SOCIETE GENERALE The Premium Review ... - Prudential plc/media/Files/P/... · 8 Population...
Transcript of SOCIETE GENERALE The Premium Review ... - Prudential plc/media/Files/P/... · 8 Population...
SOCIETE GENERALE
The Premium Review Conference 2007
Mark Tucker, Prudential plc, Group Chief Executive
December 2007
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Agenda
• Overview of the Group
• The retirement opportunity
• Positioning ourselves for success
• Conclusions
DC Schemes
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Overview of the Group
DC Schemes
• Strong heritage from leadership in UK life insurance
• Building our global presence and Group capabilities
• Driving performance across an international Group
Where we have come from The Group today
AssetManagementInsurance
Asset ManagementAsset ManagementAsia
UK
US
1. Constant exchange rates, continuing operations before tax 2. Excludes proceeds from the sale of Egg £527 million 4
Overview of the GroupContinued delivery and momentum
£34m2£(104)m£(298)mHolding Company operating cash flow inflow/(outflow)
+27%+15%+42%IFRS operating profit growth1
+39%+28%+36%EEV operating profit growth1
HY0720062005
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Overview of the GroupDriven by strong margins and returns in life businesses
0
100
200
300
400
500
600
700
800
900
1,000
1,100
2004 2005 2006 HY07
Asia US UK
£m
CAGR 18%
Value added by new business
UK
US
Asia
Internal rate of return:
15%14%12%
18%15%12%
>20%>20%>20%
200620052004
42%41%40%Group average
200620052004
Margin:
15%
18%
>20%
HY 2007
40%
HY 2007
12% YOY growth
Note: Data as at 31 December 2006 (excl Egg). Economic required capital – AA target confidence level6
Overview of the GroupSupported by real economic and operating benefits of the Group
Systematic risk and capital management
4.5
1.6
2.9
0
1
2
3
4
5
Available capital Required capital afterdiversification
Diversified surplus
£1.3 bn geographic diversification benefit
Other benefits
• Demand-side collaboration
• Exploiting the benefits of scale
• World-class standards & practices
£bn
Source: Thomson Datastream (TSR Data)7
Overview of the GroupDelivering superior shareholder value
Total shareholder returns since May 2005Cash and dividends
• Group is now cashflowpositive, one year ahead of schedule
• Focus on delivering a growing dividend; growth 5% in 2006 and at interim 2007
• Two-times cover in medium-term
90
100
110
120
130
140
150
160
170
180
190
May-05
Nov-05
May-06
Nov-06
May-07
Nov-07
PRUDENTIAL FTSE 100 MSCI WORLD INSURANCE
Population projection source: Global Demographics July 2007 Asia population data - estimates for Prudential's 12 markets8
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5
10
15
20
25
2005 2010 2015 2020 2025
The global retirement opportunityThe largest wave of money-in-motion in history
0
20
40
60
80
100
120
2005 2010 2015 2020 2025
0
200
400
600
800
2005 2010 2015 2020 2025
• Estimated £7 trillion of assets in the UK and US moving in to the retirement market over the next five years
• Significant retirement opportunity in Asia
UK – Projection of population aged 55+Asia – projection of population aged 55+
US – Projection of population aged 55+Million
MillionMillion
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The global retirement opportunityMeeting the needs of the ‘retirement’ consumer
Need for more long term savings
Need for income and protection in retirement
Changing dynamics
1.Increased longevity
2.More active retirement
3.Drag in realignment of retirement date expectations
4.Underestimating the savings required for retirement – demise of defined benefit
5.Increased cost of long-term care
6.Reduction and withdrawal of state pension benefits
7.Protection of purchasing power
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The global retirement opportunityPrudential is well-positioned to capture the opportunity
• A network of 350,000 agents in Asia; established and fast growing non-agency distribution
• Powerful advice-based distribution in the US• Diversified distribution in the UK; segmentation of IFAs
Access
• Track record of delivering innovative solutions across the financial life cycle – accumulation, transition and decumulationProduct
• Risk management – longevity, mortality, investment• Asset allocation capability – strong returns with low volatility• Customer Management
Skills
• Trusted and well-established as a leader in retirement• Strong retail presence in both UK and Asia• Superior business reputation in US broker channel
Brand
Prudential’s advantaged positioningWhat it will take
1) India: Share of Private Market 2) China: Share of foreign JV's 3) Constant Exchange Rates11
Positioning ourselves for successAsia Insurance: A unique platform for doubling 2005 NBP by 2009
Asia new business by channel
243%35Japan
25%12Korea
63%10Thailand
90%8Taiwan
32%5Philippines
39%4Hong Kong
29%2Vietnam
9%2Malaysia
77%2China2
25%1Singapore
66%1Indonesia
64%1India1
APE Growth 9M 20073
Position Market Share
0
100
200
300
400
500
600
700
800
900
1000
2001 2002 2003 2004 2005 2006 9M07
Agency Non-Agency
APE£m
48% growthon 9M 2006CAGR 36%
over 5 years
CAGR 18% over 5 years
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0
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006 9M 07
VAs FIAs FAs Life Curian
Positioning ourselves for successUS Insurance: Premier position to capture growth in the pre and post retirement market
0%
2%
4%
6%
8%
10%
12%
2001 2002 2003 2004 2005 2006 HY07
Banks Regional Independent
Rapid growth in retail sales$bn
Variable annuity market share by channel
JNL is a top-10 fixed indexed and fixed annuity provider
Variable annuityCAGR 45% over 5 years
1) Lipper Hindsight – ABI Life Funds: Money Sector Average, total return, net income reinvested; Fixed Interest Sector Average, total return, net income reinvested, Standard & Poor’s – Cautious Managed Sector, bid to bid, total return.
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Positioning ourselves for success UK Insurance: Delivering value by focusing on our strengths
Retirement income
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2007 2012 2017 2022 2027 2032 2037 2042
CorporatePensions
Ex-ScottishAmicable
£bn
Ex-DirectSalesforce
Retirement savings1
38%
44%
23%
14%
41%
64%
0% 20% 40% 60% 80%
Prudential With-Profits Fund
FTSE 100
Average Cash Life Fund
Average Fixed InterestLife Fund
Average With-Profits Fund
Average CautiousManaged Unit Fund
• Narrow our focus• Utilise our multi-asset capability • Exit areas where returns are structurally low• Improve return in Corporate Pensions
• Build on proven strengths in retail and wholesale markets• Longevity expertise• Brand
Internal vestings
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Positioning ourselves for successAsset Management: Significant potential based on superior investment performance
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2
4
6
8
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2001 2002 2003 2004 2005 2006 9M 07
M&G revenues
2006: £471 million
Asia rapid growth in external FUM
• Record net inflows in 2006 £6.1bn• Net inflows 9M07 £3.6bn
• Record net inflows in 2006 £2.5bn• Net inflows 9M07 £2.4bn
Fixed Income
Equities
Property
Private Equity Pru Finance
£bn
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Conclusion
Strong operating performance…
in individual Business Units and at the Group level…
are delivering superior shareholder value
Advantaged regional platforms and global capabilities…
place the Group in a unique position…
to capture a disproportionate share of the retirement opportunity