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 Click on, or paste the following link into your web browser, to view the associated PDF document. http://www.rns-pdf.londonstockexchange.com/rns/9133V_1-2010-11-9.pdf This information is provided by RNS The company news service from the London Stock Exchange
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