Embargo: 07.00am Friday 20 February 2009
PRUDENTIAL PLC ANNOUNCES TRANSFER OF ITS LEGACY AGENCY BOOK AND AGENCY
FORCE IN TAIWAN TO CHINA LIFE INSURANCE OF TAIWAN
Prudential plc ("Prudential") announces that it has entered into an
agreement to transfer the assets and liabilities of its agency
distribution business and its agency force in Taiwan to China Life
Insurance Company Ltd, of Taiwan ("China Life") for the nominal sum
of NTD1.
The business being transferred represents 94% of Prudential's in-force
liabilities in Taiwan and includes Prudential's legacy interest rate
guaranteed products.
In addition, Prudential will invest GBP45m to purchase a 9.95% stake
in China Life through a share placement. China Life is currently
ranked 4th in the country and is one of Taiwan's fastest growing
insurers offering a range of products through agency, broker and
bancassurance channels.
As an EU domiciled company, Prudential adheres to the European Union
Insurance Groups Directive ("IGD"), under which it is required to carry
significant economic capital reserves against this back book. On
completion of this transfer there will be a net increase in
Prudential's IGD surplus of approximately GBP800m, further
strengthening its already robust IGD position. The Group's embedded
value as reported under the European Embedded Value ("EEV") principles
will increase by GBP90m after restructuring costs. The transfer will
have an estimated one-off IFRS negative impact of GBP595m including
restructuring costs to be reported on completion. There is no impact on
Prudential's dividend paying capacity.
The transferred business had IFRS gross assets at 31 December 2008 of
GBP4.5bn, an IFRS operating profit pre-tax, based on longer-term
investment returns, of GBP55m and an EEV operating profit pre-tax of
GBP90m. The loss before tax on the IFRS and EEV bases were GBP(10)m and
GBP (240)m respectively.
This deal will enable Prudential to focus on creating greater value
in its wholly-owned and fast-growing life insurance operation, PCA Life
Assurance Company Ltd, specialising in bank distribution through
partnerships with Standard Chartered Bank and E.Sun and its successful
asset management operation, PCA Securities Investment Trust Company
Ltd. The direct investment in China Life announced today will also be
a source of incremental value.
The transfer is subject to regulatory approval.
Mark Tucker, Group Chief Executive of Prudential said: "This agreement is
enormously value enhancing for Prudential Group on
several levels. We release significant capital to further strengthen
our already very robust capital position; we improve our embedded
value; and the transfer enables us to focus on both our rapidly
expanding bank distribution through our successful partnerships with
Standard Chartered Bank and E.Sun Bank and our asset management
business. We also retain a significant interest in agency distribution
in Taiwan through our shareholding in one of the largest and most
reputable life companies in Taiwan. "We see this as clear-sighted and
active management of the Group to
optimise shareholder value. We continue to see Asia as the primary
engine of growth for Prudential and our commitment to our unique agency
distribution model and to the region is absolute".
ENDS
Enquiries:
Media Investors/Analysts
Jon Bunn 020 7548 3559 James Matthews 020 7548 3561
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About Prudential plc
*Prudential plc, is a company incorporated and with its principal place
of business in England, and its affiliated companies constitute one of
the world's leading financial services groups. It provides insurance
and financial services directly and through its subsidiaries and
affiliates throughout the world. It has been in existence for over 160
years and has GBP249 billion in assets under management (as at 31
December 2008). Prudential plc is not affiliated in any manner with
Prudential Financial, Inc, a company whose principal place of business
is in the United States of America.
Forward-Looking Statements
This statement may contain certain 'forward-looking statements' with
respect to certain of Prudential's plans and its current goals and
expectations relating to its future financial condition,
performance, results, strategy and objectives. Statements containing
the words 'believes', 'intends', 'expects', 'plans', 'seeks'
and'anticipates', and words of similar meaning, are forward-looking. By
their nature, all forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances
which are beyond Prudential's control including among other things, UK
domestic and global economic and business conditions, market related
risks such as fluctuations in interest rates and exchange rates, and
the performance of financial markets generally; the policies and
actions of regulatory authorities, the impact of competition,
inflation, and deflation; experience in particular with regard to
mortality and morbidity trends, lapse rates and policy renewal rates;
the timing, impact and other uncertainties of future acquisitions or
combinations within relevant industries; and the impact of changes in
capital, solvency or accounting standards, and tax and other
legislation and regulations in the jurisdictions in which Prudential
and its affiliates operate. This may for example result in changes to
assumptions used for determining results of operations or
re-estimations of reserves for future policy benefits. As a result,
Prudential's actual future financial condition, performance and results
may differ materially from the plans, goals, and expectations set forth
in Prudential's forward-looking statements. Prudential undertakes no
obligation to update the forward-looking statements contained in this
statement or any other forward-looking statements it may make.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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