Prudential plc Full Year 2018 Results

PRUDENTIAL DELIVERS CONTINUED GROWTH IN PROFIT AND DIVIDEND

Performance highlights on a constant (and actual) exchange rate basis

  • Group operating profit1of £4,827 million, up 6 per cent2 (up 3 per cent3)
  • Asia EEV new business profit4 of £2,604 million, up 14 per cent2, operating profit1of £2,164 million, up 14 per cent2 and underlying free surplus generation5 of £1,171 million, up 14 per cent2
  • US fee income up 8 per cent2 following a 10 per cent2 increase in average separate account balances6
  • M&GPrudential operating profitup 19 per cent, including the effect of updated longevity assumptions
  • Full year 2018 ordinary dividend increased by 5 per cent to 35 pence per share
  • Group Solvency II surplus7,8 estimated at £17.2 billion, equivalent to a cover ratio of 232 per cent
  • Continued progress in preparations for the demerger of M&GPrudential from Prudential plc

Mike Wells, Group Chief Executive, said: ‘In 2018, our financial performance, again led by our Asia operations, is testament to the scale of our opportunity set, the depth of our capabilities and our unrelenting focus on executing our strategy at pace. At the same time we have made good progress in our preparations for the demerger of M&GPrudential from Prudential plc.

‘In Asia we have again delivered double-digit growth across our key metrics of new business profit4 (up 14 per cent2), operating profit1 (up 14 per cent2) and underlying free surplus generation5 (up 14 per cent2). This performance is both broad-based, with 10 markets achieving double-digit growth2 in new business profit4, and high-quality, with health and protection new business profit growing by 15 per cent2. Our Asia asset manager, Eastspring, has increased operating profit (up 6 per cent2) amidst a challenging external environment reflecting the structural benefit from life business net flows. Our broad-based portfolio of life insurance and asset management businesses, high-quality products with distinctive value-added services and multi-channel strategy ensure that we continue to benefit from the growing customer demand in Asia for the health, protection and savings solutions that we provide.

‘In the US, our life business, Jackson, remains focused on providing financial security to increasing numbers of individuals approaching or in retirement, broadening its product range and extending its distribution network. US operating profit decreased by 11 per cent, with higher fee income being more than offset by higher market-related amortisation of acquisition costs and lower spread-based income. Jackson’s risk-based capital ratio, which increased from 409 per cent to 458 per cent by year-end, highlights the effectiveness of its risk management and hedging performance in the equity market decline experienced during the fourth quarter.

‘M&GPrudential continues to make progress implementing its merger and transformation programme while consolidating its position as one of the leading businesses in the UK & European savings and investment markets. M&GPrudential’s total operating profit increased 19 per cent, principally reflecting the benefit from updated longevity assumptions and an 11 per cent increase in the shareholder transfer from the with-profits business, which includes a 30 per cent increase from PruFund.

‘The intended demerger of M&GPrudential from Prudential plc will further enhance the strategic focus of both businesses. I am confident that, given the extent of our opportunities and our proven ability to execute and innovate, we are well positioned to continue to grow profitably.’

 

 

Summary financials

 

2018 £m

 

2017 £m

Change on AER basis

Change on CER basis

 

Operating profit1

 

4,827

 

4,699

 

3%

 

6%

Underlying free surplus generated5

4,047

3,640

11%

14%

Life new business profit4

3,877

3,616

7%

11%

IFRS profit after tax9

3,013

2,390

26%

30%

Net cash remittances from business units10

1,732

1,788

(3)%

-

 

 

2018 £bn

 

2017 £bn

Change on AER basis

 

 

IFRS shareholders’ funds

 

17.2

 

16.1

 

7%

 

EEV shareholders’ funds

49.8

44.7

11%

 

Group Solvency II capital surplus7,8

17.2

13.3

29%

 

 

Notes

1 In this press release ‘operating profit’ refers to adjusted IFRS operating profit based on longer-term investment returns. This alternative performance measure is reconciled to IFRS profit for the year in note B1.1 of the IFRS financial statements. 
2 Year-on-year percentage increases are stated on a constant exchange rate basis unless otherwise stated.
3 Growth rate on an actual exchange rate basis.

4 New business profit on business sold in the year, calculated in accordance with EEV principles.
5 For insurance operations, underlying free surplus generated represents amounts maturing from the in-force business during the period less investment in new business and excludes non-operating items. For asset management businesses, it equates to post-tax operating profit for the period. Restructuring costs are presented separately from the underlying business unit amount. Further information is set out in note 10 of the EEV basis results.
6 Average US separate account balances for the year to 31 December 2018, compared to average balances for the year to 31 December 2017 on a constant exchange rate basis.
7 The Group shareholder capital position excludes the contribution to Own Funds and the Solvency Capital Requirement from ring fenced with-profit funds and staff pension schemes in surplus. The estimated solvency positions include management’s calculation of UK transitional measures reflecting operating and market conditions at each valuation date, which for both 2018 and 2017 reflects the approved regulatory position.
8 Estimated before allowing for second interim ordinary dividend.
9 IFRS profit after tax reflects the combined effects of operating results determined on the basis of longer-term investment returns, together with short-term investment variances, results attaching to disposal of businesses and corporate transactions, amortisation of acquisition accounting adjustments and the total tax charge for the year.
10 Net cash remitted by business units are included in the Holding company cash flow, which is disclosed in detail in note II(a) of the Additional unaudited IFRS financial information. This comprises dividends and other transfers from business units that are reflective of emerging earnings and capital generation.

 

For Prudential plc’s Full Year 2018 Results press release, visit: 
https://www.prudential.co.uk/news/news-releases/2019/13-03-2019

 

<< Back to Press Releases

Back to Top