Prudential Corporation Asia. September 2018

Transcription

1 Prudential Corporation Asia September

2 Agenda Summary HY18 Results Recap Strategic Update 2

3 Prudential Corporation Asia Performance levers Entered Cambodia (2013) Vietnam CF sale (Jan 18) Long Term Orientation Regular premium 4 94% (of APE) Health & Protection % NBP Renewal premium 4 6.1bn, +17% 6 Sources of IFRS operating income 4 Spread & Other 5 Retention rate 2,4 95% Protection NBP up 19% 4,6 Portfolio Optimisation Exited Universal Life business in SG (Jan 2015) Entered Laos (2015) Japan life sale (2015) India IPO (Sept 16) Korea life sale (May 17) IM WFOE established (Mar 18) China Expansion Sichuan & Hunan entry (Nov 17 & Apr 18) TMBAM acquisition 7 (Jul 18) Babylon partnership (Aug 18) H&P Focus ~70% Fee incl Eastspring 84% Insurance margin >5m Health customers NBP 3 IFRS 3 FSG 3 4.2x 3.8x 4.8x Capability build Over 90,000 units 63% E-submission rate 55% Auto-underwriting Jet Claims AI-based autoassess & review Launched OPUS in Singapore (HNW proposition) Chatbot technology (agents & customers) Healthcare at fingertips >8,000 qualifiers Multi-metric KPIs Asia life income includes insurance income, fee income, with profits income and expected returns on shareholder assets and excludes margin on revenues. 2. Stated for PCA excluding India 3. CER 4. HY18 5. Comprises spread income, with-profits and expected return on shareholder assets. 6. Year on year growth 7. Share purchase agreement was signed on 25 July The acquisition is subject to regulatory approval, which is expected to completed by early October. 3

4 Agenda Summary HY18 Results Recap Strategic Update 4

5 HY18 Results Adding capabilities while delivering strong performance Active portfolio management and capability expansion Korea life sale (May 17) May 2017 Hunan entry (Apr 18) Double-digit growth across key metrics IFC infra mandate (Jun 17) OPUS (HNW) (Apr 18) Vietnam CF sale (Jan 18) Sichuan entry (Nov 17) Doctor2u partnership (Jan 18) SGA Fund launch (Apr 18) Pension pilot in 3 cities (May 18) Asset Mgmt & Trust license (Jun 18) New business profit 1 1,122m +11% Siam Commercial Bank (Feb 18) Robinsons Bank (Mar 18) Vietbank partnership (Mar 18) IM WFOE established (Mar 18) Enterprise (SME) launch (Jun 18) M&G Optimal Income fund launch (Jun 18) TMBAM acquisition 2 (Jul 18) Babylon partnership (Aug 18) August 2018 IFRS operating profit 1 Free surplus generation 1 1,016m 590m +14% +14% 1. Growth rates indicate variances against prior year on a constant exchange rate basis. 2. Share purchase agreement was signed on 25 July The acquisition is subject to regulatory approval, which is expected to completed by early October. 5

6 HY18 Results Pivot to value with sales momentum recovering in Q2 Record 2Q APE NBP APE growth (YoY %) +6% H1 Agency +11% Bancassurance +14% - 4% 8 Countries with double digit growth H&P NBP 1 +19% Q2 17 Hong Kong +13% China +21% Q2 18 Thailand +53% Philippines +15% Hong Kong China +14% +15% Health & Protection % NBP ~70% Vietnam +15% Cambodia +21% Singapore +20% 1. Growth rates indicate variances against prior year on a constant exchange rate basis. 6

7 HY18 Results Resilient growth underpinned by recurring premium, protection focused business IFRS Contribution from Insurance margin 1 > 1bn for the first time at HY 6 Life markets with double digit growth 145 Indonesia +6% Hong Kong +28% +13% Eastspring HY Renewal Premiums ( bn) Renewal premium +17% 723m +17% vs HY Vietnam Singapore +26% Malaysia +12% China Thailand +9% +4% +10% HY18 Taiwan +14% Other 3 1. Growth rates indicate variances against prior year on a constant exchange rate basis. 2. Represents gross earned premiums for contracts in second and subsequent years, comprising Asia segment IFRS gross earned premium less gross earned premiums relating to new regular and single premiums, plus renewal premiums from joint ventures. CER excluding Korea 3. Other represents Philippines, India, Cambodia, Laos and non-recurring 7

8 Agenda Summary HY18 Results Recap Strategic Update 8

9 Opportunity Significant long term growth opportunity Working age Demographics 1,2 +1m a month Over m 696m Health and Protection Gap 4,5 Out of pocket healthcare spend Mortality gap 42% $146tr 2.3bn $5tr a year 2.5bn 2030 Private financial wealth 3 $78tr 244m 441m Growth runway Asia 12% US 9% Asia US UK UK Penetration 6,7 $9tr $40tr US 114% $53tr UK 7.5% Asia 2.4% Insurance Mutual Fund Asia 15% 1 United Nations, Department of Economic and Social Affairs, Population Division (2015). World Population Prospects: The 2015 Revision, DVD Edition.15 2 Working age population: years 3 Source BCG Global Wealth Navigating the New Client Landscape 4 World Health Organisation - Global Health Observatory data repository (2013). Out of pocket as % of Total Health Expenditure. Asia calculated as average out of pocket 5 Source: Swiss Re Mortality protection gap in Asia Numbers are based on PCA footprint and use per capita income of working population as the base unit to calculate the size of the gap. 6 Insurance penetration source Swiss Re Sigma Insurance penetration calculated as premiums in % of GDP. Asia penetration calculated on a weighted population basis 7 Investment Company Institute and industry associations as of December FUM as a % of GDP. 9

10 Footprint Leading pan-regional franchise Pru Asia footprint Life portfolio Asset Management 15m Top 3 China 4 India 5 Indonesia Philippines Pru life customers Position in 9 of 12 markets 1 2.7% 4 2.8% 1 1.9% 1 1.2% 3 1,416m Vietnam 1,354m Thailand 267m Malaysia 6 107m Taiwan Mutual fund penetration 9 12% 1 Retail fund manager ranking 10 Market Penetration 2 Population 3 Pru Rank 1 1.3% 97m 2 3.6% 10 69m 3.3% 32m % 12 24m 11 Eastspring Asian country presence 11 Access to: Singapore 7 Hong Kong Laos Cambodia 8 3.6bn Population 6.6% 6m % 7m 2 -% 7m 3 0.1% 1 16m Market leading pan regional Asian Retail Fund Manager 10 1 Top 3 in 9 of 12 countries. As per Group s FY2017 disclosures. Source: Based on formal (Competitors results release, local regulators and insurance associations) and informal (industry exchange) market share data. Ranking based on new business (APE or weighted FYP depending on the availability of data). 2 Market penetration: Swiss Re based on insurance premiums as a percentage of GDP in 2017 (estimated). 3 United Nations, Department of Economic and Social Affairs, Population Division, World Population Prospects 2017 Revision. 4 Ranking amongst foreign JVs. 5 Ranking amongst private players, share among all players on a fiscal year basis excluding Group business. 6 Excludes Group business. 7 Singapore includes onshore only, excluding Eldershield and DPS. 8 First year gross premiums. 9 Source: Investment Company Institute, industry associations and Lipper as of Q116. Datastream as of Jun Source: Asia Asset Management Fund Manager Surveys. Based on assets sourced in Asia ex- Japan, Australia and New Zealand. Ranked according to participating firms only. 11 Eastspring has a presence in 11 markets across the region following its recent entry into Thailand in July; the completion of this transaction is subject to local regulatory approval. Sales offices in UK, US and Luxembourg. 10

11 Footprint Leading pan-regional franchise The broadest Asian Onshore footprint Indonesia Malaysia Singapore (onshore*) Vietnam Thailand China India Japan Korea Taiwan (onshore*) TMBAM Hong Kong (onshore*) Aberdeen Standard Alliance Bernstein Allianz A.M. BNP Paribas I.P. DWS A.M. Fidelity Franklin Templeton HSBC Global A.M. JP Morgan A.M. Manulife A.M. Schroders Top 10 Market Position Market Presence No Presence Sources: Singapore, Malaysia, Thailand and Hong Kong (Morningstar), Korea (Korea Financial Investment Association), India (Association of Mutual Funds in India), Japan (Investment Trusts Association, Japan), Taiwan (Securities Investment Trust & Consulting Association of R.O.C.), China (Z-Ben), Indonesia (Otoritas Jasa Keuangan), Vietnam (State Securities Commission of Vietnam), as at Dec Eastspring JVs include HK, India and China. Japan reflects Publicly Offered Investment Trusts market presence. China reflects public mutual funds market presence. Vietnam reflects open-ended mutual funds market presence only. *Market presence based on whether the AMCs offer onshore domiciled funds. Market ranking and AUM based on 100% shareholdings. 11

12 Strategic context High return businesses with significant runway Return on Equity 1 Opportunity Population 2 (m) Market penetration 3 (%) Prudential customers as % of population Asia 32% 3, % 0.4% Eastspring 40% Indonesia 62% % 0.9% Hong Kong 58% % 19% 4 Vietnam 30% % 1.5% China 30% 1, % 0.1% Malaysia 28% % 7.0% Singapore 26% 6 6.6% 15% India 20% 1, % 0.3% Philippines 18% % 0.3% Thailand 13% % 2.2% Taiwan 13% % 0.9% 1. Return on Equity using 2017 post tax operating profit and opening shareholders equity after removal of central elimination adjustments predominantly in Singapore and Malaysia 2 Population total includes Laos, Cambodia, Japan and Korea. Source: United Nations Dept of Economic and Social Affairs. Population division 2017 Revisions 3 Market penetration Swiss Re Sigma based on insurance premiums as a percentage of GDP in 2016 (estimated) 4 Hong Kong customers includes customers from Mainland China not incorporated in the population total 12

13 Strategic priorities Asia Accelerate Leverage scale Expand health & protection Penetrate wealth Enhance the core Create best-in-class health capability Accelerate Eastspring Expand presence in China Broaden flagship product range Expand distribution and drive efficiency Narrow mortality protection gap Grow participation in health and medical segments Strengthen and expand investment offering Diversify investment styles Grow into footprint Preserve leading edge operational capabilities Collaborate with non-traditional partners Build-out presence in SME 1 segment Enhance distribution capabilities Deepen asset management presence Increase automation and embed digital capability Expand value added services Build digital enablers Pursue optionality to increase participation 1 SME Small and medium size enterprises 13

14 Strategic priorities Enhance the core Opportunity Credentials and Capabilities Low Penetration Insurance Penetration 1 2.4% (UK=7.5%) Modernise customer experience and fulfilment Significant uninsured Mortality Gap 2 $146tr (2030) Top 3 position in 9 of 12 life markets (FY17) 15 million life customers >600k agents 15k bank branches Access to 3.6bn population 24m policies >8,000 qualifiers Seamless Buying Experience Frictionless Customer Servicing 63% E- submission rate (+3ppt from FY17) 55% Auto-underwriting (+4ppt from FY17) Recent Progress Linked APE growth +29% Activated new Banca partners SCB in Thailand, Robinson in Philippines Launched OPUS in Singapore (HNW proposition) Launched Hospital to Prudential Portal and Chatbot Claims (reduced claims submission time by 75%) in HK e-pos 2.0 leveraged Zhong An technology 1 Source: Swiss Re Mortality protection gap in Asia Numbers are based on PCA footprint and use per capita income of working population as the base unit to calculate the size of the gap. 2 Insurance penetration source Swiss Re Sigma Insurance penetration calculated as premiums in % of GDP. Asia penetration calculated on a weighted population basis 14

15 Strategic priorities Create best-in-class health capability Opportunity Credentials and Capabilities Ageing population +65 Asia population +450m ( ) Significant uninsured Health Protection Gap 1 US$1.8tn (2020E) >5m Health customers > 800m Premium Income (FY17) >1m Policies repriced Rising Chronic Disease Size of Protection Gap due to Chronic Illness 1 ~45% Diabetic Asia population 2 >215m Hypertensive Asia population 3 >715m Regulatory changes Launch Voluntary Health Insurance Scheme in 2019 MediShield changes effective 2019 Income tax deductibility for qualified health insurance premiums (2017) Tax deductibility of health insurance premiums (2017) Introduction of mandatory BJPS health insurance scheme Exclusive Asia partnership (AI healthcare company) Protection NBP up 19% Recent Progress Hospital portal & PRUmedical network 54 hospitals in 28 cities 93 panel hospitals Full-suite of CI products (H&P APE up 24% in 2Q18) (now in 5 markets; >90,000 units) 1 Swiss Re 2 Source: IDF, 2017 estimates; adults defined as individuals aged between 20 to 79; 3 Source: NCD RisC, 2015 estimates with crude prevalence of raised blood pressure by gender 15

16 Strategic priorities Create best-in-class health capability Delivering new, compelling propositions Continuously innovating CI offerings Leader in the growing health & protection segment Hong Kong H&P APE mix 15% H&P APE mix 25% 16

17 Strategic priorities Accelerate Eastspring Opportunity Credentials and Capabilities Asia Pacific expected to provide ~75% of Global net new flows Cumulative AM industry net new flows by region ('13-21E) 1 ~40% ~75% Rest of World Asia Pacific Market leading pan regional Asian Retail Fund Manager Top 10 in 8 countries 4 Presence in 11 countries across the region 4 >3,500 employees, >300 investment professionals Working with >300 distribution partners 2013-' '21 Increasing Wealth Private Financial Wealth 2 Low Penetration Mutual Fund Penetration 3 Established IM WFOE and received approval for QDLP application Recent Progress Acquired 65% stake in TMB Asset Management 4 10bn AUM US$78tn (2021E) 15% (US=114%) Selling M&G Optimal Income in TW (US$97m inflows in 1H18) Operationalised 5 th largest Thai Asset Manager Distribution agreement with TMB Bank 1 Source: Bain. AM Industry includes Retail + Institutional 2 Source BCG Global Wealth Navigating the New Client Landscape 3 Investment Company Institute and industry associations as of December TMBAM acquisition is subject to regulatory approval 17

18 Strategic priorities Expand presence in China Opportunity Credentials and Capabilities Insurance demand Wealth pool 18 branches, 77 cities >40k agents and 18 bank partners Access to around 70% of the population >1m customers SARMRA #1 in industry 100% agency e-sub 99% claims via WeChat (service time reduced to 1.5 days from 11 days) 尊享惠康 (Premier Critical Illness) 2017 Golden Award Provinces with 60m+ Population 8 out of 31 Urbanisation Rate 57% by 2020 up from 47% in 2010 Demand drivers Retirement Aged Population 35-40% by Working Age Population 3 21% of Global > 1 billion Pilot tax-deferred pension (launched 4 new products in June) Launched a new children education product (1/3rd of agency sales in the month of launch) Intelligent policy application (process time reduced from 5 days to 30mins & 99.9% usage rate) Recent Progress Started preparations to enter Hunan (7th largest province and 68m population) Enhanced WeChat platform (>90% customer services via WeChat) Established IM WFOE and received approval for QDLP application 1 Source: Swiss Re, CBIRC, Wind, Insurance Market in 2017 by Allianz Economic Research, Global Wealth Report by Credit Suisse. 2 World Bank via BBC 3 United Nations, Department of Economics and Social Affairs Working age population is years 18

19 China Growing footprint and diversification Branches established: Guangdong Beijing Branches established: Jiangsu Suzhou Shanghai Shenzhen Hubei Shandong Zhejiang APE by Branch Branches established: Tianjin Guangxi Fujian Hebei Liaoning Branches established: Shanxi Henan Anhui Sichuan APE % (2017) 6% 21% 24% 49% Recent branch expansion NBP margin: 21% 32% 45% Shanxi Population 37m 2014 Henan Population 95m 2015 Population Population Population Anhui Sichuan Hunan 1 62m 83m m 1 Received Regulatory approval for preparation work 19

20 China Increasing H&P focus supported by opportunity & regulatory change APE Non-Par HY18 Product development H&P (% APE) % 27% 41% Par H&P 41% Linked Launched Zun Xiang Hui Kang in A limitedpay whole life critical illness (CI) protection plan Regular premium (% of APE) 98% +6ppts Regulation Opportunity Raise foreign ownership restrictions in security, asset management, and insurance companies to 51%, without limits after 3 years Insurance penetration 1 2.7% 5.0% CIRC Target Current 2020 Rmb4.5tn premium Product regulation changes (e.g. document 134 to eliminate lower margin, shorter duration investment products from the market) to protect consumers against aggressive sales tactics and fraudulent product design Out of pocket healthcare spend 2 32% China 12% US 9% UK Income tax deductibility for qualified health insurance premiums from July 2017 C-ROSS phase II to be completed in 2020 Diabetic population 3 114m or 27% of world s diabetic population is in China, accounting for $110bn in healthcare spending H&P APE +18% (41% of mix) NBP +15% Retention ratio (HY18) 97% 1 CIRC. Penetration is defined as premium as percentage of GDP 2 World Health Organisation. Out of pocket as % of Total Health Expenditure. 3 Source: IDF. By

21 Asia Country snapshots Hong Kong Singapore Indonesia >19,800 agents >30% Agency market share >3,700 MDRT +14% NBP (1H18) +13% APE;+20% MCH APE (2Q18) 23% H&P Mix (Agency) (from 20% in 1H17) 99% Retention Ratio 98% Regular Premium 96% agency e-submission IFRS 190m, +27% CAGR (HY13-18) PRUsistant: 3mins claims submission First to market Hospital to Prudential Largest agency force >4,700 Double Digit growth Agency APE #1 in Regular Premium (22% market share) Optimising strategic partnerships +9% APE +20% NBP 88% PruShield e- renewals / e-statements 50% e-contracts #1 Agency (>20% market share) Over 405 offices covering 165 cities +3% growth in agents 58% of agents in market 2.2m customers 3.1m policies -12% APE +19% Sharia (21% of mix) +4% Bancassurance 62% agency e-submission (40% in 2017) 21

22 Asia Country snapshots Malaysia Thailand Vietnam ~20,000 agents +7% productivity #1 (Conventional & Takaful) 42% H&P Mix (APE) +26% APE Double digit banca growth 15% market share 1.5m customers Optimising partnerships Launched in 2018 Initiated PRUbiz beyond targeting SMEs Improvement medical claims experience 97% Retention Ratio 97% Regular Premium +33% increase in active agents ~3,500 agents +43% NBP 30% Linked mix (11% HY17) Launched PRUApp Launched PRUbot 95% Retention Ratio 99% Regular Premium e-pos 2.0 leveraged Zhong An technology IFRS 63m, +21% YoY HY18 22

23 Asia Summary Strong financial performance and further pivot to value High quality diversified business delivering resilient growth Continued focus and expansion of capabilities Well positioned to benefit from long-term structural opportunities 23