Prudential Plc · LSE:PRU
Prudential — Morgan Stanley European Financials Conference 2016
23 slides from Prudential's conference presentation, Mar 16, 2016
Slide 1: Prudential plc
Prudential plc Morgan Stanley European Financials Conference 16 March 2016 1
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: CEO messages
Group CEO messages 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 Wel
Slide 4: Another year of strong delivery
Group Another year of strong delivery IFRS operating profit1, £m Free surplus generation1, £m New business profit1,2, £m +22% +15% +20% 4,007 2,617 3,290 3,050 2,175 2,645 2014 2015 2014 2015 2014 2015 EEV per share (pence) Group Solvency II surplus3, £bn Dividend per share (pence) +11% +£0.5bn 48.7
Slide 5: Strategy
Group Strategy Significant protection gap and investment needs of the middle class Self-reliant global middle class, US Transition of ‘baby- boomers’ into retirement UK ‘Savings gap’ and aging population in need of returns / income PRUDENTIAL
Slide 6: Premium franchises
Group Premium franchises Asia US UK Premier retirement income Well recognised brands with strong track Leading pan regional franchise player record In Asia since 1923 167 years of providing financial Founded in 1961 security 14m life customers 4m life customers 6m life customers Top 3 position in 9
Slide 7: Regional footprint
Asia Regional footprint Hong Kong Singapore Malaysia Indonesia # 2 Rank #2 Rank # 1 Rank 3 # 1 Rank 32% Agency market 25% Market share 4 18% Market share 22% Market share share2 # 1 Largest agency in # 1 Agency player 23% Regular premium the industry market share Philippines, Thailand, India & China
Slide 8: Product portfolio aligns with customer needs
Asia Product portfolio aligns with customer needs Health & protection Savings Clear benefit Affordable price Strong returns 100% = average annual income Actual +19% Linked 19 46 premium Saving Premiums paid = 9% \ 73 of average annual Illustrative 100 income H&P 54 81 premium Spend 27 % of premium u
Slide 9: Consumers remain resilient
Asia Consumers remain resilient Personal disposable income1 China Malaysia Indonesia 25 12 25 10 30,352 8 20,396 22,297 19,244 20,348 27,290 18,439 30 20 16,755 10 20 15,116 16,587 17,866 8 22,434 24,898 7 14,655 15 12,549 8 15 13,883 6 20 18,090 20,084 6 6 5 10 10 4 4 10 4 5 2 5 2 3 0 0 0 0 0 2 201
Slide 10: Outperforming peers. Disciplined delivery
Asia Outperforming peers. Disciplined delivery APE sales1,2, FY15 £m Leveraging economies of scale and scope Q4 25 consecutive quarters of 17% average growth3 Q3 High regular premium content, protection bias Q2 Stable margins Q1 Discipline drives long-term shareholder value 7 PCA Pru AIAA1
Slide 11: Recurring income
Asia Recurring income Asia life weighted premium income1,2, Asia persistency3, £bn CER % FY15 10.0 growth 8.5 93.5% 92.1% 91.3% 90.2% 7.3 89.4% 90.0% 89.9% +14% 86.2% 6.2 In-force 5.6 7.2 4.9 6.3 4.2 5.4 3.8 3.3 4.6 4.1 2.6 3.6 2.0 2.6 3.0 2.1 +29% 1.8 1.4 2.8 2008 2009 2010 2011 2012 2013 2014 2015
Slide 12: High quality, defensive growth
Asia High quality, defensive growth Regular and Single Premium APE1, £m c90% Regular premium MSCI Asia ex Japan2 2,641 2,010 1,911 1,740 1,514 1,391 1,131 1,052 889 723 206 120 494 151 106 103 360 91 340 281 155 122 110 146 157 214 227 212 79 23 11 77 27 63 46 45 56 68 91 79 6 9 1995 1996 1997 1998
Slide 13: Hong Kong
Asia Hong Kong IFRS operating profit,1 £m CAGR Focus on regular premium protection sales 24% • 95% of sales are regular premium • H&P APE +65%, H&P 58% of NBP • Similar domestic and Mainland China product mix 150 High quality Mainland China business • 55% of Hong Kong APE 50 • 97% regular premiu
Slide 14: High quality, defensive growth
Asia High quality, defensive growth FY15 +15% +17% Inforce recurring income underpins delivery 1,266 1,086 New business earns over time In-force IFRS 2015operating In-force 2015 Free surplus Profit1,4, Generation2,4, £m £m Earnings predominantly uncorrelated to markets 65% Resilient financia
Slide 15: Asia 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 capacity Proven record of innovation and execution drives customer and shareh
Slide 16: US: Outperforming peers. Delivering results
US Outperforming peers. Delivering results Operating ROE1, FY15 $ 13.0 VA Net inflows bn 2 30% +16ppt #1 Leading cost efficient player 3 (33bps) 50% Larger wholesale distribution than nearest competitor 4 14% 32% Greater wholesaler productivity 5 1.7 Profitable inforce book £ bn 6 2015 481% RBC rati
Slide 17: Proven execution skills
US Proven execution skills Strategic imperatives Jackson position 1 1 High quality product 9x more funds than peers delivering +10% return1 2 2 Transparency of guarantee Modular product / no cross subsidy 3 3 Operational flexibility Leading cost efficient player2 4 4 Commercialisation speed & qualit
Slide 18: UK: Navigating change. Investment focus
UK Navigating change. Investment focus Retail APE sales1, £m Life Jan 2013 Apr 2014 Pension reforms 70% Growth in APE from new products (2015) 19% Income drawdown market share RDR 874 2 795 (Up 12pts from 7% 2013) Other 82% Growth in PruFund APE (inc PruFund ISA) 697 663 Bonds (2015) Income drawdown
Slide 19: 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 in • Sub-prime • Liquidity crisis • Start of global • Greece and • Concern over • US debt ceiling • Concern over • Asia FX • Solvency II fin
Slide 20: Disciplined execution
Group Disciplined execution IFRS operating profit1,2, £m New business profit1,2, £m Free surplus generation1,2,3, £m 3.8x 3.9x 4.8x 2,617 4,007 3,050 CAGR CAGR CAGR +16% 2,115 2,579 +16% 3,186 +19% 2,462 2,082 2,954 1,791 2,080 1,982 2,520 1,536 1,687 2,017 1,433 1,453 1,823 1,444 1,143 1,1681,244 9
Slide 21: Delivering cash
Group Delivering cash Dividend, pence per share 48.78 Special 10.00 dividend +10.0% 38.78 36.93 +5.0% +15.0% 33.57 +15.9% 29.19 +5.6% 25.19 +20.2% 23.85 26.47 +5.0% +5.0% 25.74 +5.0% +5.0% 18.90 19.85 23.84 Total dividend 17.14 18.00 16.32 20.79 17.24 17.24 12.91 13.56 Final / second 11.02 11.72 12.
Slide 22: Delivering profitable growth
Group Delivering profitable growth Revenue Value Returns APE1,2, £m + EEV shareholders’ equity3, £bn + IFRS ROE3,4, £m 1.5x CAGR1,2 Growth rate1,2 +10bn 11% 2014-2015 Q4 +30% Q3 +17% 5,456 26% 27% 32.4 Q2 +19% 29.2 23% 23% 4,025 24.9 22.4 Q1 +7% 2012 2015 2015 2012 2013 2014 2015 2012 2013 2014 2015
Slide 23: Summary
Group Summary 2015 performance highlights distinct competitive advantages and execution quality Premium franchises, ‘best in class capabilities’ Asia structural growth underpinned by compelling demographics and franchise quality High quality, recurring income & defensive balance sheet underp
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