise from: Mortality/ 10% • Credit (UK annuities and Jackson fixed annuities) Morb
Slide 53: Well capitalised and defensively positioned
Balance sheet Overview IFRS operating Free surplus generation Other items Well capitalised and defensively positioned profit Maintained capital strength • IGD surplus £4.7bn equivalent to cover of 2.4 times • With-profits estate of £7.2bn1 (1 January 2014: £6.8bn) • Jackson RBC ratio of 456% (2013:
Slide 54: 2014 summary
2014 summary Overview IFRS operating Free surplus generation Other items profit • Strong operating performance • Resilient in-force cash generation • Robust balance sheet position • Positive financial outlook 54 2014 FULL YEAR RESULTS
Slide 55: Agenda
Prudential plc 2014 full year results Agenda Business Review Tidjane Thiam Financial Review Nic Nicandrou Outlook Tidjane Thiam 55 2014 FULL YEAR RESULTS
Slide 56: Group: Geographic footprint
Group Geographic footprint Prudential footprint % of GDP growth1, 2014-2019, $bn 37% 63% Prudential footprint Rest of World Prudential 24m life customers Global growth $13.9 trillion 1 IMF World Economic Outlook – October 2014 56 2014 FULL YEAR RESULTS
Slide 57: Strategy
Group Strategy Significant protection gap and investment needs of the Asian middle class Transition of US ‘baby-boomers’ into retirement UK ‘savings gap’ and ageing population in need of returns / income 57 2014 FULL YEAR RESULTS
Slide 58: Significant growth opportunities
Group Significant growth opportunities Asia US UK Sweet spot middle class1, m Retiree population2, m Assets under mgt3, £tn +112m 1.4x 2.0x 403 56.4 1.2 291 40.2 0.6 2010 2020 2010 2020 2010 2020 2014 Global 2nd position 1 Asian Development Bank (ADB). Key indicators for Asia and the Pacific 2010. P
Slide 59: Disciplined execution
Group Disciplined execution Asia US UK Health and Protection APE1, £m Sales and deposits by product, $bn M&G retail FUM, £bn 2.4x 2.0x 3.9x 625 28.3 74.3 5.2 32.2 5.1 14.0 262 7.5 18.0 19.1 42.1 11.9 6.5 7.2 2008 2014 2008 2014 2008 2014 Variable Annuity Bonds Elite Access Equities and Other FA, FIA
Slide 60: Value creation
Group Value creation Free surplus and dividend1, £m 2.9x Net free surplus Reinvestment Reinvestment rate 19% rate 21% Reinvestment 606 Reinvestment rate 23% 637 Reinvestment rate 22% Reinvestment rate 28% 618 rate 31% 553 643 Reinvestment 660 Reinvestment rate 50% 3,185 rate 35% 3,099 2,698 2,535 2,
Slide 61: Delivering cash
Group Delivering cash Dividend, pence per share 36.93 +10.0% 33.57 +15.0% 29.19 +15.9% +5.6% 25.19 23.85 25.74 +20.2% 19.85 23.84 18.00 +5.0% 18.90 +5.0% 17.14 +5.0% 20.79 Total dividend 16.32 +5.0% 17.24 17.24 12.91 13.56 Final dividend 11.72 12.30 11.02 9.73 11.19 Interim dividend 7.95 8.40 5.30 5
Slide 62: Group: Summary
Group Summary • Strong 2014 performance • Disciplined execution of clear unchanged strategy • Asia central to Group prospects • Well positioned to deliver long-term shareholder value 62 2014 FULL YEAR RESULTS
Slide 63: Appendix
Appendix 63 2014 FULL YEAR RESULTS
Slide 64: We have a clear strategy underpinned by clear operating principles
Strategy We have a clear strategy underpinned by clear operating principles Strategy Operating Principles Balanced Metrics & Disclosures US Build on Strength ASIA Accelerate Focus on Customers and Distribution UK Proactive Disciplined ASSET Focus Risk Capital MANAGEMENT Management Allocation Optimis
Slide 65: Disciplined capital allocation
Disciplined capital allocation New business profit growth New business strain1,2, £m New business profit2,3, £m +86% 2,082 2,126 237 270 1,791 -8% 1,536 241 1,433 660 643 637 706 694 618 606 195 UK 103 65 553 29 1,143 266 568 45 73 54 166 530 UK 281 298 187 495 300 US 326 202 US 432 1,139 1,162 982
Slide 66: Life IFRS operating income: High quality earnings
Life IFRS operating income High quality earnings “Cash profit”1: Income2 – Expenses (before impact of DAC adjustment), £m 1.6x 3,468 3,467 3,232 2,805 6,424 2,956 6,083 2,616 2,536 5,336 2,104 4,589 4,047 1,784 1,511 1,998 US Life + 1,650 UK Life 1,233 1,111 990 Asia 871 966 958 521 673 Life 1 1 1 1
Slide 67: Delivering cash: Cash remittances to Group
Delivering cash Cash remittances to Group Business unit net remittances, £m +11% 1,482 1,341 M&G 342 incl 1,200 PruCap 1,105 292 297 935 325 UK 280 355 202 688 313 297 515 175 415 US 420 294 249 167 322 434 80 199 341 400 400 Asia 233 206 144 39 5 40 2008 2009 2010 2011 2012 2013 2014 67 2014 FULL Y
Slide 68: Total dividend increased by 10%
Dividend Total dividend increased by 10% Dividend, pence per share +10% 36.93 Total dividend 33.57 • 2014 dividend increased by 10 per cent to 36.93 pence per share • Ex-dividend date: 26 March 20151 25.74 Final dividend 23.84 • Record date: 27 March 2015 • Payment of dividend: 21 May 20152 Interim
Slide 69: Asia: Long term opportunity
Asia Long term opportunity GDP per capita in 2010, against the US GDP per capita,1990 US$1 35,000 Hong Kong • Pan Asian leader: #1 by NBP2 Singapore 30,000 • Top 3 in 8 /11 Asian countries3 25,000 Taiwan Korea • Market leading platform 20,000 − Over 550,000 agents 15,000 − Access to 5,155 bank Malay
Slide 70: Asia: Favourable dynamics
Asia Favourable dynamics Prudential customers as a GDP 2014 GDP % of total population2 ($bn)2 growth (%)2 Indonesia (1995)1 1.0% 915 5.5 Philippines (1996) 0.2% 289 6.3 Sweet Spot markets Thailand (1995) 0.9% 391 4.6 Vietnam (1999) 1.4% 180 5.6 Hong Kong (1964) 12.4% 282 3.3 Malaysia (1924) 6.5% 332
Slide 71: Products meet customer needs and create shareholder value
Asia Life Products meet customer needs and create shareholder value Health and Protection – Out of pocket Annual premium for a customer aged 50 medical expenses1 (indexed) 143 123 19 117 114 100 73 Saving 100 81 27 Spend Without Basic Prudential Prudential Co. A Co. B Co. C Co. D insurance Governmen
Slide 72: Affordable products underpin consumer demand
Asia Affordable products underpin consumer demand Prudential product premium1 Developed markets health insurance spend2 Healthcare spend as % of average annual income2 100% = average annual income 12% 11% 11% Linked 10% 46 premium Premiums paid = 9% of average annual 5.0% income H&P 54 premium Premi
Slide 73: Growing demand for healthcare
Asia Growing demand for healthcare Household consumption by category1, % 100% = $1.3tn 6 Personal items 14 Recreation 3 Education 12 Transportation 3 Communications 5 Clothing 7 Healthcare 5 Household products 100% = $0.5tn 15 Housing 5 14 Discretionary 2 10 2 9 6 Semi-Necessities 6 13 31 Food Neces
Slide 74: Wealth and financial assets ownership
Asia distribution Wealth and financial assets ownership Breakdown of personal financial assets Life 12% 24% Non-Life 9% 39% Asset Mgt 9% 18% 20% 24% Bank 70% Deposits 21% 38% 16% Per capita Up to $2000 to $15000+ income level $2000 $15000 Source: Oliver Wyman analysis; Prudential analysis. 74 2014 F
Slide 75: Asia Life APE by market
Asia Life APE by market Asia APE by market, £m (Constant Exchange Rate) +39% 645 -4% 464 +6% 399 385 357 338 +6% +13% 190 201 +1% +16% +35% 124 +36% +6% 110 112 113 109 105 +20% 94 83 78 61 51 61 48 51 Hong Kong Indonesia Singapore Malaysia Taiwan Korea India 26%3 China 50% Thailand Vietnam Philippi
Slide 76: Asia Life APE sales by product
Asia Life APE sales by product - percent Asia APE by product, % 3 3 3 4 2 2 4 3 4 5 3 3 3 3 3 5 4 5 5 5 5 7 7 6 8 7 9 8 9 7 8 9 14 18 19 21 17 19 20 23 26 27 29 30 30 28 25 26 33 33 33 33 18 33 35 34 31 34 34 35 35 38 38 17 18 38 40 20 20 19 22 30 24 27 27 24 30 27 25 31 29 32 24 34 30 33 34 30 29 3
Slide 77: Asia Life: Flows and persistency
Asia Life Flows and persistency Asia Life inflows1,2, £bn Asia Life inflows (ex-India)1,2, £bn 4.4 4.5 4.7 4.8 12.6% 3.8 13.8% 4.1 3.4 3.8 3.3 2.7 10.6% 9.6% 9.7% 9.6% 10.0% 10.1% 9.2% 9.8% FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 Surrenders/withdrawals as % of opening liabilities 1 Defined
Slide 78: US retail sales and deposits
US retail sales and deposits 2014 Retail sales and deposits, $m 2013 = $25,966m 2014 = $27,179m $868 $2,625 $868 $2,733 $4 $609 $1,419 $5,122 $4,045 $15,142 $14,537 $2,813 $2,360 Fixed Annuities Variable Annuities – with living benefits Variable Annuities – w/o living benefits, non EA Elite Access F
Slide 79: US Life VA volumes
US Life VA volumes VA volumes by quarter, sales US$bn 27% 28% 53% 46% 45% 42% 50% 47% 6.4 6.4 •‘Features War’ 5.7 5.7 5.7 5.5 1.1 1.4 5.3 0.4 5.2 5.0 0.2 1.1 1.3 4.7 4.6 4.6 1.1 4.4 4.4 1.0 4.2 4.2 3.7 3.7 3.8 0.7 0.8 1.3 3.3 3.1 2.9 2.4 2.4 2.3 2.3 2.1 1.8 1.8 1.5 1.4 1.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 80: Variable annuity distribution
US Life Variable annuity distribution Variable annuity sales by distribution channel, US$bn 2014 includes $5.1bn of Elite Access sales (2013: $4.0bn) 23.1 20.9 15.3 13.3 3.9 4.1 3.7 3.7 2013 2014 IBD RBD/Wirehouse Bank IBD: Independent Broker/Dealer, RBD: Regional Broker Dealer. 80 2014 FULL YEAR RE
Slide 81: New business margin
US Life New business margin New business margin1 – % APE 50% 47% 42% 23% 19% 17% Variable Annuities US Other 2012 2013 2014 1 On a post-tax basis. 81 2014 FULL YEAR RESULTS
Slide 82: DAC impact on results
US IFRS profit DAC impact on results Impact on results of DAC amortisation, £m 2013 2014 Gross profits1 1,716 1,944 New business strain2 (198) (209) DAC Amortisation - Core (485) (474) - (acceleration) / deceleration 82 (13) Operating result 1,115 1,248 Core as % of Gross profits 28% 24% 1 Gross pro
Slide 83: Policyholder behaviour
US Life Policyholder behaviour Optional benefits elected, % of initial benefits elected (New business) 86% 82% 80% 79% 65% 62% 55% 42% 28% 14% 15% 11% 8% 5% 6% 5% 5% 6% 2006 2007 2008 2009 2010 2011 2012 2013 2014 No benefit GMWB (for life) 83 2014 FULL YEAR RESULTS
Slide 84: Asset growth
US Life Asset growth Growth in statutory admitted assets, US$bn 2014 v 2013 increase: $18.5bn 189.4 Net Inflows: $12.3bn 170.9 Market and other movements: $6.2bn 142.8 127.5 107.6 108.8 97.5 80.1 81.0 76.7 69.3 70.9 58.8 62.8 48.9 55.6 30.0 33.3 50.9 22.3 20.9 43.0 46.6 14.7 40.2 7.1 10.4 4.4 5.6 5.
Slide 85: GMWB policyholder behaviour sensitivities
Resilient balance sheet GMWB policyholder behaviour sensitivities GMWB policyholder behaviour sensitivities, FY 2014 US$bn • Policyholder behaviour experience is continuously monitored and a comprehensive study is conducted on an annual basis 7 • For IFRS and Statutory accounting purposes, assumptio
Slide 86: IFRS impact 'below-the-line'
Hedging result IFRS impact ‘below-the-line’ 2014 VA hedge results, net of related DAC, £m 500 0 (500) (645) (1,000) 240 325 (1,251) (1,500) (1,171) (2,000) Equity hedge VA reserve Interest Non-operating IFRS net instruments changes rate hedges fee income, hedge result net of claims 86 2014 FULL YEAR
Slide 87: VA hedging: Moving reserves to 'fair value'
VA hedging Moving reserves to ‘fair value’ Guarantee Benefit Liability Supplemental Disclosure1, net of DAC, £m 1,500 299 1,000 803 Liabilities 500 0 47 Assets (500) (422) (1,571) (469) (1,000) As recorded2 Change in Adjustment Revised liability, Volatility Hypothetical rates3 to full fees4 excludin
Slide 88: Jackson: Capital, hedging and policyholder behaviour
Jackson Capital, hedging and policyholder behaviour • Hedging programme continues to effectively Total adjusted Capital mitigate risks • Total adjusted capital excludes gains on interest rate US$bn swaps: $555m at Dec 2014 (Dec 2013: loss of $1m) 4.8 • Earned guarantee fees of 117 bps per annum (c$1
Slide 89: IFRS operating profit – source of earnings: Asia
IFRS operating profit1 – source of earnings Life insurance - Asia Source Total operating profit FY13 FY14 (CER) +/- 1,050 905 16% £m except reserves £bn = Total Life income Total Life expenses DAC adjustments - +/- 2,607 2,372 10% (1,649) (1,499) (10)% 92 32 188% Spread Technical and income Fee inco
Slide 90: IFRS operating profit – source of earnings: US
IFRS operating profit – source of earnings Life insurance - US Source Total operating profit FY13 FY14 (CER) +/- 1,431 1,181 21% £m except reserves £bn = Total Life income Total Life expenses Expense deferrals - + 2,820 2,388 18% (1,580) (1,504) (5)% 678 680 - - Spread Expected returns Fee income in
Slide 91: IFRS operating profit – source of earnings: UK
IFRS operating profit – source of earnings Life insurance - UK Source Total operating profit FY14 FY13 +/- £m except reserves £bn 752 706 7% = Total Life income Total Life expenses DAC adjustments - - 997 954 5% (239) (234) (2)% (6) (14) 57% Spread Technical and Expected returns Fee income income ot
Slide 92: IFRS operating profit – source of earnings: Asset management
IFRS operating profit – source of earnings Asset management Asset management Source operating profit1 FY 2013 FY2014 +/- (CER) 536 463 16% £m except assets £bn M&G operating Eastspring profit Investments 446 395 13% 90 68 32% Underlying income Other income2 Total expenses Total income2 Total expense
Slide 93: Life IFRS operating income – Asia
Life IFRS operating income – Asia Sources of income Asia IFRS operating income1,2, £m Growth % 1,062 2014 vs. 2013 CER 959 6% +23% 4% (2)% 5% 5% 12% +17% 11% 15% +11% 15% +10% 64% 63% 2013 CER 2014 Insurance margin Fee income Spread income With-profits Expected return on shareholder assets 1 Exclude
Slide 94: Life IFRS operating income – US
Life IFRS operating income – US Sources of income US IFRS operating income1, £m 2,820 Growth % 2014 vs. 2013 CER 2,388 (36)% 1% 26% +6% 29% 50% +26% 47% 23% 24% +20% 2013 CER 2014 Insurance margin Fee income Spread income Expected return on shareholder assets 1 Excludes margin on revenues, acquisiti
Slide 95: Life IFRS operating income – UK
Life IFRS operating income – UK Sources of income UK IFRS operating income1, £m Growth % 2014 vs.2013 821 767 17% +2% 17% 31% +2% 33% 33% 30% +19% 8% 7% (6)% 12% 12% +8% 2013 2014 Insurance margin Fee income Spread income With-profits Expected return on shareholder assets 1 Excludes margin on revenu
Slide 96: M&G – retail FUM
Asset Management M&G – retail FUM Retail funds under management, £bn 16% 16% 21% 19% 26% 35% 43% 43.5 42.5 40.4 36.0 33.5 31.8 26.1 23.7 16.0 14.5 9.0 8.2 3.1 5.0 2008 2009 2010 2011 2012 2013 2014 UK / Other Europe X% Europe FUM as % of Retail FUM 96 2014 FULL YEAR RESULTS
Slide 97: Life operating variances – Group
EEV operating profit Life operating variances – Group Group Life operating variances, £m Experience variances and assumption changes % opening EEV1 0.4% 1.1% 2.4% 0.7% 1.2% 1.9% 2.2% 3.0% 2.5% 1,500 1,440 1,133 1,106 1,055 1,068 811 881 754 668 609 427 347 339 180 132 110 40 2006 2007 2008 2009 2010
Slide 98: Life operating variances – Asia
EEV operating profit Life operating variances – Asia Asia Life operating variances, £m Experience variances and assumption changes % opening EEV1 0.8% 2.0% 2.4% (1.5)% (0.5)% 1.1% 1.0% 0.9% 0.9% 668 648 490 476 465 406 316 226 177 89 81 89 85 91 51 16 (32) (80) 2006 2007 2008 2009 2010 2011 2012 201
Slide 99: IGD capital: Movement during the period
IGD capital Movement during the period 1 IGD capital – movement in 2014, (£bn)1 Capital position at 31 December 2014, (£bn)1 Solvency 2.4x 280% 280% IGD surplus 31 December 2013 5.1 cover Net capital generation 2.1 Cost of intangibles2 (0.8) Reduction in SHIFT asset allowance3 and Surplus (0.2) othe
Slide 100: Invested assets: Group overview
Invested assets Group overview Breakdown of invested assets – 2014, £bn Total PAR Unit- Shareholders Group Funds Linked Asia Life US Life UK Life Other Total Debt securities 145.2 59.6 10.7 7.9 33.0 31.7 2.3 74.9 Equity 144.9 34.7 108.9 0.9 0.3 - 0.1 1.3 Property Investments 12.8 10.4 0.6 - - 1.7 0.
Slide 101: Group shareholder exposures – Sovereign debt
Invested assets Group shareholder exposures – Sovereign debt Breakdown of the shareholder debt securities portfolio, % SH sovereign exposures by regions & ratings1, £m US UK Eurozone Asia Other Total AAA - 4,104 388 205 4 4,701 AA-BBB 3,607 - 88 1,964 100 5,759 Below BBB - - - 514 - 514 Total 3,607
Slide 102: Total PIIGS sovereign and bank debt of only £269m
Resilient balance sheet Total PIIGS sovereign and bank debt of only £269m Breakdown of the shareholder debt securities portfolio, % Shareholder invested assets – PIIGS countries as at 31 December 2014, £m PIIGS sovereign & bank debt Sovereign Bank debt Institution Covered Senior Tier II Tier I Total
Slide 103: Group shareholder exposures – oil and gas sector
Invested assets Group shareholder exposures – oil and gas sector Breakdown of the shareholder debt securities portfolio Breakdown by credit rating and sub-sector, £m Exploration Pipeline Integrated Refining & Oil & gas Total & / Mid- Oils Marketing Services (£m) Production stream Investment 866 867
Slide 104: UK asset quality – credit reserve
Invested assets UK asset quality – credit reserve UK shareholder debt securities portfolio by rating1 Strength of the £2.2bn credit reserve BB or below 2% AAA • No defaults of shareholder-backed debt BBB securities 14% 21% • Allowance for credit risk as at 31 December 2014 materially in line with pr
Slide 105: US asset quality – corporate debt portfolio (1/3)
Invested assets US asset quality – corporate debt portfolio (1/3) US Shareholder Debt Securities Portfolio Market value, £bn £33bn Corporate Bond Portfolio, % by rating Other <1 2 CMBS BB and AAA and 2 below RMBS AA 4 Govt 5% 5% HY 1 A 45% Total A or 40% £24.5bn above 50% Corporate Bonds IG BBB 23 9
Slide 106: US asset quality – corporate debt portfolio (2/3)
Invested assets US asset quality – corporate debt portfolio (2/3) US Shareholder Debt Securities Portfolio Market value, £bn £33bn Investment Grade Corporate Bond Portfolio, % by sector Other <1 2 CMBS Automotive 2% 2 RMBS Banking Utility Govt 4 Basic • Portfolio spread HY 1 13% 7% Industry over 696
Slide 107: US asset quality – corporate debt portfolio (3/3)
Invested assets US asset quality – corporate debt portfolio (3/3) US Shareholder Debt Securities Portfolio Market value, £bn £33bn High Yield Corporate Bond Portfolio, % by sector Other <1 2 CMBS 2 Automotive 2% RMBS Basic Utility Industry Govt 4 Telecom • Portfolio spread Capital HY 1 4% 12% Goods
Slide 108: Future free surplus emergence: Asia
Future free surplus emergence Asia Expected undiscounted free surplus from Life in-force, £bn 1.2 3.0 3.6 2.7 3.2 2.6 3.0 1.0 0.8 0.6 0.4 0.2 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Actual From 2013 Life in-force 2013 life in-force including market effects From 2014 new
Slide 109: Future free surplus emergence: US
Future free surplus emergence US Expected undiscounted free surplus from Life in-force, £bn 1.4 3.0 3.6 2.5 3.2 1.4 2.1 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Actual From 2013 Life in-force 2013 life in-force including market effects From 2014 ne
Slide 110: Future free surplus emergence: UK
Future free surplus emergence UK Expected undiscounted free surplus from Life in-force, £bn 0.7 1.9 2.0 1.8 1.9 1.8 1.8 0.6 0.5 0.4 0.3 0.2 0.1 0.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Actual From 2013 Life in-force 2013 life in-force including market effects From 2014 ne
Slide 111: Currency mix: 2014 full year
Currency mix 2014 full year IFRS operating profit, New business profit, EEV operating profit, Underlying free surplus % % % generation, % Other Asia Other Asia UK sterling Other Asia UK sterling Other Asia UK sterling Asia - US UK sterling dollar 13 13 linked1 9 18 20 18 14 14 38 17 33 35 38 36 45 3
Slide 112: Prudential plc 2014 Full Year Results
Prudential plc 2014 Full Year Results Delivering ‘Growth and Cash’ 10 March 2015 112 2014 FULL YEAR RESULTS