Slide 1: Prudential plc 2018 Full Year Results
Prudential plc 2018 Full Year Results 13 March 2019 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: Mike Wells, Group Chief Executive
Mike Wells Group Chief Executive 3 2018 FULL YEAR RESULTS
Slide 4: Group Key highlights
Group Key highlights Growth Cash Embedded value + 11% FY2018 New business profit vs £ 4.0bn FY2018 Operating free surplus £ 50bn FY2018 Embedded value +11% vs FY2017 CER1 generation FY2017 AER2 Earnings Dividend Capital £ 4.8bn FY2018 IFRS operating profit + 5% Growth on prior year to 232% FY2018 So
Slide 5: Enhancing our capabilities and extending our reach
Group Enhancing our capabilities and extending our reach WFOE1 Hunan >7,000 Shaanxi2 qualifiers China China Building on leading Broadening Expansion of our multi-channel asset footprint capabilities management Enhancing capabilities to accelerate growth Expansion of Leveraging health Digital distrib
Slide 6: Progress towards demerger
Group Progress towards demerger ✓ Completed the legal transfer of the HK business ✓ Completed reinsurance of £12bn UK annuity book to Rothesay Life ✓ Good progress with Part VII transfer ✓ HKIA announced as future Group-wide supervisor ✓ Raised £1.6bn of new subordinated debt ✓ Established new holdi
Slide 7: Prudential plc post demerger: ambition and operating principles
Prudential plc post demerger Ambition and operating principles Capturing structural Capturing structural opportunity opportunity • Long-term positioning in growing target markets • Creating financial solutions to meet distinct customer needs • Growing and diversifying distribution | Operating with d
Slide 8: M&GPrudential: broad range of capabilities
M&GPrudential Leveraging a broad range of capabilities to deliver outstanding solutions Delivering superior Successfully diversified Broad range of established investment investment capabilities performance • Differentiated investment 88 Growth Fixed 321 2008-2018 income capabilities in hard to repl
Slide 9: Country highlights – Hong Kong
Asia Country highlights – Hong Kong Structural trends Platform Execution Domestic Agency Ageing Significant Gov’t initiatives Unrivalled agency capabilities Continuous product PRUhealth critical population1 Protection gap2 upgrades & innovation illness multi-care >30% market share 72 7 ➢ VHIS3 52 >2
Slide 10: Country highlights – China
Asia Country highlights – China Structural trends Platform Execution Expansion into footprint Strategic opportunity 10.2% Growth in GDP1 (CAGR % 2017 – 2023) Access to: Access to: ✓ Approval for tax deferred pension 75% 78% ✓ Application for pension company ✓ Established WFOE7 of population China GD
Slide 11: Country highlights - Indonesia
Asia Country highlights - Indonesia Structural trends Platform Execution Enhancing distribution capabilities Broadening product range Population of1 267m Agency initiatives New launches ✓ Segmentation + 19% ✓ Revamped flagship RP unit 90% linked product 1.9% Insurance ‘Elite’ agents 6% increase in A
Slide 12: Asia: High quality portfolio
Asia High quality portfolio High quality Compounding Diversified Hong Kong +33% +15% +12% 443 Indonesia 0% 416 16.4 14.6 FY18 2,164m 329 Singapore 7% +22% £ 194 Malaysia +9% 1,481 Renewal 11.1 12.9 182 149 Eastspring +6% 143 1,293 Vietnam +16% China +20% New 3.5 3.5 Thailand +5% Taiwan +24% Other6 P
Slide 13: Asia: Compounding growth driving a growing earnings base
Asia Compounding growth driving a growing earnings base Renewal premium income1, £bn Life IFRS operating profit1,3, £m +18% +22% 10 year 10 year CAGR CAGR 1,982 269 MSCI Asia ex Japan2 12.9 2008 2018 11.1 9.2 ➢ Scale and diversification of portfolio driving value 7.7 across the cycle 6.6 5.6 4.1 4.7
Slide 14: US: Strategic initiatives
US Strategic initiatives Structural trends Platform Execution Ageing population1 Market leading distribution footprint Growing in advisory channel Population over 65 (millions) • Largest & most productive wholesaling • Partnership with DPL Financial Partners - force access opportunity in independent
Slide 15: Well protected through 4Q market volatility
US Well protected through 4Q market volatility Movement in RBC ratio, % (31 Dec 2016 – 31 Dec 2018) Long track record of • RBC >400% • Strong capital formation (95) +178 Strong capital formation 485% (110) • Paid remittances of $1,050m since 2016 458% • Absorbed 110ppts impact of tax reform since 20
Slide 16: Resilient statutory capital position
US Resilient statutory capital position Sustained capital generation Well-capitalised, resilient solvency position 11.2 9.5 9.1 8.4 7.4 6.7 6.1 5.0 4.9 4.2 4.4 483 450 456 481 485 458 438 417 429 423 409 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2
Slide 17: Long-term track record
Group Long-term track record IFRS operating profit1,2, £m New business profit1,2, £m Free surplus generation1,2,3,4, £m 3.9x 4.8x 5.1x 4,047 3,877 4,827 CAGR CAGR CAGR +15% +17% +18% 1,232 798 808 2008 2018 2008 2018 2008 2018 1 Comparatives have been stated on an actual exchange rate basis 2 Compar
Slide 18: Delivering cash
Group Delivering cash Dividend, pence per share 49.35 47.00 Long-term track record £ 9.2bn Total dividends to shareholders since 20061 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 +5.0% +5.0% +5.0% +20.2% +5.6% +15.9% +15.0% +10.0% +5.0%2 +12.2% +8.0% +5.0% 1 Amounts paid between
Slide 19: Wrap up
Group Wrap up Delivery of high quality profitable growth Building capabilities to better benefit the outlook for shareholders M&GP delivering balanced earnings growth, while executing on merger, transformation & demerger PCA delivering double digit growth, together with enhancing capabilities Jackso
Slide 20: Mark FitzPatrick, Chief Financial Officer
Mark FitzPatrick Chief Financial Officer 2018 FULL YEAR RESULTS 20
Slide 21: FY18 financial highlights
Group FY18 financial highlights New business profit1, £m External net flows1,2, £bn IFRS operating profit1, £m EEV operating profit1, £m Operating earnings CER AER CER AER CER AER New business +15% +7% +3% +19% +11% +6% 20.5 3,616 3,877 4,699 4,827 6,598 7,563 (11.5) FY17 FY18 FY17 FY18 FY17 FY18 FY
Slide 22: Key drivers of Group financial performance
Group Key drivers of Group financial performance Asia US M&GP Renewal premium income1 Separate account assets Funds under management2 £bn £bn £bn +16% +10% +2% 12.9 319 324 11.1 121 133 FY17 FY18 Average Average Average Average (CER) 2017 (CER) 2018 2017 2018 Compounding high quality revenue Drives
Slide 23: Growth aligned to areas of strategic focus
Group Growth aligned to areas of strategic focus Health and protection Variable annuities US Insurance Fee margin1,2 +15% income2 + 8% Asia China Differentiated funds M&GP IFRS profit2 +20% Net inflows £14.6bn PruFund, multi-asset, alternative strategies3 1 Comprises profits derived from insurance r
Slide 24: Asia: FY18 financial highlights
Asia FY18 financial highlights IFRS operating profit1, £m Operating free surplus generation1, £m IFRS operating profit Cash generation CER AER CER AER +10% +9% +14% +14% 2,164 1,027 1,171 1,898 FY17 (CER) FY18 FY17 (CER) FY18 Embedded value, £bn Local solvency capital position Solvency ratio2, £bn,
Slide 25: Asia: IFRS operating profit
Asia IFRS operating profit Life: continued high quality growth IFRS operating profit, £m Insurance margin, £m Strong country contributions Growth in IFRS operating profit +14% +15% Hong Kong +33% 2,164 1,481 Taiwan +24% 7 markets with 182 +6% 1,293 1,898 IFRS >£100m Singapore +22% Eastspring 171 Chi
Slide 26: Asia: EEV life operating profit
Asia EEV life operating profit EEV life operating profit, £m New business profit +23% Double digit growth across 10 markets 4,387 Hong Kong +17% Philippines +14% 3,562 China +14% Vietnam +29% 1,783 +39% Singapore +15% Thailand +75% In-force 1,280 Malaysia +13% Cambodia +73% India1 +17% Laos +29% New
Slide 27: Asia: EEV life operating profit, in-force
Asia EEV life operating profit EEV life operating profit, £m In-force profit £m +23% 4,387 1,783 1,280 565 3,562 Variances / other 311 1,783 +39% 1,218 +26% Unwind 969 In-force 1,280 FY17 FY18 (CER) New 2,604 +14% ➢ Growth in unwind driven by: 2,282 business • Increased scale of the life book • Posi
Slide 28: US: FY18 financial highlights
US FY18 financial highlights IFRS operating profit1, £m Operating free surplus generation1, £m IFRS operating profit Cash generation CER CER AER AER (14)% +7% (11)% +11% 2,146 1,282 1,419 1,919 FY17 (CER) FY18 FY17 (CER) FY18 Embedded value, £bn Local solvency capital position RBC ratio2, % Embedded
Slide 29: Life IFRS operating profit
US Life IFRS operating profit Jackson life IFRS operating profit, £m Fee income • Average separate account assets up +10% • Stable fee margin of 183bp (FY17 187bp) • YE18 separate account assets of $163bn (YE17 $177bn) 2,137 183 (142) +8% Spread income (365) 1,911 • Spread margin decline of (38)bp t
Slide 30: RBC statutory solvency position
US RBC statutory solvency position Jackson RBC solvency capital ratio, % Resilient performance through 4Q18 market decline – net capital formation Investor conference messages 4Q18 experience YE17 409% • Reserves floored out: ‘Statutory reserves will • Capital buffer of floored reserves mitigated no
Slide 31: M&GPrudential: FY18 financial highlights
M&GPrudential FY18 financial highlights IFRS operating profit, £m Operating free surplus generation, £m IFRS operating profit Cash generation +19% +21% 1,378 1,634 1,311 1,582 FY17 FY18 FY17 FY18 Embedded value, £bn Local solvency capital position PAC shareholder Solvency II surplus1, £bn, % Embedde
Slide 32: M&GPrudential IFRS operating profit
M&GPrudential IFRS operating profit M&GPrudential IFRS operating profit, £m +19% vs FY17 Life: underlying growth 1,634 • PruFund contribution of £55m, up +30% 166 • Reduction in annuity earnings in line with expectations (55) following reinsurance of £12bn annuity liabilities +5% 441 • Longevity rel
Slide 33: M&GPrudential asset flows
M&GPrudential Asset flows M&GPrudential total FUM, £bn Institutional 351 • Net inflows in infrastructure, public debt, 339 illiquid credit and real estate products 321 • Strong capital queue (12) (6.5) (2.4) (9) Other insurance 151 139 PruFund funds Minimal 132 revenue impact • £8.5bn net inflows ~2
Slide 34: M&GPrudential Solvency II capital surplus
M&GPrudential Solvency II capital surplus Shareholder Solvency II capital surplus1,2, £bn Policyholder Solvency II capital2, £bn Cover YE17 178% (28)pts 150% 172% Cover ratio 231% 201% 6.1 0.1 Surplus £5.5bn £4.8bn (4.2) 0.1 (0.3) 3.7 (3.3) 1.1 (0.1) 2.8 9.7 Includes £0.4bn of one-off items 4.2 31 D
Slide 35: Equity shareholders' funds
Equity shareholders’ funds Operating profit remains key driver of growth IFRS FY18, £m IFRS EEV Operating profit • Includes M&G Prudential merger and transformation costs of £99m Operating profit after tax 4,032 7,563 Corporate actions Loss on corporate actions (480) (451) • Primarily reflects loss
Slide 36: Group free surplus generation
Group free surplus generation Growing contributions from in-force life portfolios and asset management Operating free surplus generation £m (CER) +15% +14% New business profit / new business investment vs FY17 2018 4.8x 4,526 2017 3.9x 4,114 4,047 (815) 3,711 M&GP 1,223 461 (125) M&GP 1,094 (886) 3,
Slide 37: Holding company cash: strong liquidity position
Holding company cash Strong liquidity position Movement in holding company cash £m FY17 FY18 1 January 2,626 2,264 Remittances to Group 1,788 1,732 Diversified sources of Group liquidity • Holding company cash at YE18 of £3.2bn Asia 645 699 • MTN programme of £10bn US 475 342 • Access to £2.6bn of u
Slide 38: Robust solvency capital position
Solvency II Robust solvency capital position Group shareholder Solvency II capital position1 FY18 movement in Solvency II capital surplus1 £bn £bn Impact on SII coverage ratio Surplus £13.3bn £17.2bn 31 December 20172 13.3 Solvency II 202% 232% Operating experience cover 3.7 ~23pts UK insurance reco
Slide 39: Group embedded value
Group embedded value Growth in value and cash, driven by new business Group EEV shareholders’ funds 31 Dec 12 – 31 Dec 18, £bn Total return +17% CAGR 6.3 18.5 8.9 2018 RoEEV2 2018 3.9 3.9 14.6 17% 49.8 22.4 31 Dec 12 New business contribution Other movements1 31 Dec 18 to value of in-force Total div
Slide 40: Appendix contents
US Jackson National Contents: Share information and contact details [41] Strategic overview and headline financials: Group [42] Asia [51] US [56] Appendix Africa [64] UK [65] 2018 Full Year Results Solvency II [68] Invested asset exposures [71] Currency translation sensitivities [76] 40
Slide 41: Share information and contact details
Prudential Share information and contact details Share information Contact information London Stock Exchange: PRU.L Shareholder enquiries Institutional Analyst and Investor enquiries Hong Kong Stock Exchange: 2378 For enquiries about shareholdings, Tel +44 (0)20 7548 3300 New York Stock Exchange – P
Slide 42: Group history
Prudential plc Group history Providing financial security since 1848 Life insurance customers worldwide 26 m Total funds under management £ 657 bn Demerger of M&GPrudential announced 2018 Prudential enters its first African life insurance market 2014 The first UK life insurer to enter the China mark
Slide 43: Prudential plc post demerger
Prudential plc post demerger Group Prudential plc Prudential Jackson Prudential Corporation Asia National Africa 2018 FULL YEAR RESULTS 43
Slide 44: Structural opportunity: world's largest and fastest growing markets
Prudential plc post demerger: structural opportunity Prudential’s positioning in world’s largest and fastest growing markets Asian growth +1million US wealth 17.4 $ trillion Total advisor distributed assets1 People entering the working population every month2,3 Leading Pan Asian business Leading pro
Slide 45: Structural opportunity: global growth markets
Prudential plc post demerger: structural opportunity Global growth markets US – Managed growth Mature • Enhance product set • Capture fee based opportunity • Proactive risk management US (2017) GDP growth Africa - Build Africa Asia - Accelerate (2017) • Leverage scale Rest of Asia • Expand health an
Slide 46: New business capital allocation and returns
Group New business capital allocation and returns New business strain1,2,3, £m New business profit2,3, £m 3,877 3,616 352 342 +380% 3,088 921 2,609 268 906 +6% 903 913 318 790 815 2,057 2,104 767 129 1,776 237 259 718 175 638 102 809 624 623 539 598 583 65 1,415 1,506 241 UK 293 103 65 29 298 254 22
Slide 47: Growth in high quality earnings
Group Growth in high quality earnings Sources of IFRS operating income1,2,3,4,5, £m 8,276 8,013 7,151 899 6,493 1,108 5,837 5,400 1,171 1,153 2,480 4,595 2,271 1,129 4,047 1,071 1,991 3,662 1,671 2,604 2,836 1,049 1,061 1,329 1,393 1,455 1,524 81% 1,276 998 1,000 1,243 722 1,194 750 574 1,104 537 94
Slide 48: Free surplus generation
Group Free surplus generation Free surplus and dividend, £m 4.4x Net free surplus 16% 20% 20% 815 913 903 19% 19% 718 20% 583 23% 623 21% 4,862 27% 4,553 598 4,469 31% 539 4,047 624 3,743 3,640 3,566 49% 638 3,136 33% 3,040 3,025 517 2,623 552 2,586 2,525 602 2,417 2,295 767 449 2,088 2,025 1,986 46
Slide 49: Cash remittances to Group
Group Cash remittances to Group Business unit net remittances2, £m 1,788 1,732 1,718 25 1,625 37 192 1,482 85 1,341 57 643 654 1,200 57 1,105 603 590 91 610 935 67 590 52 475 519 342 688 510 470 420 515 82 570 415 294 61 249 527 322 699 305 645 80 4671 516 341 400 400 144 39 233 206 5 40 2008 2009 2
Slide 50: Dividend policy
Group Dividend policy The Board will maintain its focus on delivering a growing ordinary dividend. In line with this policy, Prudential aims to grow the ordinary dividend by 5 per cent per annum. The potential for additional distributions will continue to be determined after taking into account the
Slide 51: Asia: Leading pan-regional franchise
Asia Leading pan-regional franchise Pru Asia footprint >600k Life Japan Eastspring Agents 127m P China >300 1,416m P P Korea Life & asset management Taiwan distribution partnerships India3 51m P 24m P P 1.4m 1,354m Top 3 Top 10 New Pru life customers8 Hong Kong Top 3 Laos 7m Top 3 Top 10 Position in
Slide 52: Asia: Favourable dynamics
Asia Favourable dynamics Population2 Market GDP1 GDP (m) penetration3 ($bn) growth1 (%) (%) Cambodia (2013) 16 0.1% 24 7.0% China (2000) 1,416 2.7% 13,457 6.6% Hong Kong (1964) 7 14.6% 360 3.8% India (2000) 1,354 2.8% 2,690 7.3% Indonesia (1995) 267 1.9% 1,005 5.1% Laos (2015) 7 0% 18 6.8% Malaysia
Slide 53: Asia: Execution of strategic priorities
Asia Execution of strategic priorities Engagement Purchasing Servicing 9 new banca 1.4m AskPru E-submissions Channel partnerships New & Claims Zhong An ePOS Banca NBP >7,000 life Enhance the core +19% qualifiers customers 1 Unit linked IDR2 1tn of >160 70% E submissions1 Jet claim Product focus APE
Slide 54: Asia: Product mix
Asia Product mix Asia Life APE sales by product1, % 2 3 2 1 3 2 2 3 4 5 5 6 3 5 5 4 2 4 7 9 8 8 8 6 20 18 20 26 31 29 32 31 36 35 37 35 7 10 36 39 40 40 48 50 50 46 52 59 22 56 53 29 28 29 27 30 32 31 33 33 31 71 69 31 30 28 27 28 28 28 56 26 27 25 24 44 37 41 39 36 28 29 25 26 26 21 22 24 19 16 13
Slide 55: Eastspring Investments
Asia Eastspring Investments Funds under management1,3, £bn Capabilities 2012 – 2018 Growth 2.6x 151 Equity 139 3.4x Operating in 17 11 Asian markets 118 18 Quantitative solutions 14 Alternatives2 89 73 2.4x Ability to work closely 77 65 with our clients Fixed income 11 8 58 58 60 Global Asset Alloca
Slide 56: Long-term retirement opportunity
US Long-term retirement opportunity Structural opportunity Demographic shifts Significant and growing gap Consumer needs Survey outcomes6 72 Coverage gap Ageing population1 57 % Population over 65, Not enough American millions workers have access Without access to to a defined benefit % a defined be
Slide 57: Jackson positioning in US retirement markets
US S – Managed growth Jackson positioning in US retirement markets Jackson positioning Enhance Grow Largest and most productive variable Our market-leading VA position in In the advisory retirement solutions annuity wholesaling force2 the brokerage market market VA wholesalers at 30 September 2018 (
Slide 58: Variable annuity volumes
US Variable annuity volumes Jackson VA sales volumes by quarter, US$bn ‘Features War’ 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 6.4 6.4 6.6 6.0 5.7 5.7 5.7 1.4 5.5 1.1 1.4 5.3 5.3 0.4 5.2 5.2 5.0 1.3 0.2 1.1 1.3 4.7 1.1 4.6 4.6 4.4 4.4 4.6 1.0 1.1 1.0 4.3 4.3 4.3 4.3 4.5 4.5 4.4 4.
Slide 59: Statutory admitted assets
US Statutory admitted assets Jackson growth in statutory admitted assets, US$bn 241.2 236.6 215.2 199.1 189.4 170.9 142.8 176.6 163.3 148.8 134.2 127.5 107.6 108.8 97.5 80.1 76.7 81.0 69.3 70.9 58.8 62.8 48.9 50.9 55.6 33.3 46.6 22.3 30.0 20.9 40.2 43.0 14.7 7.1 10.4 5.1 4.4 5.6 66.4 73.3 62.7 62.1
Slide 60: GMWB policyholder behaviour sensitivities
US GMWB policyholder behaviour sensitivities Jackson GMWB policyholder behaviour sensitivities, 31 December 2018 $bn 8 ➢ Policyholder behaviour experience is continuously monitored and a comprehensive study is conducted on an annual basis. 7 ➢ For IFRS and Statutory accounting purposes, assumptions
Slide 61: Statutory capital
US Statutory capital Jackson total adjusted capital US$bn Continued strong operating profit 31 December 2017 4.3 Hedging program continues to effectively mitigate risks Operating profit 1.0 Reserves net of hedging and other effects 0.5 Significant remittance despite tax reform impact Other market-re
Slide 62: ALM: Unhedged economic profile of GMWB guarantees
US ALM Unhedged Updateprofile of GMWB guarantees economic Jackson unhedged GMWB cash flow exposure, as at 31 December 2018 $millions S&P @ 12/31 = 2,507 ▪ Includes guarantee fees only Guarantee Fees Base, 5% Gross Return ▪ Uses prudent best estimate assumptions (AG43/VM-21, C3P2) PV Future Guarantee
Slide 63: Variable annuity DAC mean reversion
US Variable annuity DAC mean reversion ➢ For annuity products, DAC1 amortisation for GAAP & IFRS reporting purposes is Drivers of VA DAC acceleration/deceleration largely determined by historical and projected spread or fee income. For variable annuities, market movements can displace the account ba
Slide 64: Africa: Regional footprint
Africa Regional footprint Population of Africa1 Ghana 2014 Acquisition of Express Life 1.3 bn 2.3 bn 2015: Distribution partnership with Société Générale 2017 2045 2015: Distribution partnership with Fidelity Bank 2016: Distribution partnership with CAL Bank 2018: Distribution partnership with Stand
Slide 65: M&GPrudential: Market trends
UK M&GPrudential Market trends Established International asset manager with more than 85 Self-reliance for savings, investment and 1931 years’ experience retirement Offer funds across diverse geographies, asset Substantial household assets still held in cash classes and investment strategies Acquire
Slide 66: M&GPrudential: Products
M&GPrudential Products FUM (FY18) Investment funds £ 32bn • • Top 5 in UK retail funds1 Distributed through wholesale channels UK FUM PruFund £ 43bn • • Range of consumer-focused retirement/savings wrappers Distributed through intermediaries and direct channels Traditional products £ 132bn • • Large
Slide 67: Expected capital position at demerger
M&GPrudential Expected capital position at demerger M&GPrudential Solvency II capital position, pro-forma at demerger £bn Cover ratio 172% c.170% • M&GPrudential expected to hold c£3.5bn of sub-debt • M&GPrudential SII cover expected to be c170% at demerger around 8.8 3.5 • M&GPrudential Group ratin
Slide 68: Solvency II: Capital quality
Solvency II Capital quality Solvency II Own Funds by capital tier1,2,3 Share of Solvency II Own Funds by capital tier1,2,3 30.2 FY18, 100% = £30.2bn 0.1 Tier 3 – deferred tax 6.8 Tier 2 – sub debt 0.4 Tier 1 – hybrid capital Tier 3 Tier 2 0% 22% Tier 1 = Tier 1 – core capital 2% Tier 1 = 78% of 179%
Slide 69: Solvency II classification of hybrid capital
Group Solvency II Solvency II classification of hybrid capital Hybrid capital outstanding, 31 December 2018 Issue Date Amount Coupon Maturity Date 1st Call Date SII Classification 19-Dec-01 GBP 435m 6.125% 19-Dec-31 None Tier 2* 10-Jul-03 EUR 20m 20 yr CMS rate 10-Jul-23 None Tier 2* 30-Jul-04 USD 2
Slide 70: Solvency II estimated sensitivities
Group Solvency II Solvency II estimated sensitivities Group Shareholder Solvency II capital position1, £bn Solvency II surplus estimated sensitivities1 Impact on Surplus £13.3bn £17.2bn solvency Solvency II FY18 estimated surplus ratio 202% 232% £17.2bn 232% cover 40% equity fall £13.2bn 204% (28)%
Slide 71: Group asset portfolio
Group invested assets Group asset portfolio Breakdown of invested assets1, FY18, £bn Shareholder debt portfolio, FY18 £bn Shareholder-backed Holding by issuer Portfolio No. Av. Max High yield % Total PAR Unit Asia US UK £bn issuers £m £m debt portfolio Group funds linked Life Life Life Other Total D
Slide 72: Shareholder total debt securities by credit rating
Group invested assets Shareholder total debt securities By credit rating1,2,3, 31 December 2018 US UK Asia 4% 5% 2% 14% 16% 7% 11% 18% 24% 40% 34% 27% 39% 32% 26% Rating: AAA AA Total £42bn Total £22bn Total £15bn A BBB <BBB 1. Pie charts exclude other operations totalling £2bn, of which 32% AAA, 55
Slide 73: Shareholder total debt securities by asset type
Group invested assets Shareholder total debt securities By asset type1,2, 31 December 2018 US Quasi UK Supranational Asia Sovereign1 Sovereign ABS ABS CMBS ABS CMBS 7% Sovereign1 10% Bonds 1% 1% 5% 2% 3% 12% RMBS 1% 1% Quasi Other Sovereign1 Sovereign Public 47% Bonds Sector 1% Corporate Corporate B
Slide 74: US corporate debt portfolio
Group invested assets US corporate debt portfolio US total debt portfolio1 Corporate debt portfolio 31 December 2018 Investment grade • Significant weighting towards investment grade ➢ Investment grade is 96% of corporate bond portfolio ➢ Corporate debt investment grade is 58% of total US investment
Slide 75: Shareholder backed corporate debt exposures by sector
Group invested assets Shareholder backed corporate debt exposures By sector1, 31 December 2018 US UK Asia Technology Consumer, Consumer, Materials Cyclical Non-Cyclical Diversified 1% 3% Technology Materials NA 1% 9% 1% Communications Government 2% 0% Consumer, Government 0% Mortgage 6% Materials 0%
Slide 76: Currency mix: Translation sensitivities
Currency mix Translation sensitivities IFRS operating profit, £m New business profit, £m 2018 as 2018 as 4,827 US 3,877 US reported reported Asia Asia Impact of 93 Impact of 45 translating results translating results at 31 December at 31 December 2018 spot rate 81 2018 spot rate 112 2018 at 31 Decem