Prudential Plc · LSE:PRU
Prudential — Investor Day (January 2016)
36 slides from Prudential's investor day presentation, Jan 19, 2016
Slide 1: Delivering Sustainable Growth
‘Delivering Sustainable Growth’ Mike Wells - Group Chief Executive Prudential 19 January 2016
Slide 2: Forward Looking Statements
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, includin
Slide 3: Agenda
Agenda Strategy Asia US UK Group 2
Slide 4: CEO perspective
Group CEO perspective • Clear strategy focused on significant structural growth opportunities • Leadership positions and capabilities underpin peer / market outperformance • Resilient operating model with clear value discipline • Significant headroom from leveraging scale, efficiencies and skills •
Slide 5: Strategy
Group Strategy Asia Significant protection gap and investment needs of the middle class Self-reliant global middle class US UK Transition of ‘baby- ‘Savings gap’ and aging boomers’ into population in need of retirement returns / income 4
Slide 6: Demographics
Group Demographics ASIA US & UK Working age Population1,2 , (m) Ageing Population1,3 , (m) US UK 2,500 120 30 2,400 110 32% 28 2,300 100 26 2,200 90 40% 2,100 >65% 80 24 % of total US 2,000 population 70 21% 22 1,900 60 UK 20 1,800 Asia 50 33% xx % of total population 1,700 40 18 2000 2010 2020e 203
Slide 7: Global savings
Group Global savings Wealth footprint, Wealth ownership, 2014 – 2019 $tn1 % by age Growth US 46.3 57.0 +23% % of World 2 wealth US 14% 22% 33% 31% UK 9.7 11.6 +20% 63% 3 ASIA 42.2 63.5 +50% UK 21% 25% 31% 23% <45 45-54 55-64 >65 World 155.7 210.1 1 Source BCG Global Wealth 2015: Winning the growth g
Slide 8: Significant Asia protection and savings opportunity
Group Significant Asia protection and savings opportunity Asset mix, 2014 %1 Savings2, (% GDP) 44% 31% 26% 18% 13% 60% Cash 19% 25% Asia US UK 10% Bonds 50% 49% 30% Equity Out of pocket healthcare spend3, 42% US UK ASIA (%) 12% 9% Asia US UK 1 Source – underlying data from BCG Global Wealth 2015: Wi
Slide 9: Product portfolio aligns with customer needs
Group Product portfolio aligns with customer needs Jackson VA account, UK With-profits sub fund1, M&G FUM by client and asset HY15 % HY15 % class, HY15 % MMF Loans Cash Property VA Equity Fixed Other Internal Retail Equity Large Cap Deposits Bond funds Equity Fixed Inc Multi- Asset Mid cap Balanced
Slide 10: Agenda
Agenda Strategy Asia US UK Group 9
Slide 11: Long term opportunity
Asia Long term opportunity Life premiums per capita (US$) 2014 1917 1961 1990 United States United States 2014 Hong Kong 11x Singapore 3x Malaysia 3x Indonesia 6x Thailand 5x Growth over last 20 years Philippines 4x Vietnam 14x China 28x India 6x Cambodia 1 LOW 10 LOWER MIDDLE 100 UPPER MIDDLE 1000
Slide 12: Market leading franchise
Asia Market leading franchise Top 3 Life market share Platform • In Asia since 1923 • Top 3 position in 9 out of 12 life markets Eastspring • Top decile brand awareness1 Distribution Protection Other4 Linked • Proven multi-channel model 26% 11% 23% • Over 500,000 agents • Selling through over 10,000
Slide 13: Significant growth headroom
Asia Significant growth headroom Cambodia India China Korea Population Penetration1 Pru Rank6 Population Penetration1 Pru Rank5 Population Penetration1 Pru Rank4 Population Penetration1 Pru Rank (m) (%) (%) (m) (%) (%) (m) (%) (%) (m) (%) (%) 16 -% 1 1,276 2.6% 1 1,375 1.7% 2 51 7.2% 17 Malaysia Tai
Slide 14: Multiple growth engines
Asia Multiple growth engines Sales1,2, £m 2014 xX 2005 - 2014 growth SCALE Hong Kong Indonesia > £300m Singapore x4 x6 x8 x5 x4 Eastspring1 Philippines, £150m - £300m Thailand, Malaysia China3 & Vietnam x3 x4 x6 x1 x1 x2 < £150m Taiwan4 Korea India 10% 20% GROWTH 2005 – 2014 CAGR 1 Sales based on Li
Slide 15: Recurring premiums drive growth across cycles
Asia Recurring premiums drive growth across cycles Regular and Single Premium APE1, £m c90% Regular premium 2,010 1,911 1,740 MSCI Asia ex Japan2 1,514 1,391 1,131 1,052 889 723 494 120 360 106 340 103 281 91 79 227 206 214 151 155 122 146 157 110 23 77 27 63 46 45 56 68 91 79 11 6 9 1995 1996 1997
Slide 16: Growing scale
Asia Growing scale Life weighted premium income1,2,3, £bn >70% In-force 8.4 7.3 6.2 In-force 5.5 4.9 6.3 4.4x 4.1 5.4 3.8 3.2 4.6 4.1 2.6 3.6 New 2.0 2.6 3.0 2.1 business 1.8 1.4 2.1 3.5x 1.3 1.4 1.6 1.9 0.8 1.1 1.2 1.1 0.6 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 Weighted premium income
Slide 17: In-force drives recurring earnings and cash
Asia In-force drives recurring earnings and cash In-force weighted 2014 premium income1,2, Life IFRS CAGR % £bn Life In-force IFRS +16% operating profit2,3,4, £m 1,019 64% 4.4x 882 745 Protection7 641 496 353 417 259 223 262 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 6.3 Expected in-force gen
Slide 18: New business earns over time
Asia New business earns over time New business weighted CAGR premium income1,2, +17% £bn New business profit2,3 £m 1,162 1,032 3.5x 858 718 599 521 531 461 375 291 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 New business 2.1 generation from: 2016e 576 0.6 2015e 464 2005 2014 2014 Life new busi
Slide 19: Consistent performance
Asia Consistent performance IFRS operating profit1,2, Free Surplus generation1,2, £m £m 1,200 2150 CAGR CAGR 26% 1,000 21% 1650 800 600 1150 1,140 592 973 516 400 816 409 432 670 650 310 466 513 200 197 313 209 213 120 106 184 74 - 150 -4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2
Slide 20: Summary
Asia Summary • High quality portfolio of well-positioned companies in the region • Profitable, growing back book generating capital and earnings • Products and services aligned with social needs • Unrivalled distribution capability • Proven record of innovation and execution drives customer and shar
Slide 21: Agenda
Agenda Strategy Asia US UK Group 20
Slide 22: High quality platform
US High quality platform Fund performance (%) and Expenses2, Distribution availability1 (#), FY15 % of assets Number of Living +10% Indexed Benefit eligible Number of wholesalers3,4 (3 year net return) productivity3,5 funds Jackson 200 Jackson 93 61bps Peer A +44% 100 Peer A 9x 57 Peer B 114 32bps P
Slide 23: Summary
US Summary • Profitable back book invested in a variety of asset classes producing strong earnings • High quality general account • Market leading platform for service, IT and product innovation • Industry leading distribution and training • Well proven capability to prosper through disruption 22
Slide 24: Agenda
Agenda Strategy Asia US UK Group 23
Slide 25: Solid base
UK Solid base IFRS operating profit, £m PruFund FUM (£bn) & M&G FUM by client and asset performance class, HY15 % 1,241 Annuity new Cash 162 business1 Property 13.7 Internal Retail +34% Equity Insurance 10.2 591 In-force2 Fixed Inc Multi- Asset Fixed Inc £256bn [CATEGORY Equity NAME] 0.1 M&G3 488 Eq
Slide 26: Summary
UK Summary • Two top brands in the market • Proven asset management / asset allocation and low risk product expertise • Strongly capitalised with profits fund with good performance track record • Well positioned to deliver in the pensions reforms landscape 25
Slide 27: Agenda
Agenda Strategy Asia US UK Group 26
Slide 28: Priorities
Group Priorities Asia US UK Evolving model to align with 1 Build agency scale and quality 1 Focus on profitable growth 1 asset based opportunity Leverage bancassurance 2 relationships 2 Bolt-ons to leverage platform 2 Selective approach to annuities Disciplined management of in- Ongoing digital capa
Slide 29: Effective response to challenges
Group Effective response to challenges IFRS operating profit1,2, £m 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 •Natural disasters •Continued rise •Sub-prime •Liquidity crisis •Start of global •Greece and •Concern over •US debt ceiling •Concern over •Asia FX •Solvency II finalisation trig
Slide 30: Well positioned to deliver across cycles
Group Well positioned to deliver across cycles In force IFRS operating profit1,2, £m In-force free surplus generation2, £m New business expected free surplus generation3, £m 3,179 CAGR 2,977 3,185 CAGR 3,099 15% 15% 2,467 2,698 2016e 2,535 CAGR 1,269 2,039 2,330 1,859 31% 2015e 2,113 1,004 892 1,385
Slide 31: Well positioned to deliver across cycles
Group Well positioned to deliver across cycles IFRS income by revenue source, IFRS earnings split by HY15 % currency1,2,3, % Other 18% Other Insurance USD linked 16% margin Spread income 76% USD 45% Life Fee Asset Mgt income Fee income GBP 21% HY 2015 1 USD linked includes Hong Kong and Vietnam wher
Slide 32: Solvency II
Group Solvency II Estimated Group Solvency II capital position1,2 Net free surplus generated3 HY15, £bn Cumulative share 2010 - 2014 Solvency cover 190% %, 100% = £10.8bn M&G Surplus Asia £9.2bn UK WP4 19.4 UK SB5 10.2 US 86% Own Funds SCR 1 Excludes surplus in ring-fenced policyholder funds 2 Befor
Slide 33: 2017 objectives
Group 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 > £1,858 £1.1bn £0.9bn +18% 1,260 662 1,075 573 901 471 390 680 484 592 356 924 1,140 632 3 3 2012 CER 2013 2014 CER 2015 CER 2016 2017 2012 CER 201
Slide 34: Value creation
Group Value creation IFRS operating profit1,2, £m New business profit1,2, £m Free surplus generation1,2,3, £m 3.3x 3.9x 6.4x 2,579 3,186 2,126 2,082 2,462 2,954 CAGR CAGR CAGR +16% +14% +23% 2,080 1,791 2,520 1,982 1,536 1,687 2,017 1,433 1,823 1,453 1,444 1,143 1,244 1,168 901 1,062 957 860 779 767
Slide 35: Summary
Group Summary • Right strategy, right markets, right products • Profitable and growing back book underpins earnings and cash growth • Proven commercialisation capability • Key attributes of scale to capitalise on disruptions • Portfolio effect enables disciplined execution and value delivery 34
Slide 36: Conference agenda
Conference agenda Introduction, Group Strategy Mike Wells 08:00 – 10:00 Solvency II Update Nic Nicandrou Group Q&A Break Asia Overview Tony Wilkey Asia Financials Adrian O’Connor 10:20 – 13:00 Asia Insurance Operations Lilian Ng & Azim Mithani Country Focus on Hong Kong Derek Yung, Ben Bulmer & Anth