PRUDENTIAL PLC HALF YEAR 2009 RESULTS
PRUDENTIAL DELIVERS STRONG PERFORMANCE IN CHALLENGING CONDITIONS
Capital & Dividend:
- Improved and very strong Insurance Groups Directive ("IGD")
capital surplus estimated at GBP3.0 billion at 31 July 2009
and GBP 2.5 billion at 30 June 2009 (before any allowance
for 2009 interim dividend)
- 2009 half year dividend increased by 5% to 6.29 pence per
share
IFRS:
- IFRS operating profit of GBP688 million up 6% *
Embedded Value:
- New Business Profit of GBP691 million up 25% *
- EEV Operating Profit of GBP1,246 million down 8% *
New Business:
- Group EEV new business profit margin of 52% on an APE
basis (2008: 38%) *
- Group new business APE premiums of GBP1,321 million down 8% *
Mark Tucker, Group Chief Executive said:
"These results demonstrate a continuing strong
performance by the Prudential Group in what remain
challenging market conditions. As a result of the
decision we took last year to focus on capital
conservation and cash generation by concentrating on
expanding sales in our most profitable product lines,
we have been able to manage our investment in new
business and improve our margins across the Group
in the first six months of the year. Compared with the
same period in 2008 our Group EEV New Business Profit
increased 25 per cent to GBP691 million, and our Group
IFRS statutory operating profit increased six per cent
to GBP688 million.
Our Group EEV Operating Profit decreased eight per cent
to GBP1,246 million. While our life businesses held
their contribution at 2008 levels, market conditions held
back the contribution from our asset management businesses
and reduced income at Group level. Group new business APE
premiums were GBP1,321 million, down eight per cent.
In Asia, New Business Profit was GBP277 million, down
4.2 per cent but this compares with a very strong first
half in 2008. It is particularly encouraging that demand
for higher margin protection products remains resilient
in Asia, and we believe that our relative position in the
region is continuing to strengthen.
Jackson, our US business, delivered total APE sales of
GBP392 million in the first half of 2009, up 10 per cent
on the first half of 2008. The company's retail sales were
the highest in any first half in its history, as we
continued to benefit from a flight to quality. Jackson's
New Business Profit was GBP292 million, up 113 per cent.
Prudential UK had a strong first half relative to the
market, with total APE sales of GBP376 million, down
14 per cent, and retail sales of GBP374 million, down
eight per cent. These lower sales resulted in a reduction
in EEV New Business Profit of five per cent to GBP122
million, with the underlying new business margin
increasing to 32 per cent, demonstrating the success of
our strategy of focusing on value over volume.
Despite the challenging market environment, our asset
management businesses have continued to deliver record net
inflows, capitalising on their leading market positions
and history of strong investment performance. M&G
continued to benefit from a combination of superior
investment performance, diversified business mix and
well-established distribution capabilities. These
attributes helped M&G achieve an exceptionally strong
first half, with net fund inflows of GBP8.6 billion
up 254 per cent.
Our prudent but proactive approach enabled us to
strengthen further our Group capital position and, at
30 June 2009, we had an estimated IGD surplus of GBP2.5
billion before any allowance for the interim dividend,
up from GBP1.5 billion at the end of 2008. In addition,
we completed a bond issue during July which will increase
our IGD capital surplus by a further GBP0.5 billion to an
estimated GBP3.0 billion.
In line with our sustainable dividend policy, we are
pleased to announce an increase in the interim dividend
of five per cent to 6.29 pence per share.
While we expect the business environment to remain
difficult through the rest of 2009, Prudential is very
well positioned to take advantage of any improvement in
market conditions. Our Group-wide focus on long-term
profitable growth remains unchanged and our combination of
geographic diversification, advantaged distribution and
flexible and full product range all mean we can focus on
the most profitable opportunities, especially in the pre
and post-retirement sector. Combined with our dynamic
approach to risk management, this means we are well
placed to continue to outperform over the economic and
financial cycle.
I am immensely proud to have served as Chief Executive of
Prudential. I leave knowing that we have an excellent
management team in place across the Group and I am
confident that Tidjane will continue to lead the
Group from strength to strength."
ENDS
*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.
Enquiries:
Media
Edward Brewster +44 (0)20 7548 3719
Sunita Patel +44 (0)20 7548 2466
Tom Burns, Brunswick +44 (0)20 7404 5959
Investors/Analysts
Matt Lilley +44 (0)20 7548 2007
James Matthews +44 (0)20 7548 3561
Jessica Stalley +44 (0)20 7548 3511
Notes to Editors:
1 In addition to the financial statements provided with
this press release, additional financial schedules,
including full details of the Group's investments, are
available on the Group's website at
www.prudential.co.uk/prudential-plc/
2 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. Where appropriate the EEV basis
results include the effects of IFRS.
Period on period percentage increases are stated on an
actual exchange rate basis.
3 Annual premium equivalent (APE) sales comprise regular
premium sales plus one-tenth of single premium insurance
sales.
4 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.
5 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.
6 There will be a conference call today for wire services
at 07.30am (BST) hosted by Mark Tucker, Group Chief
Executive and Tidjane Thiam, Chief Financial Officer
and Group Chief Executive-designate. Dial in telephone
number: 020 8609 0793. Passcode: 797476#
7 A presentation to analysts will take place at 09.30am
(BST) at Governor's House, Laurence Pountney Hill,
London, EC4R 0HH. An audio cast of the presentation
and the presentation slides will be available on the
Group's website, www.prudential.co.uk/prudential-plc/
8 High resolution photographs are available to the media
free of charge at www.newscast.co.uk on
+44 (0) 207 608 1000 or by calling Sunita Patel on
020 7548 2466.
9 Total number of Prudential plc shares in issue as at
30 June 2009 was 2,523,718,245.
10 Financial Calendar 2009:
Third Quarter 2009 Interim
Management Statement 28 October 2009
2009 Interim Dividend
Ex-dividend date 19 August 2009
Record date 21 August 2009
Payment of dividend 24 September 2009
11 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 GBP245 billion in assets under management
(as at 30 June 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.
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