Prudential Plc · LSE:PRU
Prudential — Investor Day (November 2016)
24 slides from Prudential's investor day presentation, Nov 16, 2016
Slide 1: Mike Wells – Group
Mike Wells Group
Slide 2: Conference objectives
Group Conference objectives 1 Confirm opportunity set & positioning 2 Demonstrate business resilience 3 Highlight BU operational progress 4 Re-affirm company prospects
Slide 3: Conference agenda
Group Conference agenda Group Strategic & Financial overview Asia Operational summary & Country ‘deep dives’ Strategic overview, Regulatory & US financial update UK M&G & Life overview
Slide 4: Market context
Group Market context Lower nominal GDP growth rates Interest rate outlook Higher uncertainty & volatility Regulatory & political change
Slide 5: Clear strategy
Group Clear 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
Slide 6: Significant growth opportunities
Group Significant growth opportunities Asia US UK Low life insurance and mutual fund penetration Retiring ‘baby-boomer’ Aging population Significant health and generation protection gap Large & growing retirement Large & growing retirement Growing working age population asset pools asset p
Slide 7: 'Best in class' franchises
Group ‘Best in class’ franchises Asia US UK • Leading pan regional franchise • Well recognised brands with strong • Top 3 position in 9 of 12 life markets1 • Premier retirement income player track records • #1 Retail Asian asset manager2 PruFund Investment Performance7 Out of pocket medical spend3 1
Slide 8: Capital allocation focus
Group Capital allocation focus Metric Objective Asia Underlying free surplus1, £bn 2017: £0.9bn to £1.1bn Asia IFRS operating profit 2, £m 2012-17: At least 15% CAGR Cumulative Group Underlying free surplus1, £bn 2014-17: At least £10bn 1. Note: 2. The objectives assume exchange rates at December 20
Slide 9: Significant capital allocation optionality
Group Significant capital allocation optionality Shareholder value levers Sources of earnings1 Expanding Protection franchise Focus on With-profits Asia De-emphasise interest sensitive Withdrawal from Bulk Products 2010-15 products UK Annuities CAGR2 Expand M&G investment Launched fee based VA capab
Slide 10: Relative outperformance
Group Relative outperformance Asia US UK APE sales1 VA net flows2 Growth in Life advised sales3, 1H16, % Growth in Current market share 1.6x environment Prudential UK 95% +10pts Income drawdown3 Jackson Rest of market 32% Jackson Prudential UK 124% +4pts Individual pensions4 7% Rest of market Indust
Slide 11: Absolute performance underlines intrinsic strengths
Group Absolute performance underlines intrinsic strengths IFRS operating earnings £2.1bn1 +9% Growth HY16 Cash Free surplus generation £1.6bn1 +13% HY16 Capital Solvency II generation £2.1bn2 YTD’ Oct 16 1. Growth rate based on reported exchange rate 2. Underlying operating experience of £1.7bn plus
Slide 12: Asia: Significant growth runway
Asia Significant growth runway +1m 42% a month +$4tr a year $64tr 12% 9% 2.3bn 2015 $42tr Asia US UK 2.5bn 2014 2019 2030 Insurance penetration1 Out of pocket healthcare spend2 Working age population3,4 Private financial wealth5 Penetration Health Gap Population Wealth 1. Insurance penetration sourc
Slide 13: Asia: Compounding growth
Asia Compounding growth Life Asset management 2.0x 3.5x 2.7x 2006 2015 Customers 2.4x 2006 2015 2006 2015 2006 2015 Case size1 Sales1,2 Funds Under Management4 17% average APE growth for 28 consecutive quarters3 1. Growth calculated on a reported exchange rate basis 2. Sales – APE 3. 17% year on yea
Slide 14: Asia: High quality resilient portfolio
Asia High quality resilient portfolio Recurring premiums Growing in-force Diversification Regular premium APE1 Life weighted premium income3,4, IFRS operating profit6,7 £m £bn CER Indonesia +12% HY16 growth5 Singapore +2% MSCI Asia ex Japan2 5.9 +20% HY16 Hong Kong 4.9 +32% 4.3 +20% £ + 743 15%, m M
Slide 15: Asia: Delivering profitable growth
Asia Delivering profitable growth IFRS operating profit1, £m 2x* 2017 objective2 1,324 1,140 2x 1,075 975 774 2x 591 482 743 278 632 184 213 512 525 435 359 H2 233 291 H1 102 81 104 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 NBP 2013 2017 objective3 objective3 objective2 1. Com
Slide 16: Asia: Central to Group prospects
Asia Central to Group prospects Asia contribution to Group earnings Asia demand drivers Operating profit1,2, £m Low insurance and mutual fund penetration 2006 Asia 6.1x 2015 Significant Health & Protection gap 2006 rebased 2006 Growing working age population Group 3.4x 2015 Increasing affluence 1. 2
Slide 17: US: Capabilities aligned to significant opportunity
US Capabilities aligned to significant opportunity Significant retirement opportunity Capabilities Penetration $14tr $16tr Leading cost efficient player3 (32bps) $2tr VA assets Retirement advisor assets1 Market leading fund performance & range4 +40 million Reach retirement 5.0 m age in next decade L
Slide 18: US: Disciplined execution
US Disciplined execution Separate account assets, $bn VA fee operating profit1, £m 3.0x 1,114 145.6 872 739 48.9 2010 3Q16 494 10.0 9.0 VA sales, $bn 8.0 7.0 265 642 552 6.0 VA ex Elite Access2 5.0 4.0 3.0 2.0 Elite Access 1.0 2011 2012 2013 2014 2015 1H16 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 19: US: Delivering cash
US HY16 Delivering cash Cash remittance, $m Capital 710 680 Strong capital position 530 470 450 400 280 125 Capital and cash generative business 63 1 2008 2009 2010 2011 2012 2013 2014 2015 1H16 Track record of cash remittances Cumulative Cash remittances $3,708m 1. Net remittance from Jackson inclu
Slide 20: UK: Pivoting to our strengths
UK Pivoting to our strengths Savings & income opportunity PruFund AuM, (£bn) 22.8 Life 16.5 25 - 34 11.6 9.1 35 - 44 45 - 54 55 - 64 65 - 74 75 - 84 7.5 5.4 +85 4.1 0.1 0.3 2.5 0.9 Financial & pension wealth by age1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q16 M&G Asset management $102tr U
Slide 21: Well positioned to deliver across cycles
Group Well positioned to deliver across cycles Earnings quality Earnings diversification Other M&G Other 8% 10% Insurance margin Spread income 26% 16% 32% Asia UK 21% GBP 76% USD linked USD 28% 22% Asset Mgt Fee income Life Fee income 37% US IFRS income by revenue source1, HY16 % IFRS profit by busi
Slide 22: Long term track record
Group Long term track record IFRS operating profit1,3, £m New business profit1,2, £m Free surplus generation1,3, £m 3.5x 3.8x 3.7x 1,609 2,059 1,260 CAGR 1,881 CAGR 1,190 CAGR 1,418 +15% +16% +16% 1,009 1,219 1,521 1,152 913 1,091 1,415 1,031 818 756 921 1,157 1,022 630 817 488 609 693 503 402 611 4
Slide 23: Summary
Group Summary • 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 • Well pos
Slide 24: Agenda
Agenda 08.30 – 09.10 Group Introduction and Group overview Mike Wells Group financial update Nic Nicandrou 09.10 – 10.30 Asia Overview, financial & insurance Tony Wilkey update, Eastspring Adrian O’Connor, Lilian Ng Q&A & Guy Strapp Break 10.50 – 12.00 US Overview Barry Stowe US distribution and DOL