SOURCE: Prudential plc

April 20, 2006 02:01 ET

Prudential Plc First Quarter 2006 New Business Results

LONDON, UK -- (MARKET WIRE) -- April 20, 2006 --


Embargo: 7.00am 20 April 2006  
 
 

PRUDENTIAL PLC FIRST QUARTER 2006 NEW BUSINESS RESULTS

 
 
- Group APE sales of GBP637 million, up 27 per cent  
- UK APE sales of GBP244 million, up 17 per cent 
- Jackson National Life (JNL) APE sales of GBP167 million, up 22 per
  cent 
- Prudential Corporation Asia APE sales of GBP226 million, up
  47 per cent 
- M&G net fund flows of GBP1.7 billion, up 38 per cent 
- Asia net fund flows of GBP0.5 billion, up 147 per cent  

All comparisons above and narrative below are quoted at constant
exchange rates (CER) unless otherwise stated. See Notes to Editor for
further details. 
 
Commenting, Mark Tucker, Group Chief Executive, said: 
 
"Our life businesses have made a good start to the year, building on
the strong momentum we established in the second half of 2005.  
 
"In the UK, new business sales were up 17 per cent as we continued to
build our shareholder-backed business. We expect the UK market to
remain competitive through 2006, and our emphasis will continue to be
on margins and return on capital, not APE volume growth.  
 
"In the US, retail sales in the quarter were up 31 per cent, driven
by record sales of variable annuities. With our advantaged position
in the variable annuity market we expect to continue to grow our
market share through the year.  
 
"Growth was particularly strong in Asia, up 47 per cent compared with
a slow first quarter in 2005. All our major markets performed well.
We have unrivalled sales and profit growth potential in Asia and we
will continue to develop our distribution capability to strengthen
this position further. 
 
"Our asset management businesses also had an excellent first quarter. 
 
"M&G delivered gross fund inflows of GBP2.9 billion, an increase of
39 per cent, and growth in net inflows was 38 per cent compared to
the same period last year. These figures reflect the strength of
M&G's diversified product offering and include record levels of
retail sales on the back of outstanding investment performance. 
 
"In Asia, third party net inflows of GBP0.5 billion were up 147 per
cent on the first quarter of 2005, due to continued strong inflows in
Korea and improved performance in Taiwan and India. 
 
"The Group continues to have excellent prospects for profitable
growth, and there is tremendous scope to deliver increasing value to
shareholders." 
 
Commentary on First Quarter 2006 New Business Results 

UK Insurance Operations

Prudential UK APE sales of GBP244 million were up 17 per cent on the
first quarter of 2005 driven by strong sales of offshore bonds, bulk
annuities and with-profit bonds. On a PVNBP basis this equates to
first quarter 2006 sales of GBP2.1 billion. 
 
Some segments of the UK market have been challenging in the first
quarter of 2006, particularly bulk and individual annuities and
unit-linked bonds. Our emphasis during this period has been on
maintaining margins and return on capital, focusing on value not
volume. 
 
APE sales of offshore and unit-linked bonds increased 17 per cent on
the first quarter of 2005. This reflects a 250 per cent increase in
offshore bond sales due to strong investment bond sales through new
and existing distributors. This in turn was offset by a 28 per cent
fall in unit-linked bond sales reflecting continuing price
competition to which Prudential chose not to respond. 
 
Bulk annuity APE sales were up 175 per cent reflecting the previously
announced GBP66 million Royal London transaction. However, the market
for bulk annuities contracted in the quarter as potential buyers
deferred decisions pending an improvement in long-term bond yields. 
 
The individual annuity market, particularly through the
intermediaries channel, remains competitive reflecting the decline in
long-term bond yields, with sales down 8 per cent on last year.
However, APE sales of individual annuities through the Partnerships
channel were up 125 per cent reflecting increased sales through the
additional partnership agreements signed during the course of last
year. 
 
APE sales of with-profit annuities have increased 150 per cent in the
first quarter. Unlike conventional annuities, with-profit annuities
link the level of income to the performance of the Prudential's
with-profits fund which has a mix of assets that gives the prospect
of income growth over the expected life of an annuity contract.  
 
With-profit bonds also saw good growth of 25 per cent reflecting
consumers' positive response to the bonus declaration made earlier
this year.  
 
APE sales of individual and corporate pensions were in line with
2005, reflecting the uncertainty in the market ahead of the
simplification in pensions legislation that took effect earlier this
month. 
 
In 2005, Prudential wrote to 440,000 of its customers contracted out
of the second state pension and provided updated information and
views to enable them to make an informed decision about whether to
contract back in for the 2005/6 tax year onwards. As a result of this
mailing, approximately 132,000 customers elected to contract back
into the State scheme resulting in a decline in DWP rebate business
of 29 per cent in the first quarter of 2006. 
 
Although recently launched, Prudential UK's new lifetime mortgage
product, the Prudential Property Release Plan, has had a good
response. PruHealth had a record quarter with total individuals
insured at the end of March 2006 standing at over 40,000 lives. 
 
Prudential UK will continue to pursue profitable opportunities in its
chosen product areas and distribution channels in 2006 maintaining
its focus on return on capital.  
 
Jackson National Life

Jackson National Life's (JNL) APE sales of GBP167 million in the
first quarter represented a 22 per cent increase on the same period
in 2005, driven by a strong increase in sales of variable annuities.
On a PVNBP basis this equates to first quarter 2006 sales of GBP1.6
billion. Retail APE sales for the quarter of GBP122 million were up
31 per cent on 2005.  
 
JNL delivered record variable annuity APE sales of GBP89 million
during the first quarter, up 51 per cent on the same period in the
prior year, reflecting its continuing focus on relationship-driven
distribution and product innovation. Quarterly variable annuity
premiums exceeded $1.5 billion for the first time, and represented
the sixth consecutive quarter of variable annuity sales growth. This
result was achieved in a market that had grown 17 per cent
year-on-year during the first two months of the year.  
 
In the first quarter, approximately 27 per cent of the variable
annuity premiums received related to two new products launched during
2005, 'Perspective Advisors II' and 'Perspective L Series', a result
that clearly demonstrates JNL's ability to deliver products and
product features that the market wants. For the full year 2005, JNL
increased its variable annuity market share to 3.6 per cent, up from
2.8 per cent in the prior year, and improved its ranking in variable
annuity sales from 14th at year end 2004 to 12th at year end 2005. In
terms of net flows, JNL improved its position to 3rd at year end 2005
from 8th a year earlier. 
 
The persisting low interest rate environment and flat yield curve in
the US has resulted in a continuation of the weak customer demand for
fixed annuities. As a result fixed annuity APE sales for the quarter
of GBP15 million were down 17 per cent on 2005. JNL was ranked the
eleventh largest provider of fixed annuities for the full year 2005.  
 
Fixed index annuity APE sales of GBP13 million were down 7 per cent
on the same period of 2005. The fixed index annuity market declined
in the second half of 2005 by 4 per cent. This decline is due
primarily to continued uncertainty in the US regulatory environment,
leading to lower demand for FIA products. JNL was ranked the seventh
largest provider of fixed index annuities for the full year 2005,
improving from ninth for the full year 2004.  
 
Life APE sales of GBP4 million were up 33 per cent on 2005.  
 
Curian Capital, which provides innovative fee-based separately
managed accounts, had a strong start to the year increasing assets
under management to GBP1.1 billion, up 55 per cent from the end of
the first quarter last year.  
 
Institutional APE sales in the first quarter of GBP44 million were
consistent with the prior year. JNL will continue to participate in
this market on an opportunistic basis, although it is expected that
the majority of institutional sales will occur in the first half of
2006. 
 
JNL has made a strong start to the year, focusing on value-driven
growth in its key product lines. With continued product innovation, a
strong relationship-based distribution model, continuing competitive
cost structure, and proven ability in execution, JNL is well
positioned to take advantage of opportunities in the US market.  
 
Prudential Corporation Asia

Prudential's Asian life operations had an exceptionally strong first
quarter in 2006 with APE sales of GBP226m up 47 per cent,
representing a continuation of the momentum seen in the second half
of 2005 compared with the relatively slow first quarter last year. On
a PVNBP basis this equates to first quarter 2006 sales of GBP1.2
billion.  
 
Strong first quarter performances were delivered by both our Korean
and Indian operations, up 77 per cent and 65 per cent respectively.
Korea's record APE sales for the quarter of GBP55 million were driven
in part by the run up to the financial year end at 31 March,
continued growth and high productivity in the financial advisor
distribution channel and the addition of new general agencies.
Prudential's 26 per cent share of its Indian joint venture with ICICI
generated APE sales for the first quarter of 2006 of GBP33 million.
Our Indian business also benefited from the tax year end in March,
but underlying growth continues to be driven by higher agent numbers
and successful partnership distribution, particularly with ICICI
Bank. Collectively, Korea and India (at 26 per cent) contributed 39
per cent to Prudential Corporation Asia's APE, compared to 33 per cent
in the first quarter of last year. 
 
Sales growth in Taiwan was 73 per cent up on prior year in the first
quarter of 2006 driven by continued success with linked products (70
per cent of its sales), increases in agent numbers and an increased
contribution from the partnership channel. Lower sales recorded in
Taiwan in the first quarter of 2005 reflected Prudential's focus on
higher margin linked business whilst competitors launched products
that we considered to be unattractive. 
 
In Indonesia, APE sales for the first quarter were the highest ever
recorded at GBP14 million and represent a 40 per cent increase on the
same period of 2005. This was driven by continued strong agent
recruitment and increases in productivity.  
 
The Singapore life operation delivered APE sales growth of 35 per
cent compared to a slow first quarter last year, when the market was
affected by weaker sentiment towards linked products. However, the
market recovered in the second half of 2005 and we launched six new
investment linked funds that continue to be popular, particularly as
single premium investments. Singapore also has increasing sales from
its newer distribution partners, Maybank and Singpost.  
 
In China, APE sales were up 50 per cent. Our joint venture with CITIC
now has ten cities operational and was granted a licence for an
eleventh (Jinan in the Shandong province) in January this year. Hong
Kong and Malaysia also performed strongly in the first quarter, with
increases of 13 per cent and 8 percent, respectively, on the same
period in 2005.  
 
APE sales in Japan and Vietnam were 50 per cent and 33 per cent below
the same quarter last year, respectively. In Japan, we closed the
Financial Advisor channel in the fourth quarter last year and in
Vietnam the market continues to stabilise following the initial
post-liberalisation boost. APE sales in Prudential's remaining
markets of the Philippines and Thailand, whilst small, doubled over
the prior year.  
 
Prudential's life insurance operations in Asia are well-placed to
deliver sustained, profitable and capital efficient growth.  
 
Asset Management 

M&G 

M&G made an excellent start to the year, delivering gross fund
inflows of GBP2.9 billion in the first quarter, an increase of 39 per
cent on the same period last year, reflecting the strengths of M&G's
diversified product offering in the areas of retail fund management,
institutional fixed income, pooled life and pension funds, property
and private finance. Net fund inflows grew by 38 per cent to GBP1.7
billion. External funds under management, which represent a quarter
of M&G's total funds, increased by a third to GBP40 billion compared
to the first quarter 2005. 
 
M&G generated record-breaking retail sales during the first quarter,
with gross fund inflows of GBP1.6 billion double those of the
previous year and already 42 per cent of the total gross retail sales
achieved in the whole of 2005. Net retail fund inflows totalled
GBP821 million, more than triple those in the first quarter 2005. In
the UK, M&G's continued strong fund performance in equities, bonds
and property led to a 77 per cent increase in gross fund inflows
compared to the first quarter 2005. M&G International, which sells
funds in Germany, Austria, Italy, Luxembourg and Switzerland, more
than doubled gross fund inflows and successfully launched into the
Spanish marketplace during the quarter. M&G's South African business
nearly doubled its gross fund inflows compared to the same period
last year. Overall retail funds under management have grown by almost
40 per cent since first quarter 2005 due to net sales, outstanding
investment performance and rising market levels.  
 
M&G's institutional businesses also had a good start to the year,
especially in the areas of segregated fixed income, property and
private finance. Gross institutional fund inflows totalled GBP1.3
billion and were similar to the equivalent period last year, while
net fund inflows were slightly lower at GBP923 million. However, the
2005 comparative for institutional inflows in first quarter was
boosted by a large single transaction of GBP967 million from
Prudential Property Investment Managers (PruPIM).  
 
Asian Fund Management Business  
 
The Asian Fund Management Business made a record start to the year,
delivering the highest first quarter third party net inflows since
the business was launched. Net inflows of GBP0.5 billion were up 147
per cent on the same quarter last year and are 38 per cent of the
total for the whole of 2005. 
 
The Asian Fund Management business's geographic diversification and
fund performance has seen continued strong net inflows in Korea, and
improved performance in India, Taiwan, Singapore and Malaysia as
compared to 2005. 
 
Total third party funds under management were GBP10.9 billion, up 16
per cent on the first quarter 2005. In August last year, ICICI
increased its stake in Prudential's Indian asset management joint
venture from 45 per cent to 51 per cent. As a result, Prudential no
longer consolidates this business at 100 per cent and the 2006
numbers are reported at 49 per cent, resulting in a GBP1.6 billion
reduction in funds under management over the same period last year.
On a comparable basis, first quarter 2006 funds under management grew
33 per cent on 2005.  
 
Prudential remains confident that its fund management businesses are
well positioned to grow strongly and profitably. 
 
- ENDS -

Enquiries:

Media		                        Investors / analysts	

Jon Bunn	        020 7548 3559   James Matthews	020 7548 3561
William Baldwin-Charles	020 7548 3719	Marina Novis	020 7548 3511
Joanne Doyle	        020 7548 3708		



Notes to Editor follow... 
 
Notes to Editor: 
 
 
1.   Annual premium equivalent (APE) sales comprise regular premium
sales plus one-tenth of single premium insurance sales and are
subject to roundings.

2.   Present Value of New Business Premiums (PVNBP) are calculated as
equalling single premiums plus the present value of expected new
business premiums of regular premium business, allowing for lapses
and other assumptions made in determining the EEV new business
contribution.

3.   Sales for overseas operations have been reported using average
exchange rates as shown in the attached schedules. Commentary is
given on the results on a constant exchange rate basis. The two bases
are compared in the table below.

                 	Annual Premium Equivalent Sales

	     Actual Exchange Rates	Constant Exchange Rates
     	    2006 Q1 2005 Q1  +/- (%)	2006 Q1	2005 Q1	 +/- (%)
   	        YTD	YTD		    YTD	    YTD	
	       GBPm    GBPm		   GBPm	   GBPm	
UK & Europe	244	208	17% 	    244	    208	    17%
US	        167	127	31%	    167	    137	    22%
Asia	        226	142	59%	    226	    154	    47%
	     ______  ______  ______	 ______	 ______	 ______
Total	        637	478	33%	    637	    500	    27%
	     ¯¯¯¯¯¯  ¯¯¯¯¯¯  ¯¯¯¯¯¯	 ¯¯¯¯¯¯	 ¯¯¯¯¯¯	 ¯¯¯¯¯¯
 	                      Gross Inflows

	     Actual Exchange Rates	Constant Exchange Rates
  	    2006 Q1 2005 Q1  +/- (%)	2006 Q1	2005 Q1	 +/- (%)
	        YTD	YTD		    YTD	    YTD	
	       GBPm    GBPm		   GBPm	   GBPm	
M&G	      2,915   2,092	39%   	  2,915	  2,092	    39%
Asia	      4,405   4,635	(5%)	  4,405	  4,941	   (11%)
	     ______  ______  ______	 ______	 ______	 ______
Total	      7,320   6,727      9%	  7,320	  7,033	     4%
	     ¯¯¯¯¯¯  ¯¯¯¯¯¯  ¯¯¯¯¯¯	 ¯¯¯¯¯¯	 ¯¯¯¯¯¯	 ¯¯¯¯¯¯
 	       Total Insurance and Investment New Business

	      Actual Exchange Rates     Constant Exchange Rates
    	     2006 Q1 2005 Q1  +/- (%)	2006 Q1	2005 Q1	 +/- (%)
	         YTD 	 YTD	 	    YTD	    YTD	
	        GBPm	GBPm		   GBPm	   GBPm	
Insurance      4,187   3,247	 29%	  4,187	  3,368	    24%
Investment     7,320   6,727	  9%	  7,320	  7,033	     4%
	      ______  ______  ______	 ______	 ______	 ______
Total	      11,507   9,974	 15%	 11,507	 10,401	    11%	         
              ______  ______  ______	 ______	 ______	 ______


4.   Prudential is initially providing reassurance to Royal London,
which will continue to pay the annuitants with Prudential reimbursing
the annuity payments to Royal London. During 2006, the intention is
for these annuity policies to transfer to Prudential, subject to
legal and regulatory approvals, at which point Prudential will take
over direct responsibility for the payment of all annuitants.
  
5.   For JNL market share data is provided for the full year 2005
being the latest available. Variable annuity data is sourced from
VARDS, fixed annuity data is sourced from LIMRA and fixed index
annuities data is sourced from LIMRA and The Advantage Group.

6.   There will be a conference call today for wire services at
7.15am (BST) hosted by Mark Tucker, Group Chief Executive and Philip
Broadley, Group Finance Director. Dial in telephone number: +44 (0)20
8609 0793. Passcode: 155439#

7.   There will be a conference call for investors and analysts at
10:00am (BST) hosted by Mark Tucker, Group Chief Executive and Philip
Broadley, Group Finance Director. From the UK please call +44 (0)20
8609 0793 and from the US +1 866 793 4279. Pin number 487687#. A
recording of this call will be available for replay for one week by
dialling: +44 (0)20 8609 0289 from the UK or +1 866 676 5865 from the
US. The conference reference number is 141718.

8.     High resolution photographs are available to the media free of
charge at www.newscast.co.uk (+44 (0) 207 608 1000).

9.   Total number of Prudential plc shares in issue as at 31st March
2006 was 2,422,372,683

10.	Financial Calendar 2005-2006:

Annual General Meeting                                   18th May 2006
Asset Management Presentation                            19th May 2006
Payment of 2005 Final Dividend                           26th May 2006 
2006 Interim Results/Second Quarter New Business Figures 28th July 2006
Ex-dividend date                                         16th August 2006
Record Date                                              18th August 2006 
Third Quarter New Business Figures                       19th October 2006
Payment of 2006 Interim Dividend                         27th October 2006
2006 Full Year New Business Figures	                 30th January 2007


*Prudential plc, a company incorporated and with its principal place
of business in the United Kingdom, 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 150 years and has GBP234 billion in assets under
management, (as at 31st December 2005) 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. 
 
 
 
Notes to Schedules :                
                
The format of the tables shown is consistent with the distinction
between insurance and investment products as applied for previous
financial reporting periods. With the exception of US institutional
business, products categorised as "insurance" refer to those
classified as contracts of long-term insurance business for
regulatory reporting purposes, namely falling within one of the
classes of insurance specified in part II of Schedule 1 to the
Regulated Activities Order under FSA regulations.                

The details shown for insurance products include contributions for
contracts that are classified under IFRS 4 (Insurance Contracts) as
not containing significant insurance risk. These products are
described as investment contracts or other financial instruments
under IFRS. Contracts included in this category are primarily certain
unit-linked and similar contracts written in UK Insurance Operations,
and Guaranteed Investment Contracts and similar funding agreements
written in US operations.                
 
UK and Asian investment products referred to in the tables above are
unit trusts, mutual funds and similar types of fund management
arrangements. US investment products relate to assets under
administration in Curian. These are unrelated to insurance products
that are classified as "investment contracts" under IFRS 4, as
described above, although similar IFRS recognition principles apply
to the acquisition costs and fees attaching to this type of
business.      
 
(1a) Insurance and investment new business for overseas operations
has been calculated using constant exchange rates. The applicable
rate for Jackson National Life is 1.75. A comparison between the
results at actual exchange rates and at constant exchange rates is
given in the press release.       
 
(1b) Insurance and investment new business for overseas operations
has been calculated using average exchange rates. The applicable rate
for Jackson National Life is 1.75 (2005: 1.82).      
      
(2) Represents cash received from sale of investment products.      
      
(3) Annual Equivalents, calculated as regular new business
contributions plus 10% single new business contributions, are subject
to roundings.      
      
(4) In Asia, 'Other' insurance operations include Thailand, the
Philippines and Vietnam.      
      
(5) Balance includes segregated and pooled pension funds, private
finance assets and other institutional clients. Other movements
reflect the net flows arising from the cash component of a tactical
asset allocation fund managed by PPM South Africa. 
      
(6) New business in India is included at Prudential's 26% interest in
the India life operation. Mandatory Provident Fund (MPF) product
sales in Hong Kong are included at Prudential's 36% interest in the
Hong Kong MPF operation.      
      
(7) Balance sheet figures have been calculated at the closing
exchange rate. The 2005 balance is shown on a constant exchange
rate.      
 
(8) Sales are converted using the year to date average exchange rate
applicable at the time. The sterling results for individual quarters
represent the difference between the year to date reported sterling
results at successive quarters and will include foreign exchange
movements from earlier periods 
 
(9) On 26 August 2005, Prudential's joint venture partner in the
Prudential ICICI Asset Management Company purchased an additional 6%
share ownership. As a result, Prudential no longer consolidates the
company as a subsidiary. 2005 Q1 results are reported at 100%. 
 
(10) GBP95m of FUM reported under Prudential Asian funds operations
relates to M&G's products distributed through those Asian operations
and this amount is also included in M&G's FUM. 
 
(11) In 2006 sales generated from certain bank relationships are
being reported within the 'Partnership' category instead of
'Intermediaries', therefore bringing the management of all retail
banks under one channel. The 2005 comparative of GBP5 million has not
been restated and remains within 'Intermediaries'. 
 
(12) In Korea other movements relate to equity fund dividend
payments  
 

Click on the following link to download the PDF document that contains 
the schedules that are related to this announcement: 

http://www.rns-pdf.londonstockexchange.com/rns/7047b_-2006-4-20.pdf
	
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