London - 31 July 2008
Strong performance from Prudential Group in challenging conditions
- Group new business APE sales up 12% to £1.5 billion
- Group EEV new business profit up 11% to £602 million
- EEV operating profit up 7% at £1.4 billion
- IFRS operating profit up 13% to £674 million
- Asset management net inflows of £4.1 billion (1H2007: £5.0 billion)
- EEV shareholders' funds £14.0 billion (December 2007: £14.6 billion*)
- On track for holding company to be operating cash positive in 2008
- Estimated IGD surplus £1.4 billion (December 2007: £1.6 billion)
- Interim dividend up 5% to 5.99 pence
All figures compared to 2007 constant exchange rates,*adjusted for change in accounting policy for pension schemes
Commenting, Mark Tucker, Group Chief Executive said:
"Prudential continued to perform strongly in the first half of 2008 with double-digit growth in new business sales and profits, maintaining the momentum of the last three years. Our retirement-led strategy continues to drive the Group's growth, with a clear focus on profitable revenue streams across the diverse geographic spread of our businesses.
"Our Asian story remains compelling. New business APE increased by 14 per cent in the first half of the year building on the exceptional 48 per cent growth achieved in the first half of 2007. It is important to note that the 2007 comparative period benefited from the highly successful launch of our "What's your number?" campaign in Taiwan and the introduction of a new variable annuity product. Excluding Taiwan, new business in Asia grew by 29 per cent and new business profit increased by 26 per cent. We remain confident of doubling Asia's 2005 new business profit by the end of 2008 - a year ahead of our previously stated target.
"The US life insurance sector has been adversely affected by current economic uncertainties, which have resulted in more conservative customer behaviour and short-term pricing pressures in the market. Despite this, the strength of Jackson's position across the annuity product range in particular is demonstrated by the resilient flow of new business, up 1 per cent to £356 million, and overall Jackson has reported record first half new business volumes.
"As a result of our targeted approach to the market, our UK operations achieved an 11 per cent increase in retail new business APE. Overall new business including wholesale operations increased by 18 per cent and new business profit was £129 million, up 19 per cent. These figures demonstrate that the disciplined delivery of our UK strategy is producing the anticipated positive financial results, with strong growth across both our retail and wholesale operations.
"The Group's asset management operations continue to demonstrate the value of their track record for sustained and excellent long-term fund performance, achieving net inflows of £4.1 billion and maintained operating profit at £181 million in what have been very testing market conditions.
"The Board has agreed an interim dividend of 5.99 pence per share be paid, an increase of 5 per cent. The Board remains committed to a progressive dividend policy, with the level of dividend determined after taking into account the Group's financial requirements, including opportunities to invest in areas of the business offering attractive returns.
"The macro economic climate will doubtless continue to be difficult for some while. We expect Asian economic growth to remain strong but beneath the peak levels of recent years. The fundamentals underpinning our Asian growth are highly positive.
"Jackson will continue to show resilient performance in the short-term and we remain confident will outperform over the cycle. In the UK, we are delivering on our strategy and in asset management we are very well placed to capitalise on the strength of our positions.
"We expect to continue to outperform our competitors. We have a clear agenda, our retirement-led strategy and our business model, with its geographic mix and diversification, are robust, while our balance sheet and capital position have been very resilient.
"The prospects for the Group remain positive."
Group Chief Executive's Review
In the first half of 2008, the Group continued the momentum achieved over the past three years and once again delivered strong performance.
Our retirement-led strategy continues to drive the Group's growth, with a clear focus on profitable revenue streams across the diverse geographic spread of our businesses. This growth has been achieved against a background of deteriorating macro economic conditions and significant capital market volatility.
The retirement market offers significant long-term and sustainable growth, in particular in Asia, where economic growth and an increased emphasis on retirement savings continue to fuel demand, and in the US, which is experiencing the biggest demographic wave of people in history moving into retirement. The Prudential Group has a very powerful franchise in the sector, based on our financial strength, our investment and risk management skills, our brands and our product and distribution expertise.
The specific opportunity differs from market to market but our operating structure, product and distribution expertise give us the flexibility to capture growth and create value across the pre and post retirement market. Our approach is one that ensures that solutions matched to local customer needs can be offered in each market, but with significant product, operational and financial synergies still provided by the wider Group.