Prudential is hosting a conference for investors and analysts on 16 November 2016 at the Langham Hotel, London. The event will start at 8.30am UK time, with presentations from management covering the Group and our businesses in Asia, the US and the UK.
Mike Wells, Group Chief Executive, said: “In today’s Investor Conference, our management teams will provide you with detailed updates on the operational progress of each of our businesses and highlight the distinctive capabilities that underpin the sustainable profitable growth prospects of the Group.”
Business performance update
The Group continues to benefit from the favourable structural opportunities in its key markets and its well established leadership positions. During the current period of heightened macro-economic and other external uncertainties, our performance is well supported by the diversification of our international operations, our focus on high-quality sources of income and our broad currency mix. The new business trends experienced in the first half of the year have continued in the third quarter of 2016, driven by Asia and selective participation in the US and the UK. Group new business profit totalled £1,970 million for the first nine months, with APE sales of £4,550 million.
In Asia, our performance remains underpinned by positive long-term demographic trends and the effectiveness of our execution across our diverse regional platform. In the first nine months, life APE sales increased by 16 per cent (25 per cent on an actual exchange rate basis), driven by our continued focus on regular premium sales, which were up 18 per cent and represented 94 per cent of the total. New business profit was 23 per cent higher (34 per cent on an actual exchange rate basis), reflecting volume growth and specific management actions to drive value, supported by increased contributions from health and protection, where new business profit was up 27 per cent in the period.
In asset management, Eastspring’s total funds under management were £115.3 billion at 30 September 2016, compared to £89.1 billion1 at the start of the year, with year-to-date external net flows turning positive at the end of the third quarter.
On 10 November 2016, we announced that the Group has reached an agreement to sell 100 per cent of its Korean life business to Mirae Asset Life Insurance Co., Ltd. for KRW170 billion (equivalent to £119 million2), subject to regulatory approval. The proposed sale is consistent with Prudential’s strategy of allocating its capital to markets where it is well positioned to generate attractive long-term returns for its shareholders.
In a period in which distributors are still adjusting to the Department of Labor standards, Jackson remains focused on the delivery of superior financial solutions and account performance for our customers. As a result, Jackson continues to experience overall positive separate account net flows, totalling $4.6 billion for the first nine months despite variable annuity new premium levels 28 per cent lower, consistent with the trend observed in the first half of the year. Together with market appreciation, net inflows contributed to an 8 per cent year-to-date increase in separate account assets to $145.6 billion as at 30 September 2016.
Our UK life business has extended its successful new business performance of the first half of the year, driven by the continued popularity of its with-profits product range. In the first nine months of the year, new business profit from retail sales was 41 per cent higher, with APE sales from customers choosing our PruFund retail investment option increasing by 65 per cent. As a result, PruFund assets under management rose to £22.8 billion, 38 per cent higher than at the start of the year.
In the third quarter, M&G’s retail asset management business has benefitted from the positive effects of market appreciation and a reduction in the level of net outflows, totalling £1.1 billion (1Q 2016: £4.1 billion net outflows, 2Q 2016: £2.0 billion net outflows). External assets under management were £136.2 billion at 30 September 2016, compared to £126.4 billion at the end of 2015.
The estimated Group shareholder Solvency II surplus at 31 October 2016 was £11.5 billion, equivalent to a capital ratio of 189 per cent (30 June 2016: £9.1 billion, equivalent to a capital ratio of 175 per cent).
The Group also announces the following dividend policy update.
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 Group’s financial flexibility across a broad range of financial metrics and our assessment of opportunities to generate attractive returns by investing in specific areas of the business.
For more information, please visit http://www.prudential.co.uk/investors/results-and-presentations/business-presentations/2016.
1 As reported.
2 KRW/GBP exchange rate of 1,433 at 9 November 2016 used (Source: Bloomberg). The consideration is denominated in KRW.
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