PRUDENTIAL PLC HALF YEAR 2010 RESULTS
STRATEGY CONTINUES TO DELIVER STRONG PERFORMANCE
Embedded Value:
. New business profit of GBP892 million, up 27%(1)
. Operating profit of GBP1,677 million, up 35%
. Shareholders' funds of GBP16.7 billion, equivalent to 657 pence per
share
IFRS:
. Operating profit of GBP968 million up 41%(2), underlying operating
profit up 19%
. Shareholders' funds of GBP7.2 billion up 14%
New Business:
. Total APE sales of GBP1,655 million up 28%(1)
. New business profit margin (% APE) of 54%
. Investment in new business - broadly flat at GBP337(1) million
(2009: GBP319 million)
Capital & Dividend:
. Insurance Groups Directive ("IGD") capital surplus estimated at
GBP3.4 billion
. Underlying free surplus generation up 63% to GBP947 million
. 2010 half year dividend increased by 5% to 6.61 pence per share
Commenting on the half year results, Tidjane Thiam, Group Chief
Executive said:"Prudential has delivered strong results during the first
half of 2010
as we continued to allocate capital to the geographies and products
with the best profitable growth prospects, in line with our strategy.
We have been able to generate significant, profitable and capital
efficient growth across the Group: our sales have increased by more
than a quarter, the higher level of margin achieved in 2009 has been
maintained during the first half and we have done this consuming
broadly the same amount of capital as last year.
Asia remains the region with the best potential for high and profitable
growth, and despite our disappointment at not being able to further
accelerate our strategy through the transaction with AIA, the prospects
for future profitable organic growth remain excellent. In Asia, new
business sales were GBP713 million, an increase of 36 per cent on the
same period last year (2009: GBP524 million). This growth was broadly
based, with all markets except Korea (where we have decided to limit
our growth as part of our 'value over volume' discipline) recording
double digit growth rates. IFRS operating profit was up 24 per cent to
GBP262 million (2009: GBP212 million).
In the US, Jackson continued to focus on growing our sales of variable
annuities whilst managing fixed annuity sales to optimise capital
consumption and returns. It delivered APE retail sales of GBP560 million
(2009: GBP392 million), up 43 per cent, while new business profit was
GBP361 million, up 24 per cent.
In the UK, we maintained our strategy of 'value over volume', deploying
capital efficiently and profitably to our core strengths, with-profits
and annuities. Total APE sales were GBP382 million, up 2 per cent on the
same period last year (2009: GBP376 million) and new business profit
increased by 11 per cent to GBP135 million.
Our asset management businesses had a strong first half, as we
continued to deliver superior investment returns in the market. Overall
the Group saw net inflows of GBP4.4 billion and in Asia, external funds
under management grew to GBP20.3 billion, up 24 per cent (2009: GBP16.4
billion).
As a result of this strong performance, I am pleased to announce that
we have increased our interim dividend by 5 per cent to 6.61 pence per
share.
We have significant opportunities for profitable growth and the
financial strength to take advantage of those opportunities.We are
cautious about the outlook for the western economies. However, our
Asian business gives us a material and powerful presence in the most
attractive markets in our industry, and one that will continue to
underpin our growth.
So we view the future with confidence. We expect the momentum that we
have seen in our businesses during the first half to be sustained
during the rest of the year. As we look further ahead, beyond the
second half, we are well positioned to continue to deliver strong
growth and generate strong returns for our shareholders, thanks to our
operational focus and strong market positions. "
ENDS
Contact:
Media Investors/Analysts
Ed Brewster +44 (0)20 7548 3719 Matt Lilley +44 (0)20 7548 3300
Robin Tozer +44 (0)20 7548 2776 David Collins +44 (0)20 7548 3300
Jessica Stalley +44 (0)20 7548 3300
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. Where
appropriate the EEV basis results include the effects of IFRS.
Period on period percentage increases are stated on an actual
exchange rate basis.
2. Asia 2010 and 2009 comparative APE new business sales and new
business profit (NBP) exclude the Taiwan agency business disposed of
during the second quarter of 2009 and the Japanese insurance
operations which we have closed to new business with effect from 15
February 2010.
3. Annual premium equivalent (APE) sales comprise regular premium
sales plus one-tenth of single premium insurance sales.
4. Operating profits are determined on the basis of including
longer-term investment returns. EEV and IFRS operating profits are
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, transaction costs arising from business
combinations in the period, costs associated with the terminated
AIA transaction, 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 07.30am
GMT+01:00 London (Summer Time) hosted by Tidjane Thiam, Group Chief
Executive. Dial in telephone number: +44(0)20 7075 1520. Passcode:
606607#
6. A presentation to analysts will take place at 09.30am GMT+01:00
London (Summer Time)at The London Stock Exchange, 10 Paternoster
Square, London, EC4M 7LS. Dial in telephone number: +44 (0)20 8817
9301. Passcode: 3332697#. An audio cast of the presentation and the
presentation slides will be available on the Group's website,
http://www.prudential.co.uk/prudential-plc/investors/
7. High resolution photographs are available to the media free of
charge at www.newscast.co.ukon +44 (0)20 78886 5895 or by calling
Prudential press office on +44 (0)20 7548 2466.
8. Total number of Prudential plc shares in issue as at 30 June 2010
was 2,539,204,415.
9. Financial Calendar 2010:
Third Quarter 2010 Interim 10 November 2010
Management Statement
2010 Interim Dividend
Ex-dividend date 18 August 2010 (UK, Irish and
Singapore shareholders)
19 August 2010 (Hong Kong
shareholders)
Record date 20 August 2010
Payment of dividend 23 September 2010 (UK and Irish
shareholders)
24 September 2010 (Hong Kong
shareholders)
30 September 2010(3) (Singapore
shareholders)
The Company will be offering a scrip dividend alternative and
details will be made available on the Group's website.
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 GBP309 billion in assets under management
(as at 30 June 2010). 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.
11. 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
standards 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, whether as a result of future events, new
information or otherwise except as required pursuant to the
Prospectus Rules, the Listing Rules, the Disclosure and
Transparency Rules, the Hong Kong Listing Rules or the SGX-ST
listing rules.
___________________________________________
(1)Excludes Japan which ceased writing new business in 2010
(2)Group IFRS operating profit of GBP968 million includes GBP123 million
of net equity hedging gains (2009:GBP23 million losses) representing
the movement in fair value of free standing derivatives included in
operating profit and the movement in the accounting value of
guarantees in Jackson's variable and fixed index annuity products, a
significant proportion of which are not fair valued, net of related
DAC. Excluding these amounts, which are variable in nature, Group
operating profit increased by 19 per cent as compared to half year
2009
(3)The Singapore dividend will be paid to shareholders on or about 30
September 2010
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