Slide 1: Prudential plc 2021 Full Year Results
Prudential plc 2021 Full Year Results 9 March 2022
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain 'forward-looking statements' with respect to certain of Prudential's (and its wholly and jointly owned businesses’) plans and its goals and expectations relating to its future financial condition, performance, results, strategy and objectives.
Slide 3: Mike Wells, Group CEO
Mike Wells Group CEO
Slide 4: Strategic and operational highlights in 2021
Prudential plc Strategic and operational highlights in 2021 Resilient Enhanced distribution business model capabilities • Business model aligned to structural growth levers New & 200 > revamped products • Diversified across Asia & Africa with H&P focus • Modern multi-channel distribution model O
Slide 5: 2021 financial highlights
Prudential plc 2021 financial highlights APE sales New business profit 88 ++ %% Group Group +13% Group 16 ++ 16%% Group Group exex HKHK +23% Group ex HK FY21 FY21APE APEvs vsFY20 FY20CER CER1 1 FY21 NBP vs FY20 CER1,3 IFRS earnings Embedded value + 16% $ 47.4bn Growth on prior year IFRS +7% EV per s
Slide 6: Strong broad based delivery despite challenging operating backdrop
Prudential plc Strong broad based delivery despite challenging operating backdrop Sharply higher new COVID cases in 2H 20211 Multi-channel model supports growth2 1H19 2H19 1H20 2H20 1H21 2H21 Broad based NBP, $m 1,696 1,874 936 1,304 1,172 1,354 Double-digit APE & NBP growth APE & NBP excl. HK YoY g
Slide 7: Enhancing multi-channel capabilities to accelerate growth: Agency
Prudential plc Enhancing multi-channel capabilities to accelerate growth: Agency Enhancing 8 34% 2020 40% 2021 quality Markets increased MDRTs1,2 MDRT contribution to APE1,3 +9% High quality Building on our position Re-tooling + 16% 48k resilient Increase in APE Agents closing sales growth 960 1,050
Slide 8: Enhancing multi-channel capabilities to accelerate growth: Bancassurance
Prudential plc Enhancing multi-channel capabilities to accelerate growth: Bancassurance Enhancing 9 10 quality Markets with NBP Markets with double margin expansion digit NBP growth +48% High quality Building on our position Extending >160 >26,000 resilient growth 661 as a leading our reach Bank Ban
Slide 9: Enhancing multi-channel capabilities to accelerate growth: Digital
Prudential plc Enhancing multi-channel capabilities to accelerate growth: Digital • Promoting inclusion through affordability & accessibility Broadening • Pulse attracts a new, younger access to new customers generation of customers • Multi-sided ecosystem connected > 32m c. 13m to partner platforms
Slide 10: Mainland China: Strong strategic platform with high quality balance sheet
Prudential plc Mainland China: Strong strategic platform with high quality balance sheet Others Par H&P Diversified Agency High quality resilient Banca Traditional platform growth Linked Channel FY21 NBP Product Agency APE + 25% Banca APE + 28% +48% +22% +23% To >1.1k MDRT1 +5 To 48 bank partners En
Slide 11: Hong Kong: Pivot to domestic protection & enhancing capabilities
Prudential plc Hong Kong: Pivot to domestic protection & enhancing capabilities +12% Top 3 with c.19% Strong sequential Focus on 75% market share1 momentum despite quality 2020 CER 2021 border closure Increase in High domestic VHIS domestic H&P APE H&P mix in NBP +14% +19% VHIS +24% H&P H&P Par Par
Slide 12: Indonesia: Resilience supported by broadening & strengthening capabilities
Prudential plc Indonesia: Resilience supported by broadening & strengthening capabilities Growth amid + 37% + 19% + 33% Momentum despite peak challenging backdrop Increase in Increase in Increase in Covid cases in Jun/Jul standalone Sharia new Group protection policies policies business APE +17% +8%
Slide 13: Singapore & Malaysia: Strong positioning supports continued momentum
Prudential plc Singapore & Malaysia: Strong positioning supports continued momentum Delivering customer-led Enhancing multi-channel +49% +48% solutions distribution PRUShield 50% 523 19% 9% 159% + +109% 350 + HNW + + Singapore Overall YoY YoY APE growth APE growth 2020 2021 APE growth supported by I
Slide 14: India & Thailand: Good progress
Prudential plc India & Thailand: Good progress Enhancing multi-channel Focus on quality distribution & our products High quality +41% resilient growth India ~100 + 28% Market leading 2020 2021 franchise with +25% Increase in NBP New partnerships Increase in APE strong momentum in 2021 to c.700 per a
Slide 15: Building on track record of delivering sustainable shareholder value
Prudential plc Building on track record of delivering sustainable shareholder value New business profit (AER)1,3,5, $m IFRS operating profit (AER)2,3,5, $m 2.0X 3.3X 10Y CAGR 10Y CAGR 4,023 +7% 2,526 +13% 1,253 HK MCH 1,214 NBP7 FY11 FY21 FY11 FY21 Embedded value (AER)2,4,5, $bn Operating free surpl
Slide 16: APE outcome reflects the timing & scale of Covid-related restrictions
Prudential plc APE outcome reflects the timing & scale of Covid-related restrictions Asia & Africa APE, % of prior year1 • We enter 2022 with a strong balance sheet and capital position • The timing of the opening of the Hong Kong border remains uncertain and Covid-19 will continue to have an impact
Slide 17: Key messages
Prudential plc Key messages • High quality resilient growth despite challenging environment • Enhancing capabilities building on our substantial competitive advantages • 100% focus on Asia & Africa with leading positions in key high growth markets & segments • Well positioned to capture future long-
Slide 18: Mark FitzPatrick, Group CFO & COO
Mark FitzPatrick Group CFO & COO
Slide 19: FY21 Financial & operational highlights
Prudential plc FY21 Financial & operational highlights Growing value Growing capital Growing earnings New business profit, $m Life & asset management Life & asset management operating free surplus IFRS operating profit, $m2 generation, $m2 Growth +13% +7% +8% 2,240 2,526 2,071 4,023 1,928 3,716 FY20
Slide 20: High quality, multi-channel, diversified new business profit growth
Growing Value High quality, multi-channel, diversified new business profit growth Quality Multi-channel Diversified Value APE by distribution, FY21 APE by segment, FY212,3 NBP by segment, FY212,3 CPL4 +25% CPL4 +22% 86% APE1 Agency Hong Kong (27)% regular Hong Kong (6)% premium Indonesia (7)% Mal. +
Slide 21: New business profit drives EEV operating profit
Growing Value New business profit drives EEV operating profit Group EEV development in FY 2021, $bn Group EEV operating profit: $3.5bn1 47.4 0.3 0.7 18.4% Jackson (0.9) 1.6 2.4 Equity raise (0.4) (0.3) (0.4) 2.5 46.1 44.7 44.3 44.3 41.9 EEV continuing NBP Expected Asset Central costs Dividends paid
Slide 22: Reinvestment of OFSG drives compounding value
Growing Capital Reinvestment of OFSG1 drives compounding value Every $1 reinvested created ~$5 of New Business Profit Group OFSG, continuing operations FY21 $bn • $2.6bn of OFSG generated by high quality in-force life business & Eastspring New business re-investment drives growth in expected future
Slide 23: Strong central liquidity: funding costs reducing, flexibility enhanced
Growing Capital Strong central liquidity: funding costs reducing, flexibility enhanced Holding company cash movement, FY21 $bn pro-forma1 Funding actions (0.6) 2.4 (2.25) 1.5 0.3 (0.4) (0.2) 2.3 (0.2) 1.7 1.6 1.6 1.8 1.5 1.4 1 31-Dec-20 Net cash Central & Dividend paid Central banca Other Equity Deb
Slide 24: Strong and resilient GWS position
Growing Capital Strong and resilient GWS position Capital generative Resilient to macro stress Estimated group shareholder GWS surplus development, FY21 $bn1 Estimated group shareholder GWS surplus, 31 December 2021 $bn1,3 2 GWS surplus 31/12/2020 9.4 370% 2 Impact on GWS surplus 31/12/21 $13.2 454%
Slide 25: Quality focus supports IFRS life operating profit growth despite higher Covid claims
Growing Earnings Quality focus supports IFRS life operating profit growth despite higher Covid claims Quality focus Insurance margin drives IFRS life result Diversified, at scale High regular premium mix1 FY21 IFRS life operating profit, continuing operations $m FY21 IFRS operating profit by segment
Slide 26: Positive operating leverage as we reduce central costs
Growing Earnings Positive operating leverage as we reduce central costs Group IFRS result, $m • Positive jaws: segment profit +8%, adjusted op. profit +16% FY20 FY21 % (CER1) Growth • Central overhead improvement reflects delivery of Long-term business 3,430 3,709 8 $180m pa corporate expenditure sa
Slide 27: Concluding remarks
Prudential plc Concluding remarks • Multi-channel, digitally enabled and quality focused distribution drives 13% NBP growth1 • In-force business generates predictable, resilient cash-flow for reinvestment at attractive returns • 8% operating RoEV2 in a Covid impacted year • Strong, robust balance sh
Slide 28: Appendix
Prudential plc Appendix Contents: CEO appendix 29 CFO appendix 44 28
Slide 29: CEO appendix
CEO appendix
Slide 30: ESG
Prudential plc ESG Inclusive product development • Focus on digital innovation to increase penetration in Making health underserved populations and financial • Added diversity to our product security offering Building social accessible • Sharia developments in Malaysia capital & Indonesia Inclusive
Slide 31: Leading pan-Asia & Africa focused life & health insurer and asset manager
Prudential plc Leading pan-Asia & Africa focused life & health insurer and asset manager Why? Who? What? How? Our Purpose 18.6m customers1 >200 new and revamped Multi-channel distribution products in FY21 We help people get the most out of life We make healthcare Large Expanding affordable and acces
Slide 32: Diversified franchise with leading presence in markets with favourable macro trends
Well positioned for further long-term profitable growth Diversified franchise with leading presence in markets with favourable macro trends FY21 IFRS Life Eastspring Insurance Total health GDP growth adjusted position1 position6 penetration7 protection forecast9 operating gap8 profit Mainland China
Slide 33: Distinct competitive advantages
Prudential plc Distinct competitive advantages 1 Mainland China: Access to nearly whole of China 5 Pulse: Compelling digital strategy 20 branches & All-in-one, >80% personalised presence in and on-demand AI-powered app 99 cities Engage Onboard Fulfilment GDP & GWP1 2 India: Top 3 Life and Asset Mana
Slide 34: Asian markets at different levels of restrictions
Operating environment Asian markets at different levels of restrictions Vaccination rates Restriction measures & timeline 2021 2022 Fully Partially vaccinated vaccinated1 1 85% 3% 73% 7% 73% 7% 69% 6% 64% 7% 78% 1% 52% 16% 34% 17% 47% 20% 87% 3% Significant containment restrictions Before Covid rest
Slide 35: APE & NBP momentum: Sequential growth since Q2, ahead of 2019 ex HK
Prudential plc APE & NBP momentum: Sequential growth since Q2, ahead of 2019 ex HK Full Year APE, $m Quarterly APE2, $m Total Total Total ex HK 8% Total ex HK 13% 11% 5,324 1,186 1,141 1,116 3,890 4,194 1,039 976 1,005 887 734 16% 3,644 1,047 835 871 912 953 3,292 3,133 775 773 611 2019 2020 2021 Q1
Slide 36: Mainland China: Our City Cluster Model
Prudential Plc Mainland China: Our “City Cluster” Model Citic-Prudential Life (CPL) GWP, $bn1 GWP GWP Mix %2 CPL GWP Market CPL Agency CPL Banca CAGR Channel3 Share % Channel3 3.3x # of (FY16- China # of # of CPL FY16 FY21 Agents $4.2bn FY21) Market Partners6 Outlets (,000)7 $3.6bn $3.3bn Rest 40% 2
Slide 37: Vietnam & Philippines
Prudential plc Vietnam & Philippines Focus on Enhancing multi-channel distribution quality High quality resilient growth >40,000 bite-sized products delivered, with + 7pp 31k >10% conversion to higher value products + 17% +1% Increase in MDRT Policies sold Banca APE Vietnam qualifiers’ APE D2C assoc
Slide 38: Africa: Ongoing business momentum despite more challenging backdrop
Prudential plc Africa: Ongoing business momentum despite more challenging backdrop Agency Bancassurance $134 million of APE sales +8% >13,000 agents Distribution +12% >600 branches +24% APE sales APE sales Optimising All markets achieved APE sales growth1 growth1 MDRT qualification growth1 strategic
Slide 39: Eastspring
Prudential plc Eastspring Funds under management (AER1), $bn IFRS operating profit, $m Average FuM +9% CER vs 20202 0.6 +10% % Mix (4.0) 3.4 10.7 Internal 59% External net flows 258.5 External 32% 314 255.2 Equity +4.6 Retail +1.1 286 247.8 Bonds, other -4.0 Inst. -0.5 External MMF 5% Funds managed
Slide 40: Reinforced leadership in Sharia and Takaful
Prudential plc Reinforced leadership in Sharia and Takaful Malaysia Takaful 30% market share 18k agents; +18% Broadening 240m # 1 Indonesia Sharia access to new 29% market share Muslims in SE Asia 143k agents; +11% High quality resilient growth customers Favourable Leading demographics position +19%
Slide 41: Continued innovation and enhancing our product capabilities
Prudential plc Continued innovation and enhancing our product capabilities Product & digital Virtual Attracting new customers innovation onboarding Virtual onboarding a new New and revamped > 200 +22% to >2.5m 18.6m products embedded capability1 New 2.2 to Pru Total life Agency Banca customers custo
Slide 42: Hong Kong: Intact demand drivers for mainland Chinese customer
Prudential plc Hong Kong: Intact demand drivers for mainland Chinese customer MCH visitors’ reasons to Financial products likely to acquire Majority of MCH visitors prefer to wait until visit HK (Next 12 months) in HK (Next 12 months) border opens to purchase insurance in HK Managing personal Health
Slide 43: Hong Kong: Intact demand drivers for mainland Chinese customers
Prudential plc Hong Kong: Intact demand drivers for mainland Chinese customers MCH visitors’ intention for MCH visitors’ preference for MCH visitors’ preference for financial products medical treatment medical treatment Any insurance CI Medical & Minor illness, % Critical illness, % products1, % ins
Slide 44: CFO appendix
CFO appendix
Slide 45: Diversification and growth
Prudential plc Diversification and growth Financial performance by segment Growth CPL mkts New Business Adjusted IFRS EEV SHF Long- $m Profit Operating Profit term business1 New Business Profit, FY21 FY21 %YoY2 FY21 %YoY2 31- Dec-21 Sing. HK Malaysia Indo. CPL3 352 22 343 28 3,114 Hong Kong 736 (6)
Slide 46: China & India life JVs
Prudential plc China & India life JVs Partner Prudential’s Prudential’s board Market Embedded NBP stake representation capitalization Value FY21 $bn (100%) $bn (100%) $m (100%) Nic Nicandrou (Chair) 50% Lilian Ng Charles Chan n/a 6.21,2 7041 CITIC Prudential Life (CPL) Jin Wen Hung 22% Wilfred Black
Slide 47: APE, NBP and Life Weighted Premiums
Prudential plc APE, NBP and Life Weighted Premiums APE, $m1 NBP, $m1 Life Weighted Premiums, $m1,2 % YoY FY21 vs FY20 % YoY FY21 vs FY20 % YoY FY21 vs FY20 4,194 8% 3,890 (27)% 13% 550 2,526 24,230 23,988 (1)% 757 2,240 (6)% 736 8,388 (14)% 9,803 786 3,644 16% 3,133 1,790 23% 15,600 8% 1,454 14,427
Slide 48: Focus on high quality product mix reduces market risk exposure
Prudential’s EV methodology Focus on high quality product mix reduces market risk exposure Prudential adopts EEV principles which: • Increase the transparency and consistency of reporting • Allow for the evaluation of risks at a product group level and by territory High quality VIF Prudential’s EV f
Slide 49: Built on prudent assumptions, demonstrated by our track record
Prudential’s EV methodology Built on prudent assumptions, demonstrated by our track record Operating experience & assumption changes1 Economic experience2 as % of opening EV 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
Slide 50: Embedded value sensitivities in rising rate scenarios
Prudential’s EV methodology Embedded value sensitivities in rising rate scenarios Embedded value long-term business As reported 31 December 2021 44,646 Excluding TVOG1 45,430 Interest rates: 2% increase Effect of interest rates and consequential effects ex Risk Discount Rates (RDR) 4,935 Effect of R
Slide 51: Group free surplus development
Capital Group free surplus development Group free surplus development, FY21 $bn Pro-forma1 Group OFSG: $1.2bn 0.3 12.3 (0.5) (0.9) 0.4 0.7 2.3 0.1 (0.4) 12.7 11.5 11.2 11.6 11.1 11.1 10.3 Free Surplus Life In-force Asset management Investment new Central costs (incl. Dividend Non operating Net capit
Slide 52: Reconciliation of GWS and EEV free surplus ex intangibles
Capital Reconciliation of GWS and EEV free surplus ex intangibles Estimated Group shareholder GWS surplus to EEV free surplus, 31 December 2021, $bn Pro-forma1 (1.7) (0.9) (2.6) 13.2 0.4 11.5 8.0 8.0 8.4 1 2 GWS surplus 31/12/21 Debt redemption January GWS surplus 31/12/21 pro- Increase required cap
Slide 53: Core structural borrowings
Prudential plc Core structural borrowings Prudential plc: Core structural borrowings, 31 December 2021 Pro-forma1 • Balanced call date / maturity profile facilitates group debt Next call / Maturity Schedule management US$m 2.95% 3.125% 1,000 4.875% • All senior and subordinated 6.125% bonds included
Slide 54: Asset portfolio
Asia and Africa invested assets Asset portfolio Breakdown of invested assets1, FY21 $bn Shareholder debt portfolio, FY21 $bn Shareholder- Holding by issuer Par funds Unit linked Total backed 2 Portfolio No. Av. Max <BBB-6 $bn Issuers5 $m $m Debt 63.3 5.9 29.7 98.9 Direct equites 10.3 12.8 2.4 25.5 S
Slide 55: Shareholder-backed debt exposures
Asia and Africa invested assets Shareholder-backed debt exposures By geography1, at 31 Dec 2021 $bn By credit rating1,2, at 31 Dec 2021 $bn Sovereign debt Other government bonds Corporate bonds 3% By market: 13% Rating: 22% 13% 25% United States 40% AAA 42% 1% Thailand AA 11% Vietnam 35% A 36% Other
Slide 56: Shareholder-backed debt exposures
Asia and Africa invested assets Shareholder-backed debt exposures By asset type1, 31 Dec 2021 By sector1,2, 31 Dec 2021 Corporate debt exposures Basic Materials Government Technology 3% 1% 5% Corporate Real Estate Bonds 6% Financial 30% 49% Sovereign 47% Consumer, Cyclical 6% Industrial 6% Energy 9%
Slide 57: Transfer of Prudential shares between UK and HK share registers
Prudential plc Transfer of Prudential shares between UK and HK share registers1 UK Shares Removed from the UK Computershare update the Form of Request Register. Removal Request sent to issued share capital on Shares deposited into Lodged with EQ2 Computershare for completion the HK register CCASS an