LONDON, UK -- (MARKET WIRE) -- February 20, 2007 --Embargo: 07.00am Tuesday 20 February 2007
ANOTHER EXCELLENT YEAR FOR PRUDENTIAL'S
4.4 MILLION WITH-PROFITS CUSTOMERS
Overview:
-- Prudential's 4.4m with-profits customers continue to reap the
rewards of investing over the long-term in the Prudential
With-Profits Fund ("the Fund")
-- Consistent and prudent investment management approach resulting
in strong returns in Prudential's Fund over many years
-- Excellent returns that help customers plan for their retirement
with greater certainty:
- Prudential has increased year-on-year payouts by more
than 10 per cent across the majority of policies
- Annual bonus rates maintained in 2007
- With-profits payout values boosted by up to 17.5
per cent
- With-Profits Annuities income increased by up to 15 per
cent for the coming year
- All maturing Prudential endowments will meet repayment
targets in 2007 and an estimated 96 per cent of Scottish
Amicable endowments are expected to do the same
-- GBP2.5 billion added to policy values
Prudential's Investment Performance Excels in 2006:
-- Prudential's Life Fund generates 12.4 per cent return in 2006.
Investment performance over 5 years of 63.8 per cent and over
10 years of 161.9 per cent, out-performing the funds of our
major competitors who have declared to date in 2007
-- Significantly better returns in 2006 from Prudential's Fund
compared with the average sector returns of: Balanced
Managed Funds; Distribution Funds; and Cautious Managed
Funds
-- Prudential's with-profits products have also significantly
out-performed against cash and building society accounts
-- Prudential's investment management has provided "dazzling
performance over the past few years" (Source: Cazalet
Consulting)
Gary Shaughnessy, Managing Director, Life and Pensions at Prudential, said: "By
prudently managing our With-Profits Fund, we have consistently delivered
substantially better returns than the vast majority of bank and building
society accounts while at the same time limiting the risk customers face when
investing directly in the stock market. Another year of strong returns means
that yet again, our policyholders are benefiting from investing with Prudential
over the long-term."
What has Prudential delivered for investors?
Prudential's 4.4 million with-profits policyholders are today looking at the
prospect of being more secure in their retirement as the company increases their
policy values by up to 17.5 per cent. This follows a very strong investment
return in Prudential's Life Fund in 2006 of 12.4 per cent (before tax and
charges). The majority of policyholders will see their policy values increase by
more than 10 per cent.
We believe Prudential's with-profits investments continue to provide solid
long-term growth prospects for investors through increased payouts for all
policies maturing in 2007 when compared with their value 12 months ago - further
evidence that holding long-term investments over their full term is sensible for
the vast majority of investors.
Policies in 2007 show increases compared with their position a year ago:
-- 10 year Prudence Bond - With-Profits Bond -
(GBP10,000 single premium) up 10.9 per cent
-- 15 year Personal Pension (GBP200 per month regular premiums)
up 11.4 per cent
-- 20 year Personal Pension (GBP200 per month regular premiums)
up 11.8 per cent
-- 25 year Prudential With-Profits Mortgage Endowment
up 11.8 per cent
-- 25 year Scottish Amicable With-Profits Mortgage Endowment
up 12.7 per cent
Notes: Both mortgage endowment examples based on GBP50 p.m. regular premiums, male
aged 30 at start of contract
: All figures are after deduction of tax (where relevant) and charges.
As in previous years, Prudential continues to show the 12-month growth achieved
for individual policyholders, as this is a more relevant measure than showing
them a comparison with a policy that matured a year earlier.
Prudential's customers have benefited from the financial strength, diversity and
outstanding investment performance of its With-Profits Fund, compared with other
cautious investments as follows:
Prudence Bond's performance relative to alternative investment products
Investment Product Total Payout Annualised
Return
Prudential With-Profits Bond GBP17,772 5.9%
(10 year, GBP10,000 single premium)
Average building society account GBP12,015 1.9%
Average balanced managed unit trust GBP18,698 6.5%
Average balanced managed GBP16,593 5.2%
unit-linked life fund
Notes 5 and 8
Prudential's Personal Pension performance relative to alternative investment
products
Investment Product Total Payout Annualised
return
Prudential With-Profits GBP119,401 8.4%
Individual Pension
(20 year term, GBP200
per month regular premiums)
Average building society account GBP67,066 3.2%
Average balanced managed unit trust GBP119,127 8.3%
Average balanced managed GBP114,352 8.0%
unit-linked pension fund
Note 5, 8 and 9
How does Prudential compare?
Prudential's with-profits investments continue to hold their own against the
alternatives available to investors and at a level of risk that is often
significantly lower than other actively managed multi-asset investments.
In 2006, Prudential's Fund return of 12.4 per cent represented a significant
out-performance over the average sector returns of: Balanced Managed Funds 9.1
per cent; Distribution Funds 5.9 per cent; Cautious Managed Funds 6.8 per cent;
and cash at 3 per cent. This performance demonstrates that investing in
with-profits with Prudential works.
Source: Financial Express average life fund sector fund performance and
Financial Express FINEX 90 day deposit performance, both between 31/12/2005-31/
12/2006
However, this year's announcement is not just about the results in 2006. Over 5
years, our Fund has outperformed the FTSE 100 and FTSE All-Share indices, as
well as the UK Average Cash and Fixed Interest Fund benchmarks. Take a look at
the facts:
Fund / Index Total return over 5 years
Prudential With-Profits Fund 63.8%
FTSE All Share (total return) 50.2%
FTSE 100 (total return) 41.1%
UK Average Life Fund 22.6%
UK Average Cash Fund 13.9%
Note 6
Similarly, the Fund has performed exceptionally well over a 10-year period
(161.9 per cent) when measured against the funds of our major competitors in the
UK who have declared bonuses so far this year and the FTSE 100 and FTSE
All-Share indices.
We believe our investment performance and the values we are adding to plans
stand out from the competition. For example, a typical payout for a 25-year
endowment maturing in 2007, on a male life (age 30 next birthday at outset,
non-smoker, paying GBP50 a month) would be worth:
-- GBP49,492 if invested with Prudential
-- GBP43,451 if invested with Norwich Union, and
-- GBP38,054 in a Standard Life plan
Source: Prudential, Norwich Union and Standard Life 2007 Bonus Announcements
Gary Shaughnessy continued: "Our longstanding customers continue to enjoy the
benefits of investing with Prudential across different market conditions.
Consistency is important to them and our investment performance over five and 10
years has continually outperformed a number of market indices and the vast
majority of other with-profits funds.
"This demonstrates clearly that with-profits, by being invested in an actively
managed, well-run and financially strong fund, can produce good returns for the
cautious investor. Our customers have done exceptionally well, not only when
compared to investing in with-profits with other companies, but against
alternative multi-asset investments, and crucially, at a lower level of risk
than direct investments in the UK stock market."
When compared with values being paid by many other major providers this year,
Prudential customers are better off up to the tune of: GBP40,481 on 20-year
individual pension; GBP1,259 on the 10-year surrender value of a single premium
with-profits bond; and GBP11,438 on a maturing 25-year with-profits endowment.
Note 7
This strong performance is in a large part due to Prudential's skilled
investment management; its prudent stewardship of the Fund; the freedom, through
sustained financial strength, that allows it to invest in 'real' assets and in
turn review the asset mix to reflect its views on markets. This focus on
maintaining the financial health of the Fund is central to the rigorous
management process that Prudential applies to with-profits investing.
Ned Cazalet, Cazalet Consulting, and a leading industry commentator said: "The
Pru's WP Fund has turned in a dazzling performance over the past few years. On
the investment front, the Pru has got some big market calls right, and its
tactical asset allocation decisions have paid-off, big time, leading to massive
investment out-performance relative to its peers, with the knock-on effect
showing up in its market-bucking bonus payments - we score it 9 out of 10."
In July 2006 Prudential retained its top ranking in the WM Life Fund Survey. The
Prudential with-profits fund took the top spot, making it the best performing
fund in the WM UK Life Fund Universe. The WM Life Fund Survey is compiled on a
quarterly and annual basis by WM, the independent fund-performance service
provider. This ranking consolidates the superior position achieved in previous
years, with Prudential retaining its top spot over 10 years.
James Smith, of Investment Week, wrote: "Prudential is one of the few to win
plaudits for performance and major asset allocation calls on its multi-billion
with-profits portfolio. After all, how many fund management groups can claim a
demonstrable track record in asset allocation that incorporates correct calls on
the dotcom bubble and subsequent market recovery?"
(Source: Investment Week - 29/01/07)
-Ends-
Full details of Prudential's 2007 bonus announcement can be downloaded from:
--
www.pru.co.uk/presscentre
--
www.headlinemoney.co.uk.
Or contact the Prudential UK press office on:
Darragh Leeson Tel: 0207 150 2600 Mobile: 07801 856011
Steve Colton Tel: 0207 150 3136 Mobile: 07771 531525
Juliette Emblem Tel: 0207 150 2657 Mobile: 07802 486414
The information contained in Prudential UK's press releases is intended solely
for journalists and should not be used by consumers to make financial decisions.
Full consumer product information can be found at
www.pru.co.uk
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.
To view the full text of this press release, paste the following link into your web browser:
http://www.rns-pdf.londonstockexchange.com/rns/5155r_-2007-2-20.pdf
This information is provided by RNS
The company news service from the London Stock Exchange