Prudential plc ("Prudential") is holding a conference for investors and analysts on 16 November 2017 at the InterContinental Park Lane Hotel in London. The event will start at 8.00am UK time, with presentations covering the Group and our life insurance and asset management operations in Asia, the US, and the UK and Europe.
Mike Wells, Group Chief Executive, said: “In today’s presentations our management teams will highlight the scale of the opportunity ahead of us in our three key geographic regions and the quality of our execution.
“In Asia, we are meeting the health, protection and savings needs of a rapidly growing middle class. In the US, we are addressing the savings and retirement income requirements of the baby-boom generation, and in the UK and Europe we are focused on the opportunity presented by the converging life assurance and savings markets.
“The presentations will demonstrate the strength of our positioning, our disciplined capital allocation and our market-leading capabilities, which all combine to drive profitable growth - and the ability of the Group to respond with pace to new opportunities.”
Business performance update1
The Group continues to benefit from powerful and enduring demand drivers and its established platforms in Asia, the US, and the UK and Europe. Over the first nine months of 2017, life insurance new business profit2 increased by 17 per cent to £2,469 million, reflecting higher sales and more favourable economics. In asset management, both M&G Prudential and Eastspring3 have delivered a positive performance, with combined third-party retail and institutional net inflows of £12.8 billion, compared to net outflows of £8.0 billion in the same period in 2016.
In Asia, our diversified portfolio of market-leading businesses continues to benefit from the fast-growing demand across the region driven by an increasingly affluent, growing population.
New business profit increased 15 per cent (24 per cent on an actual exchange rate basis) to £1,616 million in the first nine months, as a result of higher sales volumes, a richer health and protection mix and the overall beneficial effect of higher interest rates. The performance remains broad-based, with at least double-digit growth in seven countries4, including China, Hong Kong and Singapore, highlighting the strength of the regional portfolio.
In the first nine months, APE sales increased by 5 per cent overall (14 per cent on an actual exchange rate basis) and by 13 per cent (23 per cent on an actual exchange rate basis) excluding our reduced participation in the Hong Kong broker channel. The quality of this growth is underpinned by double-digit increases in seven countries4, higher contributions from both agency and bancassurance channels, and a 16 per cent uplift in health and protection sales. Outside Hong Kong, we have delivered diversified sales growth of 24 per cent.
Eastspring’s external assets under management3 increased to £44.3 billion at 30 September 2017 (31 December 2016: £38.0 billion5), reflecting year-to-date external net inflows3 of £2.8 billion and the impact of positive markets. Total assets under management, including internal insurance assets and money market funds, increased to £130.9 billion (31 December 2016: £117.9 billion5), benefiting additionally from a continuation of strong inflows from our life operations.
In the US, Jackson’s new business profit increased 17 per cent (28 per cent on an actual exchange rate basis) to £619 million in the first nine months, primarily reflecting the benefit of higher interest rates compared to the prior year. Separate account assets are up 13 per cent year-to-date to £125.5 billion (31 December 2016: £120.4 billion5), driven by continued positive net flows of £2.7 billion and favourable market movements in the period. While the near-term outlook for industry sales of variable annuities remains uncertain pending clarification of regulatory reforms in the US retirement market, Jackson’s market-leading variable annuity product proposition positions the business well for new longer-term growth opportunities in the sizeable fee-based adviser market.
In the UK & Europe, M&G Prudential has delivered external asset management net inflows of £9.9 billion in the first nine months across a broad range of Wholesale and Direct, and Institutional asset strategies. In addition, continued demand for risk-managed solutions has driven life insurance APE sales growth of 25 per cent over the same period, with new business profit up 31 per cent to £234 million. This includes APE sales growth of 32 per cent from PruFund-backed products, which generated net inflows of £6.6 billion. M&G Prudential’s total assets under management6 increased to £336.5 billion (31 December 2016: £310.8 billion), including growth of 12 per cent in external asset management business to £153.5 billion and 32 per cent in PruFund assets to £32.6 billion.
M&G Prudential, formed by the combination of our UK businesses, will leverage its scale, financial strength, and complementary product and distribution capabilities to enhance the development of capital-light, digitally enabled, customer-focused solutions. The integration of these businesses is progressing according to plan.
The estimated Group shareholder Solvency II surplus7 at 30 September 2017 was £12.8 billion, equivalent to a cover ratio of 201 per cent (31 December 2016: £12.5 billion, equivalent to a cover ratio of 201 per cent).
Prudential’s strategy remains centred on the clear structural opportunities in each of its three key markets in Asia, the US, and the UK and Europe. 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.
1 Year-on-year percentage changes are stated on a constant exchange rate basis unless otherwise stated.
2 New business profit on business sold in the period, calculated in accordance with EEV principles as defined in our Annual Report.
3 Excludes Asia Money Market Fund investment flows and assets under management.
4 Excludes Laos where amounts are immaterial.
5 As reported (on an actual exchange rate basis).
6 Total assets managed by M&G Prudential include internal insurance funds of £183 billion (31 December 2016: £174 billion), including PruFund-backed products.
7 The Group Solvency II surplus represents the shareholder capital position excluding the contribution to Own Funds and the Solvency Capital Requirement from ring-fenced with-profits funds and staff pension schemes in surplus. The estimated solvency position includes the impact of recalculated transitionals at the valuation date, which has reduced the Group shareholder surplus from £13.6 billion to £12.8 billion. The formal Quantitative Reporting Templates (Solvency II regulatory templates) include transitional measures without this recalculation.
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