SOURCE: Prudential plc

November 10, 2010 06:38 ET

Prudential PLC - Q310 Interim Management Statement

LONDON--(Marketwire - November 10, 2010) -


Embargo: 10 November 2010

PRUDENTIAL PLC THIRD QUARTER 2010 INTERIM MANAGEMENT STATEMENT

CONTINUED STRONG MOMENTUM WITH 9 MONTH NEW BUSINESS SALES OF GBP2,464
MILLION

. GROUP-WIDE SALES OF GBP2,464 MILLION UP 24 PER CENT. NEW BUSINESS
  PROFIT UP 21 PER CENT

. ROBUST GROWTH IN ASIA CONTINUES WITH YEAR TO DATE SALES UP 32
  PER CENT AND YEAR TO DATE NEW BUSINESS PROFIT UP 34 PER CENT. HIGHEST
  THIRD QUARTER SALES FOR OUR ASIAN BUSINESS, UP 25 PER CENT

. SUSTAINED SALES MOMENTUM IN US. YEAR TO DATE SALES UP 33 PER
  CENT AT ATTRACTIVE MARGINS

. UK FOCUS ON VALUE OVER VOLUME CONTINUES TO DELIVER HIGHER NEW
  BUSINESS PROFIT, UP 14 PER CENT

. ASSET MANAGEMENT NET INFLOWS OF GBP6.2 BILLION, DRIVEN BY VERY
  HEALTHY M&G RETAIL NET INFLOWS OF GBP5.1 BILLION

. CAPITAL POSITION REMAINS STRONG - IGD SURPLUS ESTIMATED AT GBP3.4
  BILLION(1)

                                           %                          %
                                      change                     change
                    YTD        YTD    on YTD        Q3       Q3   on Q3
                   2010       2009        09      2010     2009      09
Group
Insurance
(2),(3)
Sales - APE   GBP2,464m  GBP1,980m       24%   GBP809m  GBP689m     17%
New Business
Profit(4)     GBP1,345m  GBP1,116m       21%
Margin -
APE %               55%        56%     (1)pt


Investment
Net
Inflows        GBP6.2bn  GBP13.0bn     (52%)  GBP1.8bn  GBP2.9bn  (39%)

Tidjane Thiam, Group Chief Executive said: "The Group's performance in the
third quarter has been strong.
Prudential continues to grow fast and profitably. Group-wide year to
date sales are up by 24 per cent and new business profit for the same
period is up 21 per cent. This is in line with our stated strategy of
allocating capital to the geographies and products with the best
profitable growth opportunities. We do this with discipline and a
clear focus on capital efficiency as well as balance sheet strength.

Our momentum in Asia has continued with year to date APE sales up 32
per cent to GBP1,066 million (2009: GBP806 million). APE sales for the
third quarter of GBP353 million increased by 25 per cent versus the
third quarter 2009 (GBP282 million). This performance was broad based
across our markets validating our chosen geographic footprint. New
business profit increased by 34 per cent to GBP621 million in the year
to date (2009: GBP465 million) meaning that Asia represented 46 per
cent of total new business profit. We have continued to focus on
writing higher quality regular premium business, with 94 per cent of
total APE being regular premium, with a significant proportion of
health and protection products. The richness of our product mix,
combined with changes in country mix, with a lower proportion of our
sales in Korea has allowed us to achieve a new business profit margin
of 58 per cent which is consistent with last year.

In the US, Jackson delivered year to date APE sales of GBP850 million,
up 33 per cent over the same period in 2009 (GBP640 million). New
business profit grew 10 per cent to GBP532 million (2009: GBP482
million). Year to date new business margins of 63 per cent have fallen
from the exceptionally high levels achieved in 2009 (75 per cent), when
Jackson was able to take advantage of the extreme dislocation then
prevalent in the bond markets. We continue to write new business at
internal rates of return in excess of 20 per cent. Our focus remains on
optimising the balance between value, volume and capital consumption
which means that we are still selling large volumes of variable
annuities whilst containing fixed annuity sales. We do not target
volume or market share, however the unique context created by the
difficulties encountered by some of our peers means that Jackson was
ranked fourth in variable annuity sales in the first half of 2010 while
increasing its market share to 10.5(5) per cent from 8.1 per cent for
the full year 2009. We will continue to manage our sales with a primary
focus on value over volume.

In the UK, Prudential remains a market leader in its chosen product
categories of individual annuities and with-profits. Here too, we
continue to focus on balancing writing new business with sustainable
cash generation and capital preservation. Total APE sales of GBP548
million were up 3 per cent on the first nine months of 2009. New
business profit grew 14 per cent year to date to GBP192 million (2009:
GBP169 million). The new business margin improved to 35 per cent in the
first nine months of 2010 from 32 per cent in the same period of 2009,
primarily due to increased margins on with-profits bond business
combined with strong margins achieved on shareholder-backed annuity
business.

In asset management, M&G's net inflows remain very healthy year to
date, particularly M&G Retail, aided by ongoing excellent investment
performance from M&G's flagship funds. 2009 was an exceptional year
for M&G with heavy investment in our top-performing bond funds to
exploit a unique context in fixed income markets. Over the past nine
months, M&G has attracted net fund inflows of GBP6.2 billion (2009: GBP1
1.1 billion) including year to date net inflows of GBP5.1 billion for
our retail business which continues to be the number one UK fund
manager in terms of quarterly net retail sales. Indeed, M&G's Retail
business in the UK has been number one for net retail sales over seven
consecutive quarters, based on data to the end of June 2010. M&G's
total funds under management at 30 September 2010 were GBP191.2
billion, up 10 per cent on the 2009 year end (2009: GBP174 billion) and
13 per cent on the third quarter of 2009. In Asia, total funds under
management exceed GBP50 billion for the first time and closed the
quarter at GBP50.3 billion.

We remain well positioned to deliver strong growth and generate strong
returns for our shareholders, based on the Group's proven strategy, our
brand and market position in the countries where we choose to operate,
the power of our distribution and the quality of our teams. South East
Asia, with its high rates of GDP growth, saving habits and low
penetration of insurance products, remains the most attractive
long-term opportunity in our industry and the primary focus for our
growth and investment. This opportunity, supported by our strong
position in the US, our focused business in the UK and market leading
asset management businesses, means we view our future with confidence
and believe that we will continue to outperform our competitors in our
chosen markets."

(1) After payment of 2010 interim dividend
(2) Asia 2010 and 2009 comparative APE new business sales and new
    business profit exclude the Taiwan agency business disposed of
    during Q2 2009 and the Japanese insurance operations which we have
    closed to new business from 15 February 2010
(3) Unless otherwise stated all growth rates are on a sterling basis.
    Growth rates on constant currency are presented on schedule 1B of
    the Interim Management Statement
(4) For Q3 2010 we have presented year to date new business profit and
    margin for the period ended 30 September 2010 and the comparative
    period. The assumptions underlying new business profit are presented
    in schedule 5 to the Interim Management Statement
(5) Source: VARDS/Morningstar


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