TIDMPRU TIDMST11
RNS Number : 4744S
Prudential PLC
06 November 2023
6 November 2023
PRUDENTIAL PLC Q3 BUSINESS PERFORMANCE UPDATE
Year to date new business performance remains strong
Performance highlights on a constant(1) (and actual) exchange
rate basis for the nine months ended 30 September 2023
-- Year to date new business profit(2) was up 37 per cent (34
per cent) to $2,143 million with Q3 business momentum continuing to
reflect the strength of our multi market, multi-channel strategy.
Excluding economic impacts(3) new business profit was up 48 per
cent (45 per cent), with margins improved due to positive
developments in channel and geographic mix .
-- Year to date APE sales(4) were up 40 per cent (36 per cent)
to $4,417 million led by Hong Kong, with increased sales to both
Chinese Mainland visitors and Domestic customers compared with the
same period last year.
APE new business sales(4) (APE sales) and EEV new business
profit (2) (NBP)
Actual exchange Constant exchange
rate rate
-------------------- --------- ------ -------------------------------- --------------------------------
YTD 30.09.2023 YTD 30.09.2022 Change YTD 30.09.2022 Change
$m $m % $m %
-------------------- ----------------- ----------------- ------------- ----------------- -------------
APE NBP APE NBP APE NBP APE NBP APE NBP
sales sales sales sales sales
-------------------- --------- ------ --------- ------ ------- ---- --------- ------ ------- ----
Total 4,417 2,143 3,247 1,597 36% 34% 3,147 1,562 40% 37%
-------------------- --------- ------ --------- ------ ------- ---- --------- ------ ------- ----
Total new business
margin (%) 49% 49% 50%
-------------------- --------- ------ --------- ------ ------- ---- --------- ------ ------- ----
CEO Anil Wadhwani, said: "The new business momentum we saw in
the first half of 2023 continued in the third quarter. The strength
of our distribution capabilities and the diversification of the
business across markets, products and channels drove our
performance in the nine months to 30 September 2023, with fifteen
of our life markets across Asia and Africa delivering double-digit
growth in new business profit.
"Consumer demand in Asia remained resilient and we have seen
ongoing demand for both savings and health and protection products
from both Domestic and Chinese Mainland visitor customers in Hong
Kong. At the same time, several of our ASEAN(5) based businesses
have seen double-digit growth in new business profit for the first
nine months of 2023. In the Chinese Mainland, the industry-wide
changes in both product and bancassurance distribution regulations
and our pro-active actions to diversify product mix are leading to
some disruption in sales. However, these changes are expected to be
beneficial to the development of the domestic industry by
increasing the role for insurance to meet customer needs and
providing continuing demand for long-term savings and health and
protection products.
"We are focused on the execution of our recently announced
five-year strategy designed to enhance the Group's operational
efficiency and increase the productivity of our agency and bank
distribution channels. We continue to build our core capabilities
across our strategic pillars of Customer, Distribution and Health
and supporting enablers including Technology. In this regard we
have recently appointed Ashley Veasey as our new Chief Information
Technology Officer, reflecting the importance of technology and
innovation in enhancing our customer and distribution
experiences".
Going forward, Prudential plans to provide business performance
updates for the first three months and nine months of the year.
Outlook
Our diversified business model and strong capitalisation
positions us well to navigate ongoing challenges in the
macro-economic and geopolitical environment. Looking forward the
environment continues to be challenging but new business momentum
has continued into the fourth quarter supported by our multi-market
growth engine.
Performance summary for the nine months ended 30 September
2023
APE sales grew significantly compared with the same period in
2022 and, excluding economic impacts, new business margins
improved(3) due to positive developments in channel and geographic
mix. Health and protection products accounted for 37 per cent of
our total new business profit. APE sales through the agency channel
increased by 81 per cent while new business profits were up 62 per
cent(6) from the equivalent period in the prior year despite the
negative impact from interest rate movements. The increased agency
APE sales reflected the continued demand from Chinese Mainland
visitors and Domestic customers in Hong Kong and an improvement in
agency production in the majority of the other markets. APE sales
through the bancassurance channel increased 3 per cent compared
with the same period last year. This was mainly a result of new
products and bank partners in Taiwan, an improvement in Malaysia
and the continued success of our multi-currency savings product in
Hong Kong, partially offset by headwinds to sales through the
Chinese Mainland bancassurance channel and reduced consumer
sentiment in Vietnam .
Market highlights for the nine months ended 30 September
2023
In Hong Kong, APE sales to both Domestic customers and Chinese
Mainland visitors grew strongly compared with the same period in
the prior year. The Hong Kong economy continued to recover year on
year led by inbound tourism and domestic demand, with over 8
million people from the Chinese Mainland visiting Hong Kong in the
third quarter of 2023. Visitor numbers in the discrete third
quarter were circa 90 per cent of that in the same period of 2019,
while APE sales to Chinese Mainland visitors in the same period
were circa 1.3 times of that in 2019. In addition to these sales we
also saw double-digit growth in the Domestic segment's new business
profit in the discrete third quarter of 2023 compared with the same
period in the prior year. While the appetite for savings products
remained elevated in Q3, the case sizes started to normalise after
the initial border reopening earlier this year. Health and
protection sales contributed to more than a third of the new
business profit with growth in both the agency and bancassurance
channels. Consequently, the new business margin increased
sequentially for each quarter of 2023, if economic effects were
excluded(7) .
In the Chinese Mainland, our pro-active actions to diversify
product mix and the implementation of the anticipated regulatory
changes resulted, as expected, in a decline in APE sales at CITIC
Prudential Life (CPL) in the first nine months of the year. CPL's
APE sales declined further in the third quarter when compared with
the prior period due to the revisions to products required by the
regulatory changes for bancassurance announced in the quarter. New
business profit for the agency channel grew in the first nine
months offset by a decline in the bancassurance channel. New
business margins improved for both channels in the discrete third
quarter supported by a shift in product mix to health and
protection, particularly within the agency channel. Agency
productivity measured by cases per active agent recorded
double-digit growth in the third quarter(8) . We are confident that
the continued focus on quality establishes a good foundation for
future growth.
Within our larger ASEAN(5) based businesses:
o Indonesia and Malaysia saw continued momentum in APE sales and
new business profit for the year to date. In Indonesia, the
positive effect on new business profits from product repricing and
upgrades seen in the first half of 2023 moderated in the third
quarter, but the overall growth in new business profit remained
robust. In Malaysia we continue to take actions to improve
productivity by developing programs to support both new and
established agents which have seen productivity(9) increase
consistently each quarter since the start of 2023.
o In Singapore, the strength of our franchise and the quality of
our distribution model saw APE sales increasing year on year in the
discrete third quarter. This was aided by a rebound of the
bancassurance channel as the benefit of new regular premium product
launches came through. Given the impact and challenges of higher
interest rates on sales in the first half of the year, total new
business profits for the first nine months of the year were lower
than the same period in the prior year. Our continued focus on
customer experience resulted in recognition by The Straits Times as
the top insurer for customer service.
o In Vietnam APE sales and new business profit when compared to
the corresponding period declined more in the third quarter than
the first half of 2023 reflecting an industry-wide fall in consumer
sentiment. However, the business's focus on customers and the
strength of its agency force has seen it outperform the market,
increase its market share and maintain its number one position in
the market(10) .
Both ICICI Prudential Life and Africa delivered double-digit
growth for APE sales and new business profits in the nine months to
30 September compared with the same period in the prior year. ICICI
Prudential Life has seen recent growth in its retail protection
sales, improving persistency and is focused on innovating product
design to meet customer needs.
Eastspring's third party flows (excluding money market funds and
funds managed on behalf of M&G) increased in the third quarter
to give a total year to date net inflow of $2.1 billion, driven by
retail clients with net inflows into higher margin retail equity
funds. Market movements and foreign exchange rate effects in the
third quarter together with the redemption of funds managed on
behalf of M&G plc led to a reduction in funds under management
to $216 billion at the end of September 2023 compared to $221
billion(11) at the end of 2022. The overall asset mix has remained
stable and continued to be diversified across both clients and
asset classes.
Notes
1 Comparisons are to the first nine months of the prior year
unless otherwise stated and year-on-year percentage changes are
provided on a constant exchange rate basis unless otherwise stated.
All results are presented in US dollars.
2 New business profit, on a post-tax basis, on business sold in
the period, calculated in accordance with EEV Principles. Amounts
for joint ventures and associates are included on the basis of the
Group's proportionate share. See the EEV basis results in
Prudential's Half Year 2023 Report for further explanation.
3 This is a comparison with the first nine months of 2022 if new
business profit for the first nine months of 2023 had been
calculated using economics (including interest rates) as at 30
September 2022.
4 APE sales is a measure of new business activity that comprises
the aggregate of annualised regular premiums and one-tenth of
single premiums on new business written during the year for all
insurance products, including premiums for contracts designated as
investment contracts under IFRS. Amounts for joint ventures and
associates are included on the basis of the Group's proportionate
share. It is not representative of revenue recorded in the IFRS
financial statements. See note II of the Additional financial
information in Prudential's Half Year 2023 Report for further
explanation.
5 Markets within the Association of Southeast Asian Nations.
6 Excluding the effects of economics, the new business profit
for agency channel increased by 74 per cent.
7 Based on a consistent set of economics including interest rates (31 March 2023).
8 Double-digit growth in agent productivity measured over the
nine months to 30 September 2023 compared to the nine months to 30
September 2022, and also measured over the discrete 3 months to 30
September 2023 compared to the discrete 3 months to 30 September
2022.
9 Agency productivity by reference to APE sales per active agent.
10 Source: Q3 2023 Vietnam Actuarial Network data.
11 On an actual exchange rate basis.
Contact:
Media Investors/Analysts
Simon Kutner +44 (0)7581 023260 Patrick Bowes +852 9611 2981
Sonia Tsang +852 5580 7525 William Elderkin +44 (0)20 3977 9215
Sophie Sophaon +852 6286 0229 Darwin Lam +852 2918 6348
About Prudential plc
Prudential plc provides life and health insurance and asset
management in 24 markets across Asia and Africa. Prudential's
mission is to be the most trusted partner and protector for this
generation and generations to come, by providing simple and
accessible financial and health solutions. The business has dual
primary listings on the Stock Exchange of Hong Kong (2378) and the
London Stock Exchange (PRU). It also has a secondary listing on the
Singapore Stock Exchange (K6S) and a listing on the New York Stock
Exchange (PUK) in the form of American Depositary Receipts. It is a
constituent of the Hang Seng Composite Index and is also included
for trading in the Shenzhen-Hong Kong Stock Connect programme and
the Shanghai-Hong Kong Stock Connect programme.
Prudential is not affiliated in any manner with Prudential
Financial, Inc. a company whose principal place of business is in
the United States of America, nor with The Prudential Assurance
Company Limited, a subsidiary of M&G plc, a company
incorporated in the United Kingdom.
https://www.prudentialplc.com/
Metrics presented
This business performance update provides relevant information
on the trading and sales development of the Group in the first nine
months of 2023. This update focusses on annual premium equivalent
(APE) and new business profit (NBP), which are key metrics used by
the Group's management to assess and manage the development and
growth of the business. APE sales are provided as an indicative
volume measure of transactions undertaken in the reporting period
that have the potential to generate profits for shareholders. NBP
is measured in accordance with European Embedded Value (EEV)
Principles and reflects the value of future profit streams which
are not fully captured in shareholders' equity in the year of sale
under IFRS. Under this methodology, discount rates and other
economic assumptions are updated at the end of each reporting
period to reflect current interest rates, introducing a degree of
volatility into the NBP measure. In addition, the entire NBP
amounts within a given reporting period are updated using end of
period discount rates. In particular, the first nine months 2023
NBP contained in this announcement is based on interest rates as at
30 September 2023. When published, the full year 2023 results will
contain NBP for the full year based on interest rates as at 31
December 2023. Consequently, the NBP values for the first nine
months of 2023 that will be presented in the full year 2023 results
may differ to the amounts included in this announcement.
The presentation of these key metrics is not intended to be
considered as a substitute for, or superior to, financial
information prepared and presented in accordance with IFRS
Standards. Further information about these metrics including a
reconciliation of EEV shareholders' equity for half year 2023 to
the most directly comparable IFRS measure can be found in the
Group's Half year 2023 Report.
Forward-looking statements
This announcement contains 'forward-looking statements' with
respect to certain of Prudential's (and its wholly and jointly
owned businesses') plans and its goals and expectations relating to
future financial condition, performance, results, strategy and
objectives. Statements that are not historical facts, including
statements about Prudential's (and its wholly and jointly owned
businesses') beliefs and expectations and including, without
limitation, commitments, ambitions and targets, including those
related to ESG matters, and statements containing the words 'may',
'will', 'should', 'continue', 'aims', 'estimates', 'projects',
'believes', 'intends', 'expects', 'plans', 'seeks' and
'anticipates', and words of similar meaning, are forward-looking
statements. These statements are based on plans, estimates and
projections as at the time they are made, and therefore undue
reliance should not be placed on them. By their nature, all
forward-looking statements involve risk and uncertainty.
A number of important factors could cause actual future
financial condition or performance or other indicated results to
differ materially from those indicated in any forward-looking
statement. Such factors include, but are not limited to:
-- current and future market conditions, including fluctuations
in interest rates and exchange rates, inflation (including
resulting interest rate rises), sustained high or low interest rate
environments, the performance of financial and credit markets
generally and the impact of economic uncertainty, slowdown or
contraction (including as a result of the Russia-Ukraine conflict,
the conflict in the Middle East and related or other geopolitical
tensions and conflicts), which may also impact policyholder
behaviour and reduce product affordability;
-- asset valuation impacts from the transition to a lower carbon economy;
-- derivative instruments not effectively mitigating any exposures;
-- global political uncertainties, including the potential for
increased friction in cross-border trade and the exercise of laws,
regulations and executive powers to restrict trade, financial
transactions, capital movements and/or investment;
-- the longer-term impacts of Covid-19, including macro-economic
impacts on financial market volatility and global economic activity
and impacts on sales, claims (including related to treatments
deferred during the pandemic), assumptions and increased product
lapses;
-- the policies and actions of regulatory authorities,
including, in particular, the policies and actions of the Hong Kong
Insurance Authority, as Prudential's Group-wide supervisor, as well
as the degree and pace of regulatory changes and new government
initiatives generally;
-- the impact on Prudential of systemic risk and other group
supervision policy standards adopted by the International
Association of Insurance Supervisors, given Prudential's
designation as an Internationally Active Insurance Group;
-- the physical, social, morbidity/health and financial impacts
of climate change and global health crises, which may impact
Prudential's business, investments, operations and its duties owed
to customers;
-- legal, policy and regulatory developments in response to climate change and broader sustainability-related issues, including the development of regulations and standards and interpretations such as those relating to ESG reporting, disclosures and product labelling and their interpretations (which may conflict and create misrepresentation risks);
-- the collective ability of governments, policymakers, the
Group, industry and other stakeholders to implement and adhere to
commitments on mitigation of climate change and broader
sustainability-related issues effectively (including not
appropriately considering the interests of all Prudential's
stakeholders or failing to maintain high standards of corporate
governance and responsible business practices);
-- the impact of competition and fast-paced technological change;
-- the effect on Prudential's business and results from, in
particular, mortality and morbidity trends, lapse rates and policy
renewal rates;
-- the timing, impact and other uncertainties of future
acquisitions or combinations within relevant industries;
-- the impact of internal transformation projects and other
strategic actions failing to meet their objectives or adversely
impacting the Group's employees;
-- the availability and effectiveness of reinsurance for Prudential's businesses;
-- the risk that Prudential's operational resilience (or that of
its suppliers and partners) may prove to be inadequate, including
in relation to operational disruption due to external events;
-- disruption to the availability, confidentiality or integrity
of Prudential's information technology, digital systems and data
(or those of its suppliers and partners) including the Pulse
platform;
-- the increased non-financial and financial risks and
uncertainties associated with operating joint ventures with
independent partners, particularly where joint ventures are not
controlled by Prudential;
-- the impact of changes in capital, solvency standards,
accounting standards or relevant regulatory frameworks, and tax and
other legislation and regulations in the jurisdictions in which
Prudential and its affiliates operate; and
-- the impact of legal and regulatory actions, investigations and disputes.
These factors are not exhaustive. Prudential operates in a
continually changing business environment with new risks emerging
from time to time that it may be unable to predict or that it
currently does not expect to have a material adverse effect on its
business. In addition, these and other important factors may, for
example, result in changes to assumptions used for determining
results of operations or re-estimations of reserves for future
policy benefits. Further discussion of these and other important
factors that could cause actual future financial condition or
performance to differ, possibly materially, from those anticipated
in Prudential's forward-looking statements can be found under the
'Risk Factors' heading of Prudential's Half year 2023 Report and
2022 Annual Report. Such reports are available on Prudential's
website at www.prudentialplc.com.
Any forward-looking statements contained in this announcement
speak only as of the date on which they are made. Prudential
expressly disclaims any obligation to update any of the
forward-looking statements contained in this announcement 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 UK Prospectus Rules, the UK Listing Rules, the UK
Disclosure Guidance and Transparency Rules, the Hong Kong Listing
Rules, the SGX-ST Listing Rules or other applicable laws and
regulations.
Prudential may also make or disclose written and/or oral
forward-looking statements in reports filed with or furnished to
the US Securities and Exchange Commission, the UK Financial Conduct
Authority, the Hong Kong Stock Exchange and other regulatory
authorities, as well as in its annual report and accounts to
shareholders, periodic financial reports to shareholders, proxy
statements, offering circulars, registration statements,
prospectuses, prospectus supplements, press releases and other
written materials and in oral statements made by directors,
officers or employees of Prudential to third parties, including
financial analysts. All such forward-looking statements are
qualified in their entirety by reference to the factors discussed
under the 'Risk Factors' heading of Prudential's Half year 2023
Report and 2022 Annual Report.
Cautionary statements
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with, any contract therefor.
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