SOURCE: Prudential plc

March 01, 2010 05:35 ET

Prudential plc FY09 unaudited results

LONDON--(Marketwire - March 1, 2010) -

For Immediate Release: Monday 1 March 2010



Embedded Value:

- New business profit of GBP1,607 million up 34%*

- Operating profit based on longer-term investment returns of
GBP3,090 million up 8%*

- Shareholders' funds of GBP15.3 billion, equivalent to 603 pence
per share


- Operating profit based on longer-term investment returns of
GBP1,405 million up 10%*

- Operating profit after tax covers full year dividend 2.2 times

- Shareholders' funds of GBP6.3 billion (2008: GBP5.1 billion)

New Business:

- Total APE sales of GBP2,896 million up 1%*

- Retail APE sales of GBP2,890 million up 11%*

- EEV new business profit margin (% APE) of 56% (2008: 42%)*

- Free surplus - investment in new business - of GBP675 million
down 16 per cent*

Capital & Dividend:

- Management action strengthened Insurance Groups Directive
("IGD") capital surplus, estimated at GBP3.4 billion, GBP1.9 billion
higher than at the end of 2008 (GBP1.5 billion)

- 2009 full year dividend increased by 5% to 19.85 pence per share

Prudential separately announced today that it has reached an agreement
with American International Group Inc. ("AIG"), on terms for the
combination of Prudential and AIA Group Limited ("AIA"), a wholly-owned
subsidiary of AIG.

Commenting on the full year results, Tidjane Thiam, Group Chief
Executive said:"These results represent an outstanding performance against
a backdrop
of unprecedented economic uncertainty, demonstrating the success of our
strategy to focus on value over volume and capitalise on the most
profitable growth opportunities in our chosen markets around the world.
In 2009, we achieved record total sales for the Group, with total APE
sales of GBP2,896 million, up 1 per cent (2008: GBP2,879 million) and
importantly, retail sales up 11 per cent to GBP2,890 million (2008:
GBP2,615 million). The fourth quarter 2009 saw a significant increase in
our sales, up 25 per cent on the third quarter 2009 driven by the
performance of our business in Asia.

Compared with the same period in 2008, our Group EEV new business
profit was up 34 per cent to GBP1,607 million and total EEV operating
profit based on longer-term investment returns was up 8 per cent to
GBP3,090 million. Our IFRS operating profit based on longer-term
investment returns was up 10 per cent to GBP1,405 million. Average Group
new business profit margin, as a percentage of APE, increased to 56 per
cent (2008: 42 per cent). Free surplus investment in new business was
16 per cent lower at GBP675 million (2008: GBP806 million). Therefore,
we achieved higher profits while consuming less capital, highlighting
our ability to allocate capital to markets and products which produce
the highest returns.

Our performance has been delivered while taking a disciplined approach
to risk management and targeted Group-wide actions to grow and protect
our capital, consolidating our position as one of the best capitalised
insurers in the world. Our estimated IGD surplus was GBP3.4 billion at
31 December 2009, an increase of GBP1.9 billion versus 31 December 2008.
This capital strength underpins our ability to exploit growth

Asia is the engine of the Group's future growth, particularly the fast
growing economies in South East Asia. The fourth quarter 2009 saw
record sales in Asia, up 42 per cent from the third quarter 2009, as
the recovery took hold. In 2009, total APE sales were GBP1,261 million
(2008: GBP1,216 million). New business profit in Asia was up 12 per cent
to GBP713 million (2008: GBP634 million) meaning that despite the most
challenging of environments, we have exceeded our target to double 2005
new business profits by the end of 2009. IFRS operating profit was up
by 62 per cent to GBP416 million (2008: GBP257 million) reflecting the
increasing maturity of this business and a one off credit of GBP63
million for our Malaysian operations.

In the US, Jackson APE sales were GBP912 million, up 27 per cent (2008:
GBP716 million) as the business continued to benefit from a flight to
quality in the US annuity market. Jackson has continued to implement
the strategy of targeting increasing volumes of relatively less
capital-intensive variable annuity sales, higher fixed index annuity
sales and contained fixed annuity sales. As a result, Jackson was
ranked 4th in total annuity sales in the first nine months of 2009, up
from 11th at the end of 2008. Our focused approach to this market has
seen our new business margins increase from 41 per cent to 73 per cent
in 2009.
At Prudential UK, our strategy remained to rigorously focus on
balancing new business, with cash and capital preservation while
maintaining margins. APE sales were GBP723 million, down 24 per cent
(2008: GBP947 million) but Retail APE sales were GBP717 million, down 11
per cent (2008: GBP803 million). New business margins increased 3
percentage points to 32 per cent in 2009 versus 2008. This reflects our
decision to focus on value over volume, leading to significantly lower
wholesale annuity business, individual annuities and corporate
pensions, partially offset by higher sales of with-profit bonds. Our
strategy allows us to generate surplus capital for investment in more
profitable opportunities for the Group. The UK business remains key to
the future delivery of the Group's overall aim of generating
sustainable, increased shareholder value.

Our asset management businesses saw strong inflows over the year as our
record of generating superior investment performance attracted funds in
a turbulent market environment. At M&G, net investment flows reached a
record GBP13.5 billion, a 296 per cent increase versus 2008. The total
funds under management at 31 December 2009 were GBP174 billion. M&G IFRS
operating profit was GBP238 million, 17 per cent lower than 2008,
primarily due to a lower FTSE All Share index in 2009. In Asia, asset
management total funds under management were GBP42 billion, up 22 per
cent and IFRS profit was 6 per cent higher at GBP55 million (2008: GBP52

At the start of 2009 we were positioned defensively, but in 2010 we
will accelerate and amplify our proven strategy to capitalise on the
most profitable growth opportunities in our chosen markets supported by
our strong capital position. Our remarkable results in Asia and the
exceptional performances of Jackson and M&G, have allowed us to
differentiate ourselves during 2009. The UK remains the bedrock of our
expansion in our other business units. That strategy has served us well
and will continue to serve us well in 2010 as Asia continues to grow
faster than the rest of the world and as other economies progressively

Commenting specifically on the agreement with AIG, Tidjane Thiam said:"With
this agreement we have a unique opportunity to create the leading
pan-Asian life insurer. The combination of Prudential and AIA will
create a sector powerhouse in the fastest growing markets in the world.
This agreement provides Prudential with a one-off opportunity to
transform the growth profile of the Group and offers long-term material
benefits to our shareholders. Both parties are committed to a smooth
transition process including the commitment to the strong AIA brand and
the unique strengths of the sales forces. The combined business will be
the largest life insurer in seven major Asian countries, allowing us to
continue to create shareholder value through our presence in the
world's most dynamic and attractive markets."


* 2008 comparatives are at actual exchange rates (AER). In order to
facilitate comparisons for the Group's current business amounts shown
for 2009 and 2008, new business and profit related KPIs exclude those
of the Taiwan agency business for which the sale process was completed
in June 2009.


Media                              Investors/Analysts

Edward Brewster +44 (0)20 7548 3719 Matt Lilley     +44 (0)20 7548 2007
Robin Tozer     +44 (0)20 7548 2776 Jessica Stalley +44 (0)20 7548 3511
Sunita Patel    +44 (0)20 7548 2466

Notes to Editors:

1. The results in this announcement are prepared on two bases:
International Financial Reporting Standards ('IFRS') and European
Embedded Value ('EEV'). The IFRS basis results form the basis of the
Group's statutory financial statements. The supplementary EEV basis
results have been prepared in accordance with the principles issued by
the CFO Forum of European Insurance Companies in May 2004 and expanded
by the Additional Guidance on EEV disclosures published in October
2005. Where appropriate the EEV basis results include the effects of

Period on period percentage increases are stated on an actual exchange
rate basis.

2. Annual premium equivalent (APE) sales comprise regular premium
sales plus one-tenth of single premium insurance sales.

3. 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

4. Operating profits are determined on the basis of including
longer-term investment returns. EEV and IFRS operating profit is stated
after excluding the effect of short-term fluctuations in investment
returns against long-term assumptions, the shareholders' share of
actuarial and other gains and losses on defined benefit pension
schemes, and the effect of disposal and results of the Taiwan agency
business, for which the sale process was completed in June 2009. In
addition for EEV basis results, operating profit excludes the effect of
changes in economic assumptions and the time value of cost of options
and guarantees, and the market value movement on core borrowings.

5. There will be a conference call today for wire services at
10.00am (GMT) hosted by Tidjane Thiam, Group Chief Executive. Dial in
telephone number: +44 (0)20 8817 9301 Passcode: 2519535.

6. A presentation to analysts will take place at 12.00pm (GMT) at
Governor's House, Laurence Pountney Hill, London, EC4R 0HH. Dial in
telephone number: +44 (0)208 817 9301 Passcode: 2486527. An audio cast
of the presentation and the presentation slides will be available on
the Group's website,

7. High resolution photographs are available to the media free of
charge at +44 (0)207 8886 5895 or by calling
Sunita Patel on +44 (0)20 7548 2466.

8. Total number of Prudential plc shares in issue as at 31 December
2009 was 2,532,227,471.

9. Financial Calendar 2010:

First Quarter Interim Management Statement             14 May 2010
AGM                                                    19 May 2010
2010 Half Year Results and Second Quarter 2010 New     12 August 2010
Business Figures
Third Quarter 2010 Interim Management Statement        10 November 2010

2009 Full Year Dividend
Ex-dividend date                                       7 April 2010
Record date                                            9 April 2010
Payment of dividend                                    27 May 2010

10. 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 through its subsidiaries and affiliates
throughout the world. It has been in existence for over 160 years and
has GBP290 billion in assets under management (as at 31 December 2009).
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.

Group Chief Executive's Report


I am pleased to report that Prudential delivered an outstanding
performance in 2009, generating significantly higher profits while
consuming less capital. Our discipline in allocating capital to the
most profitable products and channels, combined with our proactive
management of the Group's balance sheet, has allowed us to completely
transform our capital position, which is now one of the strongest in
the industry.

We have delivered excellent results against a backdrop of unprecedented
market turbulence. After the severe difficulties encountered by the
world economy and financial markets in the second half of 2008, we
entered 2009 with a deliberately defensive position. We recognised
early on the implications of the new economic climate and focused our
strategy on capital conservation and cash generation. We prioritised
value over volume and allocated capital strictly to the products and
channels with the highest rates of return and shortest payback periods.
This led us to significantly reduce our volumes of wholesale business,
allowing us to grow our relatively more profitable retail sales by 11
per cent in a year when many companies saw a contraction or stagnation
of sales. This highly disciplined approach meant that, as conditions
started to improve, our capital strength allowed us to capture a more
than proportionate share of our target markets.

We have consistently said our strategy is a formula for outperformance,
and these results demonstrate that we have been able to execute it with
discipline and effectiveness.

As Group Chief Executive, my overriding objective is to deliver
sustainable increases in shareholder value. I am pleased to report that
we achieved this once again in 2009, outperforming the sector in our
chosen markets and in total returns for shareholders. Going forward, I
believe we have the right strategy, products, geographic presence,
brands, management and capital strength to sustain this outperformance
into the future.

We have separately announced today our agreement with AIG for the
combination of Prudential and AIA Group Limited, a wholly owned
subsidiary of AIG. The strength of AIA's business, its market-leading
positions in South-East Asia and the potential for accelerated growth
of the combined business in the future present a compelling and unique
opportunity for Prudential.

Group Performance

Turning to our performance in 2009, our total Group operating profit
before tax from continuing operations, on the European Embedded Value
(EEV) basis, rose to GBP3,090 million, an increase of 8 per cent. Our
EEV new business profit increased by GBP407 million, or 34 per cent to
GBP1,607 million. Margins improved across the Group rising from 42 per
cent to 56 per cent, an exceptional level of performance given the
market conditions prevailing in 2009. We achieved our objective of
increased profitability while consuming less capital, through investing
our free surplus in those markets and products which deliver the
highest returns within our new business strain targets. In 2009 our
investment in new business was 16 per cent lower at GBP675 million
(2008: GBP806 million).

On the statutory International Financial Reporting Standards (IFRS)
basis, operating profit based on longer-term investment returns
increased by 10 per cent to GBP1,405 million. IFRS operating profit
increased across all three life operations: in Asia it increased 62 per
cent to GBP416 million; in the US it increased 13 per cent to GBP459
million; and in the UK it increased 11 per cent to GBP606 million, a
very strong performance. Operating profit at M&G decreased 17 per cent
to GBP238 million, reflecting the impact of the volatility in equity and
property markets during the year, while our asset management business
in Asia increased operating profits by 6 per cent to GBP55 million. We
saw a change in other income and expenditure to negative GBP395 million
(2008: negative GBP260 million), as a result of lower returns on central
funds and an increase in interest payable on core structural

Net inflows increased strongly in our asset management businesses, as
our sustained investment outperformance attracted investors. M&G
recorded GBP13,478 million of net inflows, 296 per cent higher than in
2008, and our asset management business in Asia recorded GBP1,999
million of net inflows, 134 per cent higher than in 2008.

Importantly, we also succeeded in significantly strengthening our Group
capital position, making us one of the best-capitalised insurers and
underpinning our ability to exploit growth opportunities. Using the
regulatory measure of the Insurance Groups Directive (IGD), the Group's
capital surplus was estimated at GBP3.4 billion at the 2009 year-end,
more than double its level of GBP1.5 billion at the end of 2008, with a
solvency ratio of 270 per cent, or 2.7 times our regulatory

Our cash flow position remained strong during the year. In 2008 we
achieved our target of being operating cash flow positive at the
holding company level, and we maintained this position in 2009, with a
cash surplus after dividend of GBP38 million.

Given the Group's outstanding financial performance in 2009 and
increasingly robust financial position, the Board intends to recommend
a final dividend of 13.56 pence per share, bringing the full-year
dividend to 19.85 pence per share, an increase of 5 per cent. The
dividend is covered 2.2 times by post-tax IFRS operating profit based
on longer-term investment returns.

Our Strategy

Our strategy is to profitably meet our customers' changing needs for
savings, income and protection in our chosen markets. By maintaining
our focus and discipline in the implementation of this strategy, and by
allocating capital to the most attractive opportunities, we believe we
are able to generate sustainable and differentiated value for our
shareholders. Over the last year our strategy has proven its worth
under the most testing conditions, delivering a significant
outperformance in Total Shareholder Return (TSR) in 2009.

Through our international, selective and disciplined approach we
maintain a diverse portfolio of businesses, which embrace countries at
different stages of economic development, but which all share one key
attribute: the opportunity for us to build a market-leading operation
with prospects for sustainable, long-term, profitable growth and a
superior rate of return on capital.

Our financial strength is fundamental to our strategy and as a result
of our disciplined risk management approach and targeted Group-wide
actions to grow and protect our capital, we are emerging stronger from
the global economic downturn. This capital strength has been
instrumental in our ability to invest in profitable growth
opportunities in 2009, especially in our chosen markets in Asia and the

The main engine of our growth strategy is our unique presence in Asia,
which includes 28 businesses, spread over 13 countries. Asia offers us
the highly attractive combination of strong growth and high margins. In
2006 we made an external commitment to double our 2005 new business
profit in Asia by 2009 and I am very pleased to announce that we have
met this target. This achievement was important to me, and is
particularly remarkable given the economic conditions prevailing in the
second half of that four-year period.

Asia is complex, dynamic and exciting, and its economies differ
significantly, with varying levels of economic development, from the
OECD members, Japan and Korea, to the fast growing markets of
South-East Asia, such as Indonesia and Malaysia. Our approach to the
region is highly sophisticated and discriminating in terms of product
offering, distribution and branding. Given our strong presence in this
fast-growing and exciting region, and the agreement we announced today
concerning AIA, we believe we are uniquely placed to continue to
deliver sustained profitable growth for many years to come.

In the US, which remains the world's largest retirement market, we
continued to focus on building our share of the expanding and
cash-generative annuities market. We have emerged from the crisis with
a significantly stronger position in the variable annuities market, a
key product for baby boomers as they reach retirement. We have
continued to grow our share of the fixed index annuities market, while
limiting our appetite for fixed annuities in order to conserve capital
and maximise profits.

In the UK our strategy remained to rigorously focus on balancing new
business with cash and capital preservation, while maintaining margins.
This approach delivered the sales performance we wanted, combined with
improved margins. This strategy allows us to generate surplus capital
for investment Group-wide at significantly higher returns than in the
UK. Our business in the UK provides a foundation and fuel for the
Group's strategy.

Our asset management businesses in the UK and Asia continue to
capitalise on our strong investment track record and trusted brands.
Asset management is a core competence of Prudential and is a key
component of our strategy, providing a reliable source of cash and high
quality profits. Asset management remains a unique, differentiating
feature of the Group in our sector.

As a Group we have a portfolio of highly trusted brands including
Prudential, M&G and Jackson and we remain committed to this successful
multi-brand strategy. This approach gives us the flexibility to tailor
our brands to our different businesses and the customers these
businesses serve. We believe the strength of our brands was a
significant differentiator in 2009, as many customers looked for
companies with a heritage and history that they knew and trusted, as
safe havens for their assets amid the widespread financial uncertainty.

We believe that our strategy, and the consistency and discipline with
which we execute it, is what differentiates us. In 2010 we intend to
continue our disciplined execution of this strategy, amplifying and
accelerating it to deliver more profitable growth and increased
shareholder value.

Product and Distribution Strategy

Our operating model enables each of our business units to stay close to
its customers, allowing them to be flexible in identifying and
developing the specific product and distribution mix that is right for
each market.

Looking at our products, our consistent aim in all our markets is to
have a suite of savings, income and protection products that delivers
good value, and meets customers' needs in a profitable and capital
efficient manner. We use every opportunity, from product design to
channel management, to reduce the exposure of the Group and our capital
position to downturns in the economic cycle. The experience of the past
two years has demonstrated that this strategy is the right one,
generating highly resilient revenue streams. This is supported by our
ability to respond flexibly to customers' changing product and
investment needs.

In Asia, a challenging economic climate in the first half of 2009 gave
way to more positive conditions in the second half of the year. While
we saw our single premium volumes decline as a result of economic
uncertainty, our regular premium and higher-margin protection business
remained resilient, ensuring we outperformed the competition, while
remaining protected, especially in the second half.

Our distribution in Asia is unique. We have developed both the largest
regional network of tied agents, over 410,000, as well as strong
partnerships with banks across the region. A significant development in
our Asian distribution capabilities is our new long-term strategic
bancassurance distribution partnership with United Overseas Bank
Limited (UOB). This partnership, announced on 6 January 2010, will mean
our life insurance products will be distributed through UOB's 414 bank
branches across Singapore, Indonesia and Thailand. This alliance, which
complements our long-standing successful partnerships with Standard
Chartered and other banks across the region, offers us significant new
profitable growth opportunities.

In the US, the volatility in US equity markets in 2009 saw customers
seek safer, but lower, returns by buying fixed annuities, fixed index
annuities or variable annuities with guaranteed living benefits.
Jackson responded quickly and was able to capitalise on this shift in
demand across all its annuity product lines. Supported by our core
skills in product manufacturing and distribution, our purposeful focus
on variable annuities enabled us to gain significant market share while
achieving a strong rise in margins and profitability.

Going forward, we aim to build on our progress in the US in 2009 by
maintaining our focus on value over volume and continuing to target the
most profitable business. Our highly successful distribution model
focuses on our industry-leading wholesaler teams, who offer genuine
added-value to the independent financial advisor channel while also
distributing products through regional broker-dealers and banks. We
will also look to diversify our earnings growth and capitalise on our
scaleable platform by making bolt-on acquisitions of closed books when
suitable opportunities emerge.

In the UK we continued to focus on the retail market, with an emphasis
on our market-leading with-profits and annuities products. We
restricted our appetite for the capital intensive bulk annuity market
and ceased to offer lifetime mortgages. These decisions reflect our
focus on higher margin products, with shorter payback periods. In the
UK, we have a diverse multi-channel approach including direct sales,
financial advisers and partnerships. We continue to use our strong
foundation, brand heritage and customer franchise to support our

In asset management we had another excellent year in a challenging
market environment. Both M&G and our Asia asset management businesses
continued to capitalise on their strong track records in investment
performance to deliver strong rises in inflows. M&G benefited from its
high levels of trust and brand loyalty among investors, achieving
record net fund inflows, at a time when many other asset managers
suffered net redemptions.

In Asia, where savers are increasingly becoming investors, our asset
management business put in a resilient performance, while focusing on
maintaining profitability across our internal life and third-party
clients. In terms of distribution, our asset management businesses
achieved flexibility through a multi-channel, multi-geography
distribution approach in both the retail and institutional

Risk and Capital Management

Our strong and sustained financial performance is the result of
disciplined and rigorous management. In no aspect of our business is
this discipline more evident than in our approach to risk and capital.
As a result of our unwavering focus on increasing our financial
resilience, our capital position has been dramatically enhanced despite
significant market shocks. Our free surplus generation and proactive
and innovative capital management underpin an extremely strong solvency
ratio. Furthermore, we lead the sector in disclosure, reporting a
combination of IFRS, cash and EEV. Having clearly demonstrated our
defensive capabilities and transparency in the downturn, we believe we
are now well positioned to outperform as markets recover.

In late 2008 and early 2009, the balance sheets and capital positions
of all insurance companies were under close scrutiny. With this in
mind, we began 2009 by taking a disciplined and defensive stance,
focusing on building our capital base and strengthening our IGD
surplus. Despite our defensive position, we remained alert to growth
opportunities, and as these emerged in the second half of the year, our
greater capital strength enabled us to seize them aggressively.

During the course of the year we enhanced the strength and flexibility
of our capital base, increasing our IGD capital surplus from GBP1.5
billion at year-end 2008 to GBP3.4 billion at 31 December 2009,
equivalent to approximately 270 per cent cover of the required capital.
This increase resulted from a series of measures that clearly
demonstrated our disciplined approach to capital management.

In addition to internal capital generation of GBP1.1 billion, we
transferred the assets and liabilities of our agency distribution
business in Taiwan to China Life of Taiwan, which boosted our IGD
capital surplus by approximately GBP0.8 billion. A further GBP0.9
billion was contributed by issues of subordinated and hybrid debt, and
GBP0.9 billion by financial restructuring and internal reorganisation
of Group capital. These gains of some GBP3.7 billion, were partially
offset by about GBP0.4 billion of credit impacts in Jackson, GBP0.6
billion of debt interest and other central costs, GBP0.3 billion of
dividends net of scrip, GBP0.2 billion from regulatory changes and
GBP0.3 billion of foreign exchange movements.

Our prudent but dynamic management of our capital will remain a key
differentiator of our business going forward.


As we go into 2010 we will continue to capitalise on our competitive
differentiators to amplify and accelerate the execution of our
strategy. The agreement we announced today with AIG represents a
compelling and unique opportunity to transform our position in Asia,
giving us market-leading positions in all of the critical growth
markets in the region. In the US we continue to write high-margin,
capital efficient variable annuities and to benefit from the organic
consolidation under way. In the UK we will focus on our strong
positioning, brand and products to continue to generate cash and
capital for the Group. And in asset management we will optimise both M&
G and our asset management business in Asia as a core capability of the

Going forward, we are increasingly positive on the outlook for Asia and
this is reflected in our announcement concerning AIA. We remain
cautious on the major Western economies, because of a number of
imbalances threatening their return to higher growth, including high
levels of consumer and government debt, budget deficits and
unemployment. In Asia we enjoy a unique combination of market-leading
positions in the fastest growing, most profitable markets; strong
brands; unrivalled multi-channel distribution and well-designed
products. Asia, with its GDP growth rates, saving habits and low
penetration, remains the primary focus of our growth and investment.
This is the most attractive opportunity in our industry today and the
agreement we have announced today demonstrates that I have every
intention of ensuring that the Group makes the most of it, while also
capitalising on our strong presence in the US, the UK and our market
leading asset management platform.

I end my first annual review as Group Chief Executive proud of what our
teams have accomplished in delivering our highest ever margins, profits
and capital surplus, a fantastic achievement in a hugely challenging

I am committed to managing the Group with discipline and a relentless
focus on execution and operational delivery. I am confident that the
quality of our teams, coupled with our culture of discipline and focus,
will position us well to continue to outperform our industry, not only
through the current economic cycle but also through those yet to come.

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