Prudential UK & Europe. Jackie Hunt, Aki Hussain

Transcription

1 Prudential UK & Europe Jackie Hunt, Aki Hussain

2 Agenda Strategy and business overview Market developments and business lines Financial performance Summary and outlook 2

3 Agenda Strategy and business overview Market developments and business lines Financial performance Summary and outlook 3

4 Drivers of Our Strategy Growth Opportunities Broaden risk managed products and retirement solutions Enhance distribution Selective Participation Disciplined and active management of our product portfolio and routes to market Cash Generation Sustainable cash generation Delivering the EV of the in-force book through cost and persistency management Capital Discipline Rigorous approach to new business pricing Capital strength supports group balance sheet 4

5 Our Business and Capabilities Customers 7.7m policies Brand Leading retirement brand Financial Strength Strong shareholder capital and WP Fund Leading UK retirement and savings franchise Customer Propositions Retirement solutions & investments Distribution Diversified Investment Management Excellent performance track record 5

6 Our Core Product Lines Investments 1 (APE; m) Retail Annuities (APE; m) Bulk Annuities (APE; m) 38% (47%) % 15 Note: 1. Investments include with profits bonds, unit linked bonds, offshore bonds, individual pensions and drawdown. 6

7 Agenda Strategy and business overview Market developments and business lines Financial performance Summary and outlook 7

8 Budget 2014: Merging of Accumulation and Decumulation Work Retirement The Past (Typical) Save for retirement Pension (DB & DC) Take income in retirement Annuities Accumulate Decumulate The Future (Likely) Save for retirement Pension (DC) Greater use of other vehicles Increasing Flexibility Drawdown Bonds ISAs Annuities Property Long Term Care Increased attractiveness of pension & ISA Increased range of options and solutions Our product set and balance sheet strength positions us well for the change 8

9 Annuities: Impact of Consumer Reaction 21% Destination of Maturing Pension Funds by Value 1% 4% 2% 39% 46% 7% 25% 30% 25% Q Q Go elsewhere Annuities Transfer to Other Prudential Products Deferral Triviality 9

10 Annuities: Our Response Increase in Drawdown (APE; m) Initiatives Flexible drawdown 23 To be launched December 2014 with further development 128% PruFund ISA 10 To be launched early 2015 Value of PruFund to advisers as an attractive accumulation and decumulation proposition Successful growth in PFP drawdown sales in

11 Investments: Strong Growth Across Product Lines Onshore Bonds (APE; m) Offshore Bonds (APE; m) Individual Pensions (APE; m) Dynamic Portfolios (AUM; m) 29% % % % 49 11

12 Investments: PruFund A Market Leading Proposition 100% 80% Leading Investment Performance PruFund Growth Fund Fund Comparator 1 +90% Strong Growth in AUM ( bn) % +52% 98 40% 75 20% 0% -20% Q 2014 AUM # Policies, 000s Note: 1. ABI Mixed Investment 20%-60% Shrs TR 12

13 Bulks: The Opportunity and Our Approach UK Market by Scheme Size 1 A Highly Disciplined Approach Total Market Size: c 1.8tn > 250m and < 500m > 100m and < 250m 200 Scheme size < 100m Minimum return requirements Cashflow / payback periods EV margin 1,364 > 500m IFRS profit margin Note: 1. KPMG high-level analysis based on Purple Book

14 Bulks: Margin and Capital Efficiency Enhancements 2008 (Full Year; m) 2014 (Year to Sept; m) x profit margin (1) (23) (112) 4.8x capital efficiency (2) APE NBS NBP APE NBS NBP Note: 1. NBP as a percentage of APE (23.2% in 2008 compared to 62.4% for Year to September 2014); 2. Capital efficiency is NBS as a percentage of APE (78.9% in 2008 compared to 16.3% for Year to September 2014). 14

15 Other Business Lines Corporate Pensions (APE; m) Protection Poland (APE; m) 138 (15%) 117 Exit on attractive terms ( 155m) Full strategic flexibility to reenter market retained 111% 1.9 Use of Prudential brand by Discovery for marketing terminates at end Q

16 Distribution: Diversified Capability Sales by channel (Year to Sept 2014, APE m) APE Via Retail Financial Advisers ( m) Ave. New PruFund Policy Size per Adviser 5 ( 000s) Other Mature Life & Pensions 2 20% % 59 Bulks JV 3 PFP Intermediaries 1 Internal Vestings 117 Corporate Pensions M 2014 Note: 1. Includes intermediaries and PIA; 2. Includes partnership annuities, Poland, franchise and business development; 3. Includes PruHealth and PruProtect; 4. PFP pilot launched in 2010 and full operations started in December 2011; 5. Average case size covers all with-profit intermediated sales of which PruFund comprises c85%. 16

17 Strong Momentum and Ongoing Development Recent Awards Ongoing Proposition and Distribution Enhancement Onshore bond launched on two 3 rd party platforms Flexible drawdown launch PruFund ISA Onshore bond launch on up to 10 3 rd party platforms (over 2015) Ongoing investment in digital (customer and adviser) Flexible drawdown - enhancement 17

18 Agenda Strategy and business overview Market developments and business lines Financial performance Summary and outlook 18

19 Summary of Financial Performance Robust New Business performance Sustained profitability Predictable Free Surplus and Cash Generation 19

20 Robust New Business Performance APE ( m) New Business EEV Profit (Net) ( m) New Business Margin (%) 20% % +2% 32% %

21 Sustained Profitability Strong IFRS Generation from In-Force, Resilient over the Medium Term 1 EEV Operating Profit (Net of Tax; m) 854 IFRS Operating Profits (before Restructuring & SII Cost ( m)) EEV Operating Profit ( m) H1 13 H1 14 In-force Business New Business H1 13 H1 14 In force New business Note: 1. The IFRS segmental analysis is an internal analysis and is not externally audited. The splits are net of exceptional costs. In-force includes 100% of the profit from the with-profits business. 21

22 Predictable Free Surplus and Cash Generation Operating Free Surplus Generated ( m) Cash Remittances to Group ( m) H2 H2 (103) (65) (54) (45) (29) (20) (42) H1 13 H1 14 General insurance New business contribution Underlying free surplus generated from in-force life business H1 13 H1 14 PAC shareholder transfer Shareholder surplus generated One-off 22

23 Agenda Strategy and business overview Market developments and business lines Financial performance Summary and outlook 23

24 Summary and Outlook Competitively advantaged Highly disciplined in everything we do Our product set positions us well for the market changes Our product and distribution developments will enhance our position further Our financial performance remains robust Long-term outlook for Prudential in the UK retirement market remains positive 24