05 Aug 2011

Prudential plc 2011 Half Year Financial Results

Links to supplementary information about this release: PDF
News release and business review
IFRS disclosure
EEV disclosure

PRUDENTIAL PLC THIRD QUARTER 2011 INTERIM MANAGEMENT STATEMENT

New Business1:

  • Total APE sales of £1,824 million, up 10 per cent
  • EEV new business profit margin (% APE) of 59 per cent
  • EEV new business profit of £1,069 million, up 20 per cent
  • Investment in new business of £297 million (2010: £337 million)

IFRS:

  • Operating profit of £1,058 million, up 25 per cent
  • Shareholders’ funds of £8.5 billion, up 19 per cent (2010: £7.2 billion)

Embedded Value:

  • Operating profit of £2,147 million, up 28 per cent
  • Shareholders’ funds of £19.0 billion, up 14 per cent, equivalent to 745 pence per share

Capital & Dividend:

  • Insurance Groups Directive (‘IGD’) capital surplus estimated at £4.1 billion2
  • Underlying free surplus generation up 15 per cent to £1,093 million (2010: £947 million)
  • 2011 interim dividend increased by 20 per cent to 7.95 pence per share (2010: 6.61 pence per share), reflecting the upwards rebasing of the dividend at full year 2010

Commenting on the results, Tidjane Thiam, Group Chief Executive, said:

“We have reported another good performance in the first half of 2011. Against the challenging comparator of 2010, we have increased new business profit and IFRS and EEV operating profits by 20 per cent or more. The Group continues to generate growing amounts of underlying free surplus, up 15 per cent versus the same period last year. For the first time, both our IFRS operating profit and our EEV new business profit have exceeded £1 billion for the first six months of the year. These results have been achieved from a position of financial strength; the Group has a resilient balance sheet, with an IGD capital surplus of £4.1 billion at the half year.

“We have continued to concentrate on the fast growing and highly profitable markets of South-East Asia, and the positive momentum of 2010 has been maintained during the first half of this year, with new business profit up 17 per cent in Asia and 22 per cent in Asia ex-India. In the US, Jackson is now one of the leading providers of variable annuities in the world’s largest retirement market, and we continue to balance sales growth with increasing cash generation and profitability. Our UK business is performing in line with our strategy, balancing writing new business with generating cash and preserving capital. In asset management, both M&G and our business in Asia are seeing IFRS profit grow in addition to rising funds under management.

“Our operating principle of putting value over volume, our focus on execution and the investment options the Group’s structure and geographic footprint provides, have allowed us to continue to deliver value to shareholders. We expect to see continued, profitable and cash generative growth in the second half of 2011. We remain on course to deliver the 2013 profit growth and cash generation objectives we outlined at our investor day last year.”

ENDS

Contact:

Media Investors/Analysts
Ed Brewster +44 (0)20 7548 3719 David Collins +44 (0)20 7548 2871
Robin Tozer +44 (0)20 7548 2776 Andy Rowe +44 (0)20 7548 3860

Notes to Editors:

  1. The results in this announcement are prepared on two bases: International Financial Reporting Standards ('IFRS') and European Embedded Value ('EEV'). The IFRS basis results form the basis of the Group's statutory financial statements. The supplementary EEV basis results have been prepared in accordance with the European Embedded Value principles issued by the CFO Forum of European Insurance Companies in May 2004. Where appropriate the EEV basis results include the effects of IFRS. Period on period percentage increases are stated on an actual exchange rate basis.

  2. Annual premium equivalent (APE) sales comprise regular premium sales plus one-tenth of single premium insurance sales.

  3. Operating profits are determined on the basis of including longer-term investment returns. EEV and IFRS operating profits are stated after excluding the effect of short-term fluctuations in investment returns against long-term assumptions and the shareholders' share of actuarial and other gains and losses on defined benefit pension schemes. The operating profit based on longer-term investment returns for 2010 also excludes costs associated with the terminated AIA transaction and the gain arising upon the dilution of the Group’s holding in PruHealth. In addition for EEV basis results, operating profit based on longer-term investment returns excludes the effect of changes in economic assumptions and the mark to market value movement on core borrowings.

  4. In the second half of 2010 the Company amended its presentation of IFRS operating profit for its US insurance operations to exclude the net equity hedge accounting effect relating principally to its variable annuity business and reclassified it as a short-term fluctuation. Half year 2010 comparatives have been amended to exclude a positive £123 million effect from operating profit before tax. This is a presentational change and it has no impact on the IFRS profit before tax or the IFRS shareholders’ funds. The change also has no impact on our EEV financial statements.

  5. There will be a conference call today for media at 09.00am GMT+1/BST hosted by Tidjane Thiam, Group Chief Executive. Dial-in telephone number: +44 (0)20 3140 0668. Passcode: 480568#.

  6. A presentation to analysts will be webcast live at 11.00am GMT+1/BST from the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. This can be viewed live, and as a replay, on the corporate website via the link below:
    http://www.prudential.co.uk/prudential-plc/investors/resultspresentations/resultsday/

    Alternatively, a dial-in facility will be available to listen to the presentation: Please allow time ahead of the presentation to join the call (lines open half an hour before the presentation is due to start, i.e. from 10.30am GMT+1/BST). Dial-in: +44 (0)20 8817 9301. Playback: +44 (0)20 7769 6425, Passcode: 5277888#. This will be available from approximately 2.00pm GMT+1/BST on 5 August 2011 until 11.59pm GMT+1/BST on 12 August 2011.

    A copy of this announcement can be found at www.prudential.co.uk/prudential-plc/media

  7. High resolution photographs are available to the media free of charge at http://www.prudential.co.uk/prudential-plc/media/media_library

  8. Total number of Prudential plc shares in issue as at 30 June 2011 was 2,547,717,375.

  9. Financial Calendar 2011:

    Third Quarter 2011 Interim Management Statement 8 November 2011
    Investor Conference 15-17 November 2011
    2011 Interim Dividend  
    Ex-dividend date 17 August 2011 (UK, Irish and Singapore shareholders)
    18 August 2011 (Hong Kong shareholders)
    Record date 19 August 2011
    Payment of dividend 22 September 2011 (UK, Irish and Hong Kong shareholders)
    On or about 29 September 2011 (Singapore shareholders)


  10. About Prudential plc
    Prudential plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute one of the world's leading financial services groups. It provides insurance and financial services through its subsidiaries and affiliates throughout the world. It has been in existence for over 160 years and has £349.5 billion in assets under management (as at 30 June 2011). 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.

  11. Forward-Looking Statements
    This statement may contain certain "forward-looking statements" with respect to certain of Prudential's plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. By their nature, all forward-looking statements involve risk and uncertainty. A number of important factors could cause Prudential's 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, future market conditions, fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities, including, for example, new government initiatives related to the financial crisis and the effect of the European Union's "Solvency II" requirements on Prudential's capital maintenance requirements; the impact of competition, inflation, and deflation; experience in particular with regard to 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 changes in capital, solvency standards or accounting standards, and tax and other legislation and regulations in the jurisdictions in which Prudential and its affiliates operate; and the impact of legal actions and disputes. 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 Prudential's actual future financial condition or performance or other indicated results to differ, possibly materially, from those anticipated in Prudential's forward-looking statements can be found under the heading "Risk factors" in Prudential's most recent Annual Report and in Item 3 "Risk Factors" of Prudential's most recent annual report on Form 20-F filed with the U.S. Securities and Exchange Commission. Prudential's most recent Annual Report and Form 20-F are available on its website at www.prudential.co.uk.

    Any forward-looking statements contained in this statement are made only as of the date hereof. Prudential undertakes no obligation to update the forward-looking statements contained in this statement 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 Prospectus Rules, the Listing Rules, the Disclosure and Transparency Rules, the Hong Kong Listing Rules or the SGX-ST listing rules.

1 Asia 2010 comparative APE new business sales and new business profit exclude the Japanese insurance operations which ceased writing new business from 15 February 2010.

2 Before allowing for the interim dividend.

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).

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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).