Prudential plc (LON:PRU) is holding a conference for investors and analysts in Singapore on 14-15 November 2018.
The presentations will focus on Prudential’s Asia businesses, which are central to the Group’s long-term growth ambitions, both today and post-demerger of M&G Prudential, our savings and investment business in the UK and Europe. There will also be a Group update on strategy, the M&G Prudential demerger process and new business performance, alongside presentations from Jackson, our US business, and M&G Prudential.
Mike Wells, Group Chief Executive, said: “Since our last Asia-based investor conference in 2014, our Asia business has more than doubled new business profit, demonstrating our ability to capture high-quality growth at pace.
“As we look ahead post-demerger, the profitable growth prospects of our Asia businesses remain substantial, given the increasing protection and savings needs of our customers and the extent of the footprint we have established.
“I look forward to showcasing the breadth of our capabilities and the reach of all of our businesses, which underpin my confidence in the ability of Prudential and M&G Prudential to capture the structural opportunities ahead and to continue to deliver for the benefit of all our stakeholders.”
Business performance update
Over the first nine months of 2018, the Group’s life insurance new business profit3 increased by 17 per cent (12 per cent on an actual exchange rate basis), reflecting the strength and diversity of the Group’s positioning and our continued focus on high-quality new business sales, together with the benefit of pricing actions and more favourable economics in the period.
In Asia, our performance continues to be driven by our strategic focus on recurring premium, health and protection business. In the first nine months, new business profit increased by 15 per cent (9 per cent on an actual exchange rate basis) to £1,762 million, with a 19 per cent increase in health and protection new business profit. This performance remains broad-based, with double-digit growth in seven markets4, and across both our agency and bancassurance channels. While APE sales in the first nine months were unchanged compared to the same period in 2017, the year-on-year growth rate was 9 per cent in the discrete third quarter and included record third quarter sales in seven markets.
In asset management, Eastspring total funds under management increased to £149.2 billion5 (31 December 2017: £138.9 billion6), reflecting continued internal net flows from our life businesses and the additional funds from the acquisition of TMB Asset Management in Thailand. External net outflows were £2.0 billion7 in the year to date, resulting from institutional bond fund redemptions and the impact of market volatility on retail gross flows. On 23 October 2018, Eastspring announced it had successfully registered Eastspring Investment Management (Shanghai) Company Limited, Eastspring’s wholly foreign owned enterprise, as a private fund manager with the Asset Management Association of China, providing a foundation for long-term development of the business in China.
In the US, Jackson’s new business profit increased 22 per cent (16 per cent on an actual exchange rate basis) to £716 million in the first nine months, primarily reflecting the benefit of higher interest rates and tax reform. Variable annuity APE sales, excluding Elite Access, were up 1 per cent compared with the same period last year. Separate account assets are up 5 per cent year-to-date to $185.3 billion (31 December 2017: $176.6 billion), driven by positive net flows and favourable market movements.
M&G Prudential has seen continued demand for PruFund-backed products, leading to an 18 per cent increase in new business profit to £277 million, with APE sales up 6 per cent. PruFund net inflows of £6.6 billion in the first nine months contributed to PruFund funds under management of £42.9 billion, 19 per cent higher than at the start of the year. In asset management, external net outflows of £5.6 billion in the first nine months (2017: net inflows £9.9 billion) included outflows of £6.1 billion from the redemption of a single large, but low-margin, institutional mandate. External funds under management were £157.4 billion at 30 September 2018 (31 December 2017: £163.9 billion), with M&G Prudential total funds under management of £334.4 billion8 (31 December 2017: £350.7 billion8).
The estimated Group shareholder Solvency II surplus9,10 at 30 September 2018, after payment of the first interim dividend, was £14.1 billion, equivalent to a shareholder cover ratio9,10 of 205 per cent (31 December 2017: £13.3 billion, equivalent to a shareholder cover ratio9 of 202 per cent).
We continue to make good progress on the actions needed for the demerger of M&G Prudential from the Group. On 1 October 2018, we announced the appointment of Mike Evans as Chair of M&G Prudential. In addition, in October 2018, as part of the process required before demerger to rebalance debt across M&G Prudential and Prudential, the Group issued substitutable subordinated debt, in three tranches totalling a sterling equivalent of £1.6 billion.
Our strategy remains focused on the clear structural opportunities in each of our key markets. The planned demerger of M&G Prudential is on track, and demonstrates our commitment to creating shareholder value. The Group’s leading market positions, combined with significant product and distribution capabilities, mean our businesses are well placed for long-term growth and the continued delivery of value for both customers and shareholders.