20 Apr 2001

Prudential plc First Quarter 2001 New Business Results

  • Record Group total insurance and investment sales of £5.0 billion, up 29 per cent on prior year. On an annual premium equivalent (APE) basis, sales were £642 million, up 29 per cent.
  • UK insurance operations sales of £226 million, an increase on first quarter 2000 of 10 per cent on APE basis.
  • Egg customer numbers reach 1.57 million. Credit card balances grow to £1.3 billion, up 36 per cent on year end 2000.
  • Fixed Annuities sales grow by 35 per cent in the United States, but sales of equity-based products decline reflecting adverse market conditions.
  • Asia insurance sales total £373 million, up 285 per cent on first quarter 2000, and investment sales at £1.6 billion, 264 per cent up on first quarter 2000.

Jonathan Bloomer, group chief executive, Prudential plc, commented:

"First quarter 2001 sales have reached £5 billion for the first time, an impressive group performance. Our strategy to grow internationally, broaden our distribution reach and diversify our product range has been a key factor in this achievement.

"We saw continuing strong growth in Asia, in both our existing and new operations. Our UK insurance operations delivered a 10 per cent increase in sales, driven by strong growth in corporate pensions and annuities. The benefits of our policy of product diversification are particularly apparent in the US, where the strong growth in fixed annuities partially offset the industry-wide decline in the sale of equity-backed products."

UNITED KINGDOM

UK Insurance Operations

The UK insurance operations have delivered sales of £226 million, 10 per cent higher than the same period last year, on an APE basis.

Intermediated Sales
APE sales via intermediary channels (ie through Independent Financial Advisers, Consulting Actuaries and Appointed Representatives), in the first quarter were £109 million, 14 per cent above prior year.

The positive first quarter results are due in particular to sales of annuities and individual pensions. £25 million (APE) of annuities were sold via the intermediary channel, 108 per cent up on first quarter 2000, and sales of individual pensions products are 67 per cent above prior year at £20 million, largely as a result of the successful launch of the Premier Group Personal Pension Product.

Within annuity sales, total bulk annuity sales accounted for £144 million, in the first quarter 2001, a significant improvement on the prior year level of £20 million. These bulk annuity sales were written by the shareholder-backed entity Prudential Retirement Income Limited (PRIL).

Life sales through intermediaries, of £48 million (APE) in the first quarter 2001, were 16 per cent lower than the first quarter 2000. This reflects reduced sales of house purchase endowment policies, down 50 per cent on first quarter last year at £3.5 million, and reduced sales of Prudence Bond, down 21 per cent on prior year at £33.7 million.

Prudential will announce separately today that, due to the shift within the marketplace towards repayment mortgages over the past two years, and the consequent significant fall in demand for endowment products, Scottish Amicable will withdraw from the mortgage endowment sales market.

Direct Sales
APE sales by direct channels, including the direct sales force, work site marketing and remote channels, for first quarter 2001 were £117 million, 5 per cent above prior year.

Sales of corporate pensions were £54 million, 42 per cent ahead of first quarter 2000. This increase is predominantly due to the new corporate pensions mandates won by Prudential and reflects the quality of our pensions administration platform.

Annuity sales via direct channels were £16 million, in line with first quarter 2000.

We are well positioned in the stakeholder market. Our schemes were open for business at launch on 6 April 2001, in addition to the two own-branded affinity schemes that we developed for the Trades Union Congress and the British Chambers of Commerce.

M&G

M&G achieved total investment sales of £249 million in the first quarter 2001 and increased its ISA market share, particularly in the IFA channel.

Total investment sales of £249 million were 18 per cent down on sales of £303 million last year, reflecting an industry-wide decline in ISA sales from the exceptional levels achieved in the first quarter of 2000. M&G's ISA sales reduced by 25 per cent, which compared well with the broader market.

Net sales for each month were well above levels achieved last year, reflecting falling redemptions.

Due to its strong product offering, M&G continues to be the market leader in fixed interest products and has achieved growing recognition of the strong performance of its equity funds over the past year.

EGG

In the first quarter 2001, Egg's customer base reached 1.57 million from the previous quarter of 1.35 million. Credit cards continue to deliver the majority of the growth, with quarter end balances of £1.26 billion, up £330 million since the year end.

Egg personal loans have grown by 14% since the year end to a quarter end balance of £485 million. Overall mortgage balances grew 3% net in the quarter, with steady growth from the Egg branded portfolio, which saw sales of £90 million in the period.

Egg continues to see some shift in the profile of its deposit account base. There was a net increase of 7,000 in customer numbers in the quarter, albeit with smaller average balances, leading to an overall decrease in deposit balances of £394 million in the Egg book, which reflects seasonality plus the repricing of the book in February.

Egg Invest, its fund supermarket, doubled its customer base to almost 22,000 customers at 31 March 2001, and had £65 million of funds under administration at quarter end.

EUROPE

Prudential Europe made a positive start to the year with total sales of £15 million, 7 per cent higher than in the first quarter 2000.

In France, sales of Prudential Europe Vie, an innovative equity-backed single premium savings product, launched on 18 January 2001, have reached £7 million. This is being marketed through Centre Français du Patrimoine, the largest multi-product broking network in France. Sales are now running at around £1 million each week, with the with-profit option being chosen for 90 per cent of invested funds.

UNITED STATES

The volatility of the equity markets in the United States has affected sales at Jackson National Life. New insurance premiums at Jackson were down 20 per cent from last year at £1.2 billion. This decrease is attributable to significant market corrections experienced in US equity markets in recent months. This correction has had a universal adverse impact on the sales of equity-based products throughout the US.

Against this background, however, Jackson achieved a 35 per cent growth in sales of individual fixed annuities, reflecting its strength in distribution, its ability to offer high-quality, competitive products, its diversified product portfolio, and its reputation for industry-leading client service.

Persistency numbers have continued to improve. Recent turmoil in equity markets combined with an aggressive business-retention programme have contributed to a dramatic fall in the number of surrenders of fixed annuity policies, which are now running well within our assumptions.

Sales of Stable Value products were strong during the quarter at £565 million. Although sales are down from 2000 levels, the decrease is primarily a function of the timing of the 2000 sales, with almost 40 per cent of total sales having occurred during the first quarter of 2000.

The sharp drop in equity prices during recent months has translated into a slowdown in the flow of funds into equity based products across the industry. Within Jackson, variable annuity sales of £239 million were 51 per cent lower than 2000, and sales of equity linked annuities were down 45 per cent to £72 million. Given the extremely favourable demographic trends in the US, we expect long-term sales of equity products to return to previous levels and continue to grow.

ASIA

Total insurance and investment sales in Asia of £2.0 billion have increased by 267 per cent on the first quarter 2000, with a strong performance from all operations. Insurance sales continued to grow strongly, increasing by 285 per cent to £373 million.

Total funds under management in the Asian mutual fund business grew strongly, exceeding £1.9 billion as at 31 March 2001, compared to £0.6 billion at the end of first quarter 2000, and £1.6 billion as at 31 December 2000.

Regular premium insurance sales increased by 86 per cent and single premium insurance sales were more than five times higher than first quarter 2000. APE sales grew strongly by 131 per cent. Significant growth in Taiwan and Hong Kong reflects our strength in building and managing high quality agency forces. Sales for the quarter also include new business from Japan written in the period since our Japanese acquisition on 13 February 2001. These results include exceptional single premium sales in Singapore (more than five times higher than first quarter 2000), resulting from recent further liberalisation of the Central Provident Fund, which are at lower margins and are not expected to recur.

In April 2001 we became the first international company operating in China to receive approval from the regulatory authorities to market unit-linked products.

Gross investment sales in India, Taiwan and Japan amounted to almost £1.6 billion, an increase of 258 per cent on first quarter 2000, reflecting particularly strong sales in Taiwan. Core Pacific Investment Trust Enterprise in Taiwan was acquired by Prudential in October 2000. Net mutual fund inflows in first quarter 2001 were £136 million.

During first quarter 2001 our joint venture with Bank of China in Hong Kong received £68 million of contributions in respect of the Mandatory Provident Fund launched in December last year. We recorded £25 million of sales reflecting our 36 per cent interest in the joint venture.

Enquiries:

Media: Analysts:
Geraldine Davies Rebecca Burrows
020 7548 3911 020 7548 3537
Tina Christou Andrew Crossley
020 7548 3719 020 7548 3166
Steve Colton
020 7548 3721

1.Annual premium equivalent sales comprise regular premium sales plus one tenth of single premium sales.

2.Financial Calendar for 2001:
Annual General Meeting - 10 May 2001
Payment of Final Dividend - 30 May 2001
Interim Results: Includes Quarter 2 2001 New Business Results - 26 July 2001
Quarter 3 New Business Results - 18 October 2001

PRUDENTIAL PLC - 2001 NEW BUSINESS PREMIUMS - QUARTER 1 2001 VERSUS QUARTER 1 2000
Schedule 1
Single Premiums Regular Premiums Total Premiums APE
2001
£m
2000
£m
+/-
(%)
2001
£m
2000 £m +/- (%) 2001
£m
2000
£m
+/- (%) 2001
£m
2000
£m
+/- (%)
Direct:
Individual Pensions 9 10 (10%) 8 11 (27%) 17 21 (19%) 9 12 (25%)
Corporate Pensions 179 177 1% 36 21 71% 215 198 9% 54 38 42%
Life 114 145 (21%) 5 9 (44%) 119 154 (23%) 16 24 (33%)
Annuities 162 157 3% - - - 162 157 3% 16 16 0%
Investment Products 8 12 (33%) 3 2 50% 11 14 (21%) 4 3 33%
Sub-Total 472 501 (6%) 52 43 21% 524 544 (4%) 99 93 6%
DSS Rebates 175 175 0% - - - 175 175 0% 18 18 0%
Total (Schedule 2) 647 676 (4%) 52 43 21% 699 719 (3%) 117 111 5%
Intermediated:
Individual Pensions 54 44 23% 15 8 88% 69 52 33% 20 12 67%
Corporate Pensions 17 35 (51%) 4 4 0% 21 39 (46%) 6 8 (25%)
Life 403 470 (14%) 8 10 (20%) 411 480 (14%) 48 57 (16%)
Annuities 254 121 110% - - - 254 121 110% 25 12 108%
Investment Products 27 6 350% 1 1 0% 28 7 300% 4 2 100%
Sub-Total 755 676 12% 28 23 22% 783 699 12% 103 91 13%
DSS Rebates 55 51 8% - - - 55 51 8% 6 5 20%
Total (Schedule 2) 810 727 11% 28 23 22% 838 750 12% 109 96 14%
Total UK Insurance Operations:
Individual Pensions 63 54 17% 23 19 21% 86 73 18% 29 24 21%
Corporate Pensions 196 212 (8%) 40 25 60% 236 237 (0%) 60 46 30%
Life 517 615 (16%) 13 19 (32%) 530 634 (16%) 65 81 (20%)
Annuities 416 278 50% - - - 416 278 50% 41 28 46%
Investment Products 35 18 94% 4 3 33% 39 21 86% 8 5 60%
Sub-Total 1,227 1,177 4% 80 66 21% 1,307 1,243 5% 203 184 10%
DSS Rebates 230 226 2% - - - 230 226 2% 23 22 5%
Total UK Insurance Operations 1,457 1,403 4% 80 66 21% 1,537 1,469 5% 226 206 10%
M&G:
Individual Pensions - 13 0% - 1 0% - 14 0% - 2 0%
Investment Products 246 299 (18%) 3 4 (25%) 249 303 (18%) 28 34 (18%)
Total 246 312 (21%) 3 5 (40%) 249 317 (21%) 28 36 (22%)
Total UK Operations 1,703 1,715 (1%) 83 71 17% 1,786 1,786 0% 253 243 4%
European Operations:
Insurance Products 11 6 83% 4 8 (50%) 15 14 7% 5 9 (44%)
Sub-Total 11 6 83% 4 8 (50%) 15 14 7% 5 9 (44%)
US Operations:
Fixed Annuities 348 257 35% - - - 348 257 35% 35 26 35%
Equity Linked Index Annuities 72 130 (45%) - - - 72 130 (45%) 7 13 (46%)
Variable Annuities 239 484 (51%) - - - 239 484 (51%) 24 48 (50%)
Total Annuities 659 871 (24%) - - - 659 871 (24%) 66 87 (24%)
Guaranteed Investment Contracts 154 48 221% - - - 154 48 221% 15 5 200%
GIC - European Medium Term Note 411 611 (33%) - - - 411 611 (33%) 41 61 (33%)
Life - - - 5 6 (17%) 5 6 (17%) 5 6 (17%)
Sub-Total 1,224 1,530 (20%) 5 6 (17%) 1,229 1,536 (20%) 127 159 (20%)
Asian Operations:
Insurance Products 306 61 402% 67 36 86% 373 97 285% 97 42 131%
Investment Products 1,582 435 264% - - - 1,582 435 264% 159 44 261%
Sub-Total 1,888 496 281% 67 36 86% 1,955 532 267% 256 86 198%
Group Total:
Insurance Products 2,953 2,991 (1%) 151 112 35% 3,104 3,103 0% 446 411 9%
Investment Products 1,873 756 148% 8 9 (11%) 1,881 765 146% 196 85 131%
Group Total 4,826 3,747 29% 159 121 31% 4,985 3,868 29% 642 496 29%
2001
£m
2000
£m
Q4 2000 £m
UK Banking Products
Egg 6,322 7,337 (14%) 6,715
Prudential Banking 378 504 (25%) 412
Total Deposit Liabilities 6,700 7,841 (15%) 7,127
Mortgage Book 2,472 1,825 35% 2,406
Personal Loans Book 502 257 95% 445
Credit Card Receivables 1,259 464 171% 929
Investment Supermarket FUM 65 5 1200% 42
Total Retail Assets 4,298 2,551 68% 3,822
US Banking Products
Total Deposit Liabilities 519 171 204%
Retail Assets 676 165 310%
General Insurance
UK Gross Premiums Written 91 79 15%
Schedule 2:
Supplementary Information
Single Premiums Regular Premiums Total Premiums APE
2001
£m
2000
£m
+/- (%) 2001
£m
2000
£m
+/- (%) 2001
£m
2000
£m
+/- (%) 2001
£m
2000
£m
+/- (%)
UK Operations
Prudential Financial Services
Retail:
Individual Pensions 9 10 (10%) 8 11 (27%) 17 21 (19%) 9 12 (25%)
Corporate Pensions - 1 0% - 6 0% - 7 0% - 6 0%
Life 114 145 (21%) 5 9 (44%) 119 154 (23%) 16 24 (33%)
Annuities 128 123 4% - - - 128 123 4% 13 12 8%
Investment Products 8 12 (33%) 3 2 50% 11 14 (21%) 4 3 33%
Sub-Total 259 291 (11%) 16 28 (43%) 275 319 (14%) 42 57 (26%)
DSS Rebates 175 175 0% - - - 175 175 0% 18 18 0%
Total 434 466 (7%) 16 28 (43%) 450 494 (9%) 60 75 (20%)
Group Pensions:
Corporate Pensions 179 176 2% 36 15 140% 215 191 13% 54 33 64%
Annuities 34 34 0% - - - 34 34 0% 3 3 0%
Total 213 210 1% 36 15 140% 249 225 11% 57 36 58%
Total Financial Services 647 676 (4%) 52 43 21% 699 719 (3%) 117 111 5%
Prudential Intermediated Businesses
Retail IFA:
Individual Pensions 54 44 23% 15 8 88% 69 52 33% 20 12 67%
Corporate Pensions 17 35 (51%) 4 4 0% 21 39 (46%) 6 8 (25%)
Life 403 470 (14%) 8 10 (20%) 411 480 (14%) 48 57 (16%)
Annuities 31 32 (3%) - - - 31 32 (3%) 3 3 0%
Investment Products 27 6 350% 1 1 0% 28 7 300% 4 2 100%
Sub-Total 532 587 (9%) 28 23 22% 560 610 (8%) 81 82 (1%)
DSS Rebates 55 51 8% - - - 55 51 8% 6 5 20%
Total 587 638 (8%) 28 23 22% 615 661 (7%) 87 87 0%
Annuities:
Annuities 223 89 151% - - - 223 89 151% 22 9 144%
Total Intermediated Businesses 810 727 11% 28 23 22% 838 750 12% 109 96 14%
Asian Operations:
Insurance Products:
Singapore 284 53 436% 7 7 0% 291 60 385% 35 12 192%
Hong Kong 13 3 333% 13 7 86% 26 10 160% 14 8 75%
Malaysia 2 4 (50%) 7 5 40% 9 9 0% 7 5 40%
Taiwan 0 - - 24 13 85% 24 13 85% 24 13 85%
Japan 5 - - 6 - - 11 - - 7 - -
Other 2 1 100% 10 4 150% 12 5 140% 10 4 150%
Total 306 61 402% 67 36 86% 373 97 285% 97 42 131%
Investment Products:
India 435 435 0% - - - 435 435 0% 44 44 0%
Taiwan 1,120 - - - - - 1,120 - - 112 - -
Other 2 - - - - - 2 - - 0 - -
Total Gross Mutual Fund Sales 1,557 435 258% - - - 1,557 435 258% 156 44 255%
Hong Kong MPF Products 25 - - - - - 25 - - 3 - 0%
Total 1,582 435 264% - - - 1,582 435 264% 159 44 261%
Total Asian Operations 1,888 496 281% 67 36 86% 1,955 532 267% 256 86 198%
Asia Mutual Funds
Net Mutual Fund Sales:
India ( 3) 195 -
Taiwan 140 - -
Other ( 1) - -
Total Net Mutual Fund Sales 136 195 (30%)
Funds Under Management:
India Taiwan Other Total
Opening Balance of FUM (31/12/00) 695 934 20 1,649
Net Flows ( 3) 140 ( 1) 136
Market Movement 17 114 ( 2) 129
Closing Balance of FUM (31/03/01) 709 1,188 17 1,914

Notes to Schedules:

  1. Sales for overseas operations have been calculated using average exchange rates. The applicable rate for Jackson National Life is 1.46 (March 2000 - 1.61). Balance sheet figures have been calculated using closing exchange rates.

  2. In Asia, 'Other' Insurance Products include Thailand, Indonesia, The Philippines, Vietnam, India (26% interest) and China.

  3. Insurance sales for Japan are included from 13 February 2001, the date of acquisition of Orico Life Insurance Company Limited.

  4. Mandatory Provident Fund product sales in Hong Kong are included at Prudential's 36% interest of the Hong Kong MPF operation.

  5. APE subject to rounding differences.

Jackson National Life Insurance Company

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Prudential plc is an international company incorporated in the United Kingdom, and its affiliated companies constitute one of the world’s leading financial services groups. It provides insurance and financial services directly and through its subsidiaries and affiliates throughout the world, and it has been in existence for over 170 years. Prudential plc is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America, or the Prudential Assurance Company, a subsidiary of M&G plc (a company incorporated in the United Kingdom).