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Business and Financial Overview
Mark Tucker Chief Executive Garth Jones Managing Director, Finance, Actuarial & IT 15th Nov, 2000
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Content Key messages PCA’s mandate PCA’s profitable growth strategy
PCA: Today PCA: The future 1
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Key Messages 1 Significant, material & profitable growth opportunities in Asia 2 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 3 4 PCA is very well positioned and resourced to take advantage of the region’s exciting growth potential 2
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“ ” Group’s 1994 Mandate To PCA
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 Group’s results ” 3 Business and Financial Overview
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Mass-affluent segment
PCA’s Strategy For Growth: Four Dimensions Geography Expand into Asian markets with largest, profitable pools 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 Target Customers Professional/ Mass-affluent segment 4
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A competitive advantage
Understanding Our Customers In depth local research UK heritage & history Prudence Trust & Credibility A competitive advantage 5
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Customer Growth: 2000 1,500,000 +1,000% Life % Mutual Funds 20% 1994 150,000 Life 100% 6
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Geography: 1994 Hong Kong Malaysia Singapore 7
Business and Financial Overview
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Geography: 2000 China HK, Singapore Japan Hong Kong India (AMC) Taiwan
India (life) Vietnam Thailand Philippines Malaysia Singapore Indonesia 8 Business and Financial Overview
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Products & Distribution: 1994
Geography HK Sin Mal Products Life -Traditional - Unit Linked General Distribution Agency 9
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Products & Distribution: 2000
Geography HK Sin Mal Thai Indo Phil Vietnam India Taiwan China Japan Products Life -Traditional -Unit linked Mutual Funds General Distribution Agency Bank Broker Direct 10
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Market presence/licences
….. now A Regional Life Insurance Leader Number of markets among top 5 AIG PCA 2000 3-5 PCA 1994 Manulife 1-2 Cathay Life Sun Life of Canada New York Life CMG Great Eastern Life AXA ING Aetna RSA CGNU Aegon Allianz Zurich/Eagle Star Prudential US None 1-2 3-6 7-8 9+ Market presence/licences 11
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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
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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
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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
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A Trusted Brand Across Asia
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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
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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
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Strong Existing JVs/Alliances With Major Financial Institutions
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Maximising shareholder value
PCA’s Vision 1994 Today “ To be Asia’s #1 life & retail financial solutions provider 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 Group’s results #1 in customer focus #1 in attracting the best people ” Maximising shareholder value 19
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Investment Management
PCA’s Operating Structure Mutual Funds India Taiwan Investment Management Hong Kong Singapore Japan Life Established Markets Hong Kong, Singapore, Malaysia Emerging Markets Thailand, Indonesia, Philippines, Vietnam, India China & Taiwan Level of market development Scale of operations Depth of management resources 20
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PCA’s Management Team Mutual Funds Investment Mgt Life Mark E Tucker
Chief Executive Garth Jones Finance, Actuarial & IT Mina Hsu Brand & Communications Peter Booth Human Resources Mike Bishop Alternative Distribution Hugh Davies Asia Desk Gary Bennett Business Development Mutual Funds Investment Mgt Life Tan Suee Chieh Established Mkts Dominic Leung Taiwan & China Ajay Srinivasan Mutual Funds Toru Ueda PPM Japan Dan Bardin Emerging Mkts 21
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PCA’s Operating And Management Structures
Leverage expertise & resources across borders Capitalising On Regional Synergies Spread corporate values Develop critical areas of excellence Make Prudential a household name 22
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The financial services employer of choice
PCA’s 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
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PCA: Financial Overview
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1 2 3 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 2 3 25
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New Business: Strong Life Regular Premium Growth
Rebounding from Crisis earlier than expected +120% on 9 mths 99 £m 150 +17% 100 -34% +34% 50 1996 1997 1998 1999 9 mths 2000 Established Emerging Taiwan & China 26
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New Business: Strong Life Single Premium Growth
Single Premiums also recovered rapidly from Crisis £m 250 +62% on 9 mths 99 200 150 +157% 100 +333% -81% 50 1996 1997 1998 1999 9 mths 2000 Established Emerging Taiwan & China 27
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New Business: Life APE CAGR 9 mths 1996 - 9 mths 2000 of 20% £m
160 140 120 100 80 60 40 20 1996 1997 1998 1999 9 mths 2000 Full Year 9 mths 28
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New Business: Life APE Taiwan 29% Emerging 10% Established 61%
New Business Geographic Mix 9 mths 2000 Taiwan 29% Emerging 10% Established 61% 29
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Life Operations: New Business Achieved Profits
CAGR 6 mths mths 2000 of 35% £m 90 80 70 60 50 40 30 20 10 1996 1997 1998 1999 6 mths 2000 Full Year 6 mths 30
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Life Operations: NBAP Product Mix 6 mths 2000
Non Par 30% Linked 40% Non-Linked 30% New business achieved profit on APE 60% 31
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Life Operations: Building Core Agency Distribution
Numbers of agents ‘000s 25 20 15 10 5 Dec 96 Dec 97 Dec 98 Dec 99 Sep 00 32
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Agency: Productivity & Persistency
Prudential’s agency force more productive than market Malaysia % Singapore % Hong Kong % Prudential’s persistency also higher than market 33
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Mutual Funds India: Net Sales
#1 in Private Sector £313m net sales for 9 mths 2000 up 46% over 9 mths 1999 £m 350 300 250 200 150 100 50 1998 1999 9 mths 2000 Full year 9 mths 34
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PCA: Total Funds Under Management
£bn 12 Asian Investment Management businesses all reporting to PCA from 1999 Acquisition of Prudential Taiwan SITE adds a further £1.1bn 10 8 6 4 2 Dec 96 Dec 97 Dec 98 Dec 99 Jun 00 UK Life Fund PCA Life Mutual Funds Pensions 35
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PCA: Total Funds Under Management - June 2000
Pensions 2% PCA Life 30% UK Life Fund 62% Mutual Funds 6% Total FUM £10.4bn excluding Prudential Taiwan SITE 36
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Operating Achieved Profits
CAGR 6 mths mths 2000 of 35% £m 120 100 80 60 40 20 1996 1997 1998 1999 6 mths 2000 Full Year 6 mths 37
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MSB Profits £m Full Year 6 mths 16 14 12 10 8 6 4 2 1996 1997 1998
1996 1997 1998 1999 6 mths 2000 Full Year 6 mths 38
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PCA: Value Added To Shareholder Funds
£m ROE: 28% 60 50 40 30 20 10 1999 1 Jan - 30 Jun 2000 1 Jan - 30 Jun Expected Return Value Added 39
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PCA Contribution to Group Results
New Business Achieved Profits 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 UK & Europe 40% US 42% Asia18% 40
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1 2 3 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 2 3 41
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PCA: The Future
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PCA: 2000-2005 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
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Challenges - External Political instability Economic shocks
Regulatory environment Competition 44
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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
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Products & Distribution PCA 2000
Geography HK Sin Mal Thai Indo Phil Vietnam India Taiwan China Japan Products Life -Traditional -Unit linked Mutual Funds General Distribution Agency Bank Broker Direct 46
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PCA: Sources Of Competitive Advantage
Proven formula for transforming acquired and start-up businesses Prudential Group’s financial strength: where security of many large regional players in doubt Success breeds success: PCA’s track record - real advantage in deal-making and partner selection 47
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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
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Summary 1 Significant, material & profitable growth opportunities in Asia 2 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 3 4 PCA is very well positioned and resourced to take advantage of the region’s exciting growth potential 49
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