Slide 1: Prudential plc 2020 Half Year Results
Prudential plc 2020 Half Year Results 11 August 2020 41
Slide 2: Contents
Contents: Asia 43 Africa 82 Additional Information US 85 2020 Half Year Results Group 93 2020 HALF YEAR RESULTS 42
Slide 3: Asia Section
Asia Section 2020 HALF YEAR RESULTS 43
Slide 4: Asia key features
Asia Key features Asia financial performance, $m Leading pan-regional franchise HY20 HY19 % FY19 CER7 CER7 Top 3 position in 9 of 13 life markets1 APE 1,665 2,540 (34)% 5,130 NBP 912 1,673 (45)% 3,515 Market leading pan regional Asian Retail Fund Manager2 IFRS operating profit5 1,733 1,526 14%
Slide 5: Asia content
Asia Content Context and HY20 performance Strategic priorities and progress Market updates Supporting our staff, customers and community Capital, balance sheet and earnings 2020 HALF YEAR RESULTS 45
Slide 6: Capturing structural opportunities with quality platform and new capabilities
Asia Capturing structural opportunities with quality platform and new capabilities Capturing High Resilience Amplifying Accelerating structural quality through capabilities to Pulse consumer demand business diversified meet customer rollout for H&P model platform demand 2020 HALF YEAR RESULTS 46
Slide 7: Operating environment
Operating environment Several markets in restart mode with planned easing measures Restriction measures & timeline Jan Feb Mar Apr May Jun Jul Aug Current status of measures Easing measures; internal travel and business activity resumed nationwide from China 26 March with strict measures in place to
Slide 8: Capturing structural consumer demand for H&P
Asia Capturing structural consumer demand for H&P Demand for insurance reinforced1 Shift towards H&P Asia Pacific China 7 markets with higher H&P APE mix in HY20, led by (33)% 46% searched for new policies 73% searched for new policies India (+14ppts to 27%), Singapore (+8ppts to 29%) 32% bought a n
Slide 9: Growth, diversification and resilience
Asia Growth, diversification and resilience Regular premium (% of APE) Renewal premiums ($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 10: Resilience through a diversified platform
Asia Resilience through a diversified platform Asia ex-HK APE Performance highlights1 As % of prior year 100% • Five markets with increased sales • Double-digit APE growth in Indonesia (+42%), Thailand (+33%), and 1Q20 Singapore (+10%) 111% 87% 90% 101% • Asia ex-HK NBP up +17% underpinned by double
Slide 11: Amplifying capabilities to meet customer demand
Asia Amplifying capabilities to meet customer demand New virtual onboarding Agent capacity and quality Strengthening core capabilities • Virtual sales introduced in all markets1 • Virtual end-to-end agency management • 15-year strategic partnership with TMB ~90%2 of products (based on APE) in all ma
Slide 12: Accelerating Pulse roll out
Asia Accelerating Pulse roll out Engage Onboard Purchase M • Pulse by Prudential live in 11 • Launched 8 digital products including • PRULeads: converting downloads markets; 10 languages Dengue fever, Credit Shield, Personal into leads Accident, Coronavirus cover • 21 new digital partnerships secure
Slide 13: Asia content
Asia Content Context and HY20 performance Strategic priorities and progress Market updates Supporting our staff, customers and community Capital, balance sheet and earnings 2020 HALF YEAR RESULTS 53
Slide 14: Significant long-term growth opportunity
Asia Significant long-term growth opportunity- $1.3tn of expected premiums2 income Majoritysolutions of Asian markets remain below the inflection point, US$10k to US$20k GDP per capita, for life insurance penetration Our Asia Market profile1 Future sources of growth 1.8x 4.5 Growth contribution 2.5
Slide 15: Leading pan-regional franchise
Asia Leading pan-regional franchise China9 Pru Asia footprint1 Japan >600k Agents 1,434m 127m >300 India10 Life & asset management Korea Taiwan distribution partnerships 1,366m Top 3 Top 10 51m 24m 1.4m New Pru life Myanmar customers11 Hong Kong Top 3 54m Laos 7m Top 3 Top 10 Position
Slide 16: Strategic priorities
Asia Strategic priorities Strategic priorities Create ‘best-in-class’ • Broaden flagship product range • Narrow mortality protection gap Enhance the core health capability • Expand distribution and drive efficiency • Grow participation in health and medical segments • Collaborate with non-traditiona
Slide 17: Clear strategic priorities and quality execution
Asia Clear strategic priorities and quality execution Strategic priorities • Leader in banca1 – enhanced with TMB banca agreement; access to >19,000 bank branches Enhance the core • 90% of products capable of virtual sales; 38% of agency cases sold virtually in 2Q • Agent management moving online, s
Slide 18: Enhance the Core
Enhance the Core Diversifying into new distribution partners, customer segments and products Channels Core products Customer segment New distribution, product & customer segments High Net Worth NEW Estate Robo- • OPUS in Singapore APE of $25m planning investing • 101 Private Wealth consultants Consu
Slide 19: Accelerate Pulse Buildout
Accelerate Pulse Buildout Pulse is broadening our customer base, gathering new data and converting into sales Pulse: First-of-its-kind, all-in-one and AI-powered app Broadening customer base Majority of Pulse users are in 18-35 age group 35% 30% 27% Pulse services usage • >6 million Pulse downloads
Slide 20: Accelerate Eastspring
Accelerate Eastspring Eastspring is a unique, structurally advantaged platform Overview Cyclical business but structurally advantaged due to reliable and consistent life business flows5 Unique platform • Top 10 in 7 out of 11 markets CAGR: ($ bn, AER) 14% 241 • Asia’s largest retail asset manager (e
Slide 21: Expand Presence in China
Expand Presence in China Significant growth potential from higher penetration Citic‐Pru footprint (Dec’19) NBP3 (US$’m, 100% basis) Access to2 2019 524 17 Straight ‘A’ score for CBIRC Integrated Risk Rating since 2016 (only JV) 2015 84 Top 10 ranked Chinese Life Insurers by 83% 77% 83% California St
Slide 22: Asia content
Asia Content Context and HY20 performance Strategic priorities and progress Market updates Supporting our staff, customers and community Capital, balance sheet and earnings 2020 HALF YEAR RESULTS 62
Slide 23: Market highlights – China
Asia Market highlights – China Intact structural demand drivers Expansion of our platform ` Execution7 • Faster growth in GDP than advanced economies1 • Operationalised Shaanxi province • Presence in 20 branches, 97 cities (+3) and 234 APE • Rapid expansion of the middle class; significant (XX% indi
Slide 24: Market highlights – Hong Kong
Asia Market highlights – Hong Kong Intact structural demand drivers Enhancing our distribution capabilities ` Domestic Mainland Execution5 • Ageing population • 69% of MCH customers intend • Virtual sales of all products enabled in agency and (XX% indicates 2020 sales as a proportion of 2019 levels)
Slide 25: Hong Kong: Intact demand drivers for mainland Chinese customers
Asia Hong Kong: Intact demand drivers for mainland Chinese customers MCH visitors’ intention for financial products MCH visitors’ preference for medical treatment MCH visitors’ preference for medical treatment Note: Based on our 2Q20 MCH Sentiment Tracker conducted through online survey using Nielse
Slide 26: Hong Kong: Resilient earnings
Asia Hong Kong: Resilient earnings APE1, $bn Life weighted premium income1, $bn Life IFRS operating profit1, $m +20% 16x 21% CAGR CAGR +143% 18% 11% 24% New business 734 11.5 23% Renewal premium 412 +32% 5.3 +66% 0.4 0.7 54 HY20 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2
Slide 27: Market APE sales trends
Asia Market APE sales trends Markets returned to YoY growth in 2Q Markets with “April low” Markets with “May low” Markets (Thailand, Taiwan and Vietnam) where lockdown Markets (Malaysia, India, the Philippines, Cambodia and Laos) Markets (Indonesia and Singapore) where lockdown measures were introdu
Slide 28: Markets returned to year-on-year growth
Asia Markets returned to year-on-year growth ` ` ` Thailand Vietnam Taiwan Partnership momentum Enhancing distribution capabilities Profitable growth • 15-year exclusive partnership with TMB • SeABank partnership launched in April • Shift to higher-margin Par products (APE up +81%) • 22% increase in
Slide 29: Markets with 'April low'
Asia Markets with “April low” ` ` ` India Malaysia Philippines Focus on quality Continued to focus on quality Enhancing distribution capabilities • H&P APE +29%, sales mix +14ppts to 27% • 96% of APE from regular premiums • Agent count up 7%3 to 34k • Persistency at 83%, one of the best in industry4
Slide 30: Markets with 'May low'
Asia Markets with “May low” ` ` Indonesia # 1 Singapore # 1 Enhancing & diversifying distribution Overall & Continued focus on quality Overall regular • Agent recruits2 +50%; agent count +13% to 285k agency3,4 premium sales3,5 • H&P APE +6%, sales mix +8ppts to 29% • # of MDRT +48% to >1,000; larges
Slide 31: Indonesia: Broadening our capabilities
Asia Indonesia: Broadening our capabilities Intact structural drivers & premium franchise Enhancing our distribution capabilities ` • Rapid expansion of the middle class; significant 1 Agency segmentation strategy 2 3 Execution protection gap Core agency New / Rookie agents MDRT / Elite leaders Mark
Slide 32: Asia content
Asia Content Context and HY20 performance Strategic priorities and progress Market updates Supporting our staff, customers and community Capital, balance sheet and earnings 2020 HALF YEAR RESULTS 72
Slide 33: Stakeholder delivery during the COVID-19 affected period
Asia Stakeholder delivery during the COVID-19 affected period • COVID-19 protection Customers • Acceleration of claims payment • Flexible premium payment options • Flexible “work at home” support Staff & • Digital tool roll out agents • Online training & education programme • Launched COVID-19 Relie
Slide 34: Continuous investment in our community
Asia Continuous investment in our community ` China Hong Kong Launched Prudential Covid-19 Relief Fund of $2.5 million • RMB15m donation from Life and Asset • Free Covid-19 coverage to HK residences: available Management businesses to the first 500,000 people through Pulse sign-up • RMB43k donation
Slide 35: Asia content
Asia Content Context and HY20 performance Strategic priorities and progress Market updates Supporting our staff, customers and community Capital, balance sheet and earnings 2020 HALF YEAR RESULTS 75
Slide 36: Robust capital position
Asia Robust capital position Shareholder solvency1 ($bn) Total company solvency1,2 ($bn) 253% 308% 333% 312% 6.5 19.6 18.8 4.7 3.0 3.2 8.0 9.4 YE19 HY20 YE19 HY20 Minimum capital requirement LCSM surplus Minimum capital requirement LCSM surplus 1. Estimated position at 30 June 2020. Based on Group M
Slide 37: Asia invested assets: Asset portfolio
Asia invested assets Asset portfolio Breakdown of Asia invested assets1, HY20 $bn Shareholder debt portfolio, HY20 $bn Shareholder- Holding by issuer Par funds Unit linked Total backed 2 Portfolio No. Av. Max <BBB5 $bn Issuers4 $m $m Debt 52.7 5.3 24.1 82.1 Sovereign debt 11.4 78 146.2 2,788.7 11.8%
Slide 38: Shareholder-backed debt exposures
Asia invested assets Shareholder-backed debt exposures By geography1, at 30 June 2020 $bn By credit rating1,2, at 30 June 2020 $bn Sovereign debt Other government bonds Corporate bonds 5% 21% By market: 8% Rating: 24% 15% United States AAA 41% Thailand 30% 35% AA 14% Vietnam A Other BBB 18% <BBB 24%
Slide 39: Shareholder-backed debt exposures
Asia invested assets Shareholder-backed debt exposures By asset type1, 30 June 2020 By sector1,2, 30 June 2020 Corporate debt exposures Government 2% Diversified Basic Technology 3% Materials 7% Financial 3% 35% Corporate Other Bonds Sovereign 2% 47% 47% Consumer, Cyclical 4% Industrial 6% Energy 9%
Slide 40: PCA value in Prudential joint ventures
Asia PCA value in Prudential joint ventures Partner CITIC PRUDENTIAL Prudential Share 22% 50% Market Value $ 7.1 bn ₹ 662.9bn1,6 N/A EV $ 3.1 bn ₹ 230.30bn2,6 Not disclosed IFRS NAV $ 1.0 bn ₹ 72.12bn2,6 Not disclosed GWP $ 4.5 bn ₹ 334.31bn4,6 $ 1.8 bn RMB 12.7 bn3,6 Pre-tax operating profit $ 0.1
Slide 41: Quality execution: Consistent and resilient growth across cycles
Asia Quality execution: Consistent and resilient growth across cycles IFRS operating profit1, $m 24% CAGR • Asian Financial • 9-11 Terrorist Attack • China & India grow • Global Financial • Eurozone slowdown • Further US • Brexit (2016) • Lower interest rates (2019) Crisis (1997- (2001) as world Fin
Slide 42: Africa Section
Africa Section 2020 HALF YEAR RESULTS 82
Slide 43: Africa regional footprint
Africa Regional footprint Africa opportunity Our timeline Accomplishments Rapid population growth1 1.3 bn 2.3 bn 100% owned Joint Ventures 1,000,000+ customers 5 2019 2045 Moving from 17% of world pop to 24% Ghana 2014 Acquisition of Express Life ~10,000 agents 2015: Distribution partnership with So
Slide 44: Africa HY20 business highlights
Africa HY20 Business highlights $54 million of APE sales Agency Bancassurance +102% ~10,000 agents +73% APE sales growth Distribution +59% APE sales 4 countries with Optimising APE growth1 growth MDRT agents strategic partnerships COVID-19 cover for all customers Mobile policies in Nigeria Products
Slide 45: US Section
US Section 2020 HALF YEAR RESULTS 85
Slide 46: US key features
US Key features US financial performance, $m Leading position in the annuity industry1 HY20 HY19 % FY19 Best in class cost base3 & industry leading platform4 APE 979 1,075 (9)% 2,223 NBP 248 450 (45)% 883 Successful track record of risk management IFRS operating profit 1,266 1,572 (19)% 3,070
Slide 47: Sales developments
US Sales developments Sales and deposits, $bn Total advisory sales, $m VA % of retail sales 89% 79% 65% 70% 80% 95% VA % of total sales 68% 66% 61% 70% 63% 95% 6.2 6.3 5.7 5.3 274 5.0 0.4 1.3 248 251 0.9 2.0 206 62 195 1.2 1.0 1.6 1.0 3.5 182 58 56 4 0.4 0.2 13 43 3.8 3.8 4.0 190 213 195 191 3.5 3.7
Slide 48: Unhedged economic profile of GMWB guarantees
US Unhedged economic profile of GMWB guarantees Jackson unhedged GMWB cash flow exposure, 30 June 2020 2020 HALF YEAR RESULTS 88
Slide 49: Transactions with Athene
US Transactions with Athene 1. ~90%point increase in JNL’s3 RBC ratio, increased strategic flexibility 2. Lower credit exposure Statutory (US) LCSM (Group) IFRS (Group) EEV (Group) +69%p to RBC +25%p to LCSM shareholder ratio IFRS pre tax: $846m EEV profit: $(423)m Reinsurance1 +$0.8bn to stat. surp
Slide 50: US invested assets: Asset portfolio
US invested assets Asset portfolio Breakdown of US invested assets 1, HY20 $bn Shareholder debt portfolio, HY20 Holding by issuer Shareholder-backed 2 Portfolio No. Av. Max 39.0 <BBB7 Debt $bn Issuers6 $m $m Equity 0.3 Sovereign debt 4 5.4 8 675.0 5,354.2 0.0% Other debt 32.4 1,132 28.6 228.2 2.8% M
Slide 51: Shareholder-backed debt exposures by credit rating
US invested assets Shareholder-backed debt exposures by credit rating1,2 Other government bonds Corporate debt3 Asset backed securities 3% 1% 4% 5% 6% 16% 39% Rating: AAA 17% AA 50% 42% A 6% 66% BBB <BBB 45% Total $1bn Total $28bn Total $3bn 1. Totals may not cast as a result of rounding 2. Based on
Slide 52: Shareholder-backed debt exposures
US invested assets Shareholder-backed debt exposures By asset type1,2, 30 Jun 2020 By sector1,2,3, 30 Jun 2020 Corporate debt portfolio4 Corporate debt exposures Investment grade Technology • Significant weighting towards investment grade Quasi 5% − Investment grade is 97% of corporate debt Sovereig
Slide 53: Group Section
Group Section 2020 HALF YEAR RESULTS 93
Slide 54: 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 55: Capital generation
Capital generation Comparison of Group LCSM with EEV Free Surplus generation HY20 movement in estimated LCSM capital surplus1, $bn HY20 movement in EEV free surplus5,6, $bn Required capital = Group Minimum Capital Requirement (GMCR) Required capital set to satisfy regulatory constraints 31 December
Slide 56: Prudential plc 2020 Half Year Results
Prudential plc 2020 Half Year Results 11 August 2020 96