LONDON, Oct. 28, 2009 (Marketwire) --
LONDON -- (Marketwire) -- 10/28/09 --
Embargo: 07:00am Wednesday 28 October 2009
PRUDENTIAL PLC THIRD QUARTER 2009 INTERIM MANAGEMENT STATEMENT
ROBUST NINE MONTHS GROUP-WIDE SALES OF GBP2,020 MILLION
IN THE THIRD QUARTER:
. GROUP-WIDE RETAIL SALES OF GBP699 MILLION UP TEN PER CENT
. POWERFUL MOMENTUM IN US, RETAIL SALES UP 66 PER CENT
. ASIAN SALES UP FOUR PER CENT
. OUTSTANDING ASSET MANAGEMENT NET INFLOWS OF GBP2.9 BILLION UP 187
PER CENT
STRONG CAPITAL POSITION - IGD SURPLUS ESTIMATED AT GBP2.8 BILLION
9m 09 APE % change Q3 09 APE % change on
Q3 08
Retail Insurance
Asia+ GBP846m (9)% GBP293m 4%
US GBP640m 51% GBP249m 66%
UK GBP531m (13)% GBP157m (22)%
Total - Retail GBP2,017m 3% GBP699m 10%
Total - Wholesale GBP3m (99)% GBP1m (99)%
Total Group
Insurance GBP2,020m (9)% GBP700m (9)%
Net inflows Net inflows
M&G GBP11,137m 169% GBP2,512m 47%
Asia Asset
Management GBP1,891m 99% GBP435m ++
US GBP(61)m ++ GBP(49)m ++
Total GBP12,967m 154% GBP2,898m 187%
+ Asia 2009 and 2008 comparative APE sales exclude the Taiwan agency
business disposed of during Q2 2009.
++ Asia asset management net outflows in Q3 2008 were GBP690m. US asset
management net inflows in 9m 2008 were GBP8m (net outflows GBP4m in Q3
2008).
Tidjane Thiam, Group Chief Executive said: "I am pleased to report strong
Group-wide new business in the third
quarter with total retail sales of GBP699 million up 10 per cent over
the same period last year. This performance demonstrates the
effectiveness of our strategy in what remains a challenging and fragile
economic environment.
In total, for the first nine months of the year, Group-wide retail
sales were GBP2,017 million, three per cent higher than the same period
last year. Wholesale sales were held to minimum levels as we continued
to focus on products with higher IRRs and shorter payback periods.
In Asia, we achieved sales of GBP293 million in the third quarter,
up four per cent on the third quarter last year on actual exchange
rates. The third quarter of 2009 was the first quarter with positive
year-on-year growth since the second quarter of2008. Our new business
sales of GBP846 million for the first nine months of the year were down
nine per cent on the same period in 2008, compared to a 15 per cent
fall at the half year, an improving performance in difficult market
conditions. As a Group we remain well-positioned in the region, which
we believe offers the best long-term profitable growth prospects.
In the US, we continue to be one of the major beneficiaries of the
significant changes in the competitive landscape. Jackson has delivered
the highest level of retail sales for the first nine months of the year
in the company's history, with sales of GBP640 million, a 51 per cent
increase from the same period in 2008 on actual exchange rates. The
momentum seen in the first half of the year has continued, with GBP249
million of new business written in the third quarter, a 66 per cent
increase over the same quarter last year, demonstrating the strength
and quality of our business model.
In the UK, our disciplined approach to capital consumption led to
retail sales of GBP531 million in the first nine months of the year,
down 13 per cent on the same period last year. Our total new business
sales were down 28 per cent at GBP534 million, reflecting the large bulk
annuity transaction executed in the third quarter of 2008. We remain
focused on our two key areas of strength; the with-profits and annuity
markets.
M&G continues to deliver strong investment performance and as a result
has continued to outperform, with total net fund inflows of GBP11.1
billion to the end of September, including GBP2.5 billion in the third
quarter alone. External funds under management have increased to
GBP66.2 billion, up 41 per cent on the start of the year.
Our Asian asset management business has been able to generate net
inflows of GBP1.9 billion to the end of September, double the 2008
performance, and has seen external funds under management increase
by 23 per cent during the year to GBP18.8 billion.
Our capital position continues to be strong with an estimated IGD
surplus of GBP2.8 billion, covering our minimum capital requirement 2.4
times.
We believe that the economic environment will remain uncertain for a
while. The Group has clearly demonstrated its strong defensive
capabilities and is now well positioned to benefit from the next stage
of the economic cycle."
1. Business Unit Review
1.1 Asia insurance operations
We are becoming progressively more optimistic about the economic
situation in Asia, following the turbulence of the previous 12 months.
There are some encouraging signs of recovery.
The experience of our life businesses is in line with this more
positive assessment of the region. Third quarter new business APE of
GBP293 million is up four per cent on the third quarter of 2008 after
corresponding decreases of 11 per cent and 14 per cent in the first and
second quarters. Year to date APE of GBP846 million is nine per cent
lower than the same period last year, compared to a 15 per cent fall at
the half year, confirming the inflexion observed in the third quarter.
In nine markets out of 12, sales were higher in Q3 than for the same
period last year.
Year to date, the proportion of higher-margin and strategically
important health and protection business remains at 29 per cent. We
have continued to focus on the profitability of the business we write,
with a high proportion of regular premium business. Furthermore, we
have not seen any material adverse changes in persistency experience in
the in-force book during the third quarter.
Looking at developments of our sales in each major market:
CITIC-Prudential Life in China had a very encouraging third quarter
with our share of new business at GBP13 million up 44 per cent on the
same period in 2008, making this the highest ever quarter in this
market both in local currency and at actual exchange rates.
Bancassurance remains a key driver of growth with year to date APE up
73 per cent over 2008, contributing 44 per cent of total new business
compared to 32 per cent last year. There has also been an up-tick in
agency activity during the third quarter following new initiatives to
boost recruitment and productivity together with renewed interest in
unit-linked products. Year to date new business is GBP34 million, up 21
per cent over the same period last year.
Hong Kong continued the upwards trend seen in the second quarter with
third quarter APE of GBP55 million 20 per cent above the third quarter
of 2008. Sales growth is being led by the agency channel, and there are
some signs of recovery in the bank channel, with September seeing the
highest volume of new business so far this year. Year to date APE of
GBP150 million is six per cent below the same period last year compared
to the 16 per cent decrease reported at half year. Regular premium
business is up 27 per cent year to date and 49 per cent in the third
quarter compared to prior year.
After some challenges related to the economic climate earlier this
year, the life market in India rebounded strongly in the third quarter.
Prudential's share of ICICI-Prudential Life's new business in the third
quarter was GBP40 million, principally driven by the resurgence in
interest in insurance products and an increase in average case sizes.
Compared to 2008 new business is down 15 per cent in the third quarter,
a very significant and positive change in trend, compared to the second
quarter year on year decline of 46 per cent. Year to date APE of GBP116
million is 33 per cent lower than the same period in 2008 reflecting
the severity of the impacts of the economic crisis especially during
the beginning of the year.
Our business in Indonesia has expanded rapidly during the last two
years, principally through the very successful growth of the agency
force. We now have over 70,000 agents there and are firmly established
as the market leader. New business for the third quarter was GBP43
million, two per cent higher than the third quarter of 2008. Year to
date APE of GBP126 million is three per cent lower than the same period
in 2008, an improvement on the six per cent fall at the half year.
The market conditions in Korea remain challenging, especially for
foreign players and our management remain firmly committed to our value
over volume strategy. We have therefore refused to match products in
the market which we consider to offer unattractive returns to
shareholders. This clearly impacted sales with year to date APE of GBP96
million being 47 per cent lower than the same period last year.
Encouragingly, persistency rates in this business have now stabilized.
Prudential's life businesses in Malaysia continue to perform very well
with third quarter new business of GBP32 million up 19 per cent compared
to the third quarter of 2008. The key driver of this growth remains the
agency force of 12,000 that generates over 90 per cent of the new
business. However, there are now positive signs from the bank channel,
as although still relatively small, volumes of new business year to
date are over three times the same period last year. Year to date APE
of GBP84 million is a very positive 27 per cent higher than the previous
year.
The latest available data from Singapore shows that we have
outperformed the market in terms of regular premium new business, with
sales of GBP64 million year to date, 14 per cent higher than the same
period last year. Third quarter APE was up 32 per cent compared to th
e
same period in 2008. Year to date APE of GBP80 million is eight per
cent lower than the same period last year, compared to the 20 per cent
reduction reported at the half year.
