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Business and Financial Overview Mark Tucker Chief Executive Managing Director, Finance, Actuarial & IT Garth Jones 15th Nov, 2000.

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Presentation on theme: "Business and Financial Overview Mark Tucker Chief Executive Managing Director, Finance, Actuarial & IT Garth Jones 15th Nov, 2000."— Presentation transcript:

1 Business and Financial Overview Mark Tucker Chief Executive Managing Director, Finance, Actuarial & IT Garth Jones 15th Nov, 2000

2 Business and Financial Overview Content Key messages PCAs mandate PCAs profitable growth strategy PCA: Today PCA: The future 1

3 Business and Financial Overview PCA is very well positioned and resourced to take advantage of the regions exciting growth potential PCA has now succeeded in breaking through the formidable entry barriers PCA has a pan-regional presence and platform PCA has a clear strategy & business model for life and retail financial services and a track record of delivery Key Messages 1 Significant, material & profitable growth opportunities in Asia 2

4 Business and Financial Overview Quantum change in pace, size and return from the Asian region on a scale which in time will make a significant & positive impact on the Groups results Groups 1994 Mandate To PCA 3 Business and Financial Overview

5 PCAs Strategy For Growth: Four Dimensions Geography Expand into Asian marketswith largest, profitablepools of target customers Distribution Improve still further effectiveness of current channels Expand options access more customers maximise stickiness & productivity through cross-selling Products Continue to meet customer needs for core life insurance savings products Offer broader range of RFS products to deepen customer relationship Professional/ Mass-affluent segment Target Customers 4

6 Business and Financial Overview Understanding Our Customers In depth local research UK heritage & history Prudence A competitive advantage Trust & Credibility 5

7 Business and Financial Overview Customer Growth: ,000 Life 100% 1,500,000 Life 80% Mutual Funds 20% +1,000%

8 Business and Financial Overview Geography: Business and Financial Overview Singapore Malaysia Hong Kong

9 Business and Financial Overview Geography: Business and Financial Overview Thailand India (life) India (AMC) China Singapore Malaysia Vietnam Indonesia Philippines Taiwan Hong Kong HK, Singapore Japan

10 Business and Financial Overview Products & Distribution: 1994 Products Life -Traditional - Unit Linked General Distribution Agency Mal Sin HK 9 Geography

11 Business and Financial Overview Products & Distribution: 2000 Products Life -Traditional -Unit linked Mutual Funds General Distribution Agency Bank Broker Direct MalSinHKThaiIndoPhilIndiaJapanTaiwanVietnamChina Geography 10

12 Business and Financial Overview ….. now A Regional Life Insurance Leader None Market presence/licences Number of markets among top 5 Aegon Allianz Zurich/Eagle Star Prudential US 9+ Sun Life of Canada New York Life CMG Great Eastern Life Manulife RSA CGNU PCA 1994 PCA 2000 AXA ING Aetna AIG 11 Cathay Life

13 Business and Financial Overview Summary: Key Drivers Of Growth Favourable regional economic growth & wealth distribution trends Success in getting licences Successful JV partnering with respected local financial brands Building competitive advantage focusing on quality, productivity and economic value of dominant agency distribution channel 12

14 Business and Financial Overview Summary: Key Drivers Of Growth Excellence in regional brand promotion Systematic processes rolled out regionally Consistent application of a delegated Think regional, Act local management approach 13

15 Business and Financial Overview PCA Today: Overview A trusted brand across Asia Overcoming barriers to entry - unlocking opportunities for profitable growth Establishing joint-ventures and alliances to accelerate profitable growth A vision and operational & management structure designed for the future with people who can deliver A financial track record that demonstrates all of the above 14

16 Business and Financial Overview A Trusted Brand Across Asia 15

17 Business and Financial Overview Overcoming Barriers To Entry Limited number of licences available Early market presence and history critical Understanding operating and regulatory environment People constraints; experience and expertise 16

18 Business and Financial Overview Establishing JV Partners: Selection Criteria Financially sound Strong ethical approach to business Well trusted brand with good reputation in market Appreciation of financial services sector and its challenges Prudential ownership/shared ownership of the customer 17

19 Business and Financial Overview Strong Existing JVs/Alliances With Major Financial Institutions 18

20 Business and Financial Overview PCAs Vision Quantum change in pace, size and return from the Asian region on a scale which in time will make a significant & positive impact on the Groups results #1 in customer focus #1 in attracting the best people To be Asias #1 life & retail financial solutions provider 1994 Today 19 Maximising shareholder value

21 Business and Financial Overview PCAs Operating Structure Level of market development Scale of operations Depth of management resources Established Markets - Hong Kong, Singapore, Malaysia Emerging Markets - Thailand, Indonesia, Philippines, Vietnam, India China & Taiwan Mutual Funds India Taiwan Investment Management Hong Kong Singapore Japan Life 20

22 Business and Financial Overview PCAs Management Team 21 Mina Hsu Brand & Communications Garth Jones Finance, Actuarial & IT Peter Booth Human Resources Hugh Davies Asia Desk Mike Bishop Alternative Distribution Gary Bennett Business Development Mark E Tucker Chief Executive Investment Mgt Life Mutual Funds Dominic Leung Taiwan & China Dan Bardin Emerging Mkts Tan Suee Chieh Established Mkts Ajay Srinivasan Mutual Funds Toru Ueda PPM Japan

23 Business and Financial Overview PCAs Operating And Management Structures Capitalising On Regional Synergies Leverage expertise & resources across borders Spread corporate values Develop critical areas of excellence Make Prudential a household name 22

24 Business and Financial Overview PCAs People: Fundamental To Our Success Recruitment of core competency talent PRUflexiben PRUuniversity MBA fast-track programme developing management resource pipeline The financial services employer of choice 23

25 Business and Financial Overview PCA: Financial Overview

26 Business and Financial Overview PC Asia Financial Performance Strong, Diverse and Sustainable Very strong growth all round in sales and achieved profits The diversity of geography, product and type of business That significant and material shareholder value has already been delivered

27 Business and Financial Overview New Business: Strong Life Regular Premium Growth Rebounding from Crisis earlier than expected £m mths % -34% +34% +120% on 9 mths 99 EstablishedEmergingTaiwan & China 26

28 Business and Financial Overview New Business: Strong Life Single Premium Growth Single Premiums also recovered rapidly from Crisis EstablishedEmergingTaiwan & China £m mths % -81% +333% +62% on 9 mths

29 Business and Financial Overview New Business: Life APE mths 2000 £m Full Year9 mths CAGR 9 mths mths 2000 of 20% 28

30 Business and Financial Overview New Business: Life APE New Business Geographic Mix 9 mths 2000 Taiwan 29% Established 61% Emerging 10% 29

31 Business and Financial Overview Life Operations: New Business Achieved Profits Full Year 6 mths CAGR 6 mths mths 2000 of 35% mths 2000 £m

32 Business and Financial Overview Life Operations: NBAP Product Mix 6 mths 2000 Linked 40% Non-Linked 30% Non Par 30% New business achieved profit on APE 60% 31

33 Business and Financial Overview Life Operations: Building Core Agency Distribution Numbers of agents 000s Dec Dec 97Dec 98Dec 99Sep 00 32

34 Business and Financial Overview Agency: Productivity & Persistency Prudentials agency force more productive than market Malaysia +200% Singapore + 28% Hong Kong + 28% Prudentials persistency also higher than market 33

35 Business and Financial Overview £313m net sales for 9 mths 2000 up 46% over 9 mths 1999 Mutual Funds India: Net Sales mths 2000 Full year9 mths £m #1 in Private Sector

36 Business and Financial Overview PCA: Total Funds Under Management Asian Investment Management businesses all reporting to PCA from 1999 Acquisition of Prudential Taiwan SITE adds a further £1.1bn Dec PCA Life Pensions £bn Mutual Funds UK Life Fund Dec 97 Dec 98 Dec 99 Jun 00 35

37 Business and Financial Overview PCA: Total Funds Under Management - June 2000 UK Life Fund 62% Pensions 2% PCA Life 30% Mutual Funds 6% Total FUM £10.4bn excluding Prudential Taiwan SITE 36

38 Business and Financial Overview Operating Achieved Profits CAGR 6 mths mths 2000 of 35% 1996 £m mths 2000 Full Year6 mths 37

39 Business and Financial Overview MSB Profits £m Full Year6 mths mths

40 Business and Financial Overview PCA: Value Added To Shareholder Funds ROE: 28% Expected Return Value Added 60 £m Jan - 30 Jun Jan - 30 Jun

41 Business and Financial Overview 18% of new business achieved profits 6 mths up from 15% in 1999 £250m APE sales 9 mths % of group-wide total - up from 11% in 1999 PCA Contribution to Group Results Asia 18% US 42% US 42% UK & Europe 40% UK & Europe 40% New Business Achieved Profits 40

42 Business and Financial Overview PC Asia Financial Performance Strong, Diverse and Sustainable Very strong growth all round in sales and achieved profits The diversity of geography, product and type of business That significant and material shareholder value has already been delivered…. and we are confident it will continue

43 Business and Financial Overview PCA: The Future

44 Business and Financial Overview PCA: Profitable Growth Objectives Regional alignment with savings market opportunities Promote long-term savings through life insurance and value adding product enhancements Complement life offering with expanded product range and retail financial services customer proposition Multiple distribution Scale applied to capture operating economies 43

45 Business and Financial Overview Challenges - External Political instability Economic shocks Regulatory environment Competition 44

46 Business and Financial Overview Challenges - Internal Attracting, retaining and developing the best people Managing in multilingual/ multicultural environment Integrating acquisitions Maintaining excellent relationships with JV partners Keeping our unique PCA culture as we grow 45

47 Business and Financial Overview Products & Distribution PCA 2000 Products Life -Traditional -Unit linked Mutual Funds General Distribution Agency Bank Broker Direct MalSinHKThaiIndoPhilIndiaJapanTaiwanVietnamChina Geography 46

48 Business and Financial Overview PCA: Sources Of Competitive Advantage Proven formula for transforming acquired and start-up businesses Prudential Groups financial strength: where security of many large regional players in doubt Success breeds success: PCAs track record - real advantage in deal-making and partner selection 47

49 Business and Financial Overview PCA: Sources Of Competitive Advantage Understanding of customer retail savings needs Ownership of key customer relationships Life agency network and management model Ownership of successful bancassurance distribution model Profit consciousness inculcated at all levels of the business 48

50 Business and Financial Overview PCA is very well positioned and resourced to take advantage of the regions exciting growth potential PCA has now succeeded in breaking through the formidable entry barriers PCA has a pan-regional presence and platform PCA has a clear strategy & business model for life and retail financial services and a track record of delivery Summary 1 Significant, material & profitable growth opportunities in Asia 49


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