09 Mar 2011

Prudential plc Full Year 2010 Results

PRUDENTIAL CONTINUES TO DELIVER STRONG RESULTS

New Business:

  • Total APE sales1 of £3,485 million up 23 per cent
  • EEV new business profit margin (% APE) of 58 per cent
  • EEV new business profit1 of £2,028 million up 25 per cent
  • Investment in new business1 of £643 million (2009: £660 million)

IFRS:

  • Operating profit of £1,941 million up 24 per cent
  • Profit for the year after tax of £1,431 million up 112 per cent
  • Shareholders’ funds of £8.0 billion up 28 per cent

Embedded Value:

  • Operating profit of £3,696 million up 20 per cent
  • Shareholders’ funds of £18.2 billion, up 19 per cent, equivalent to 715 pence per share

Capital & Dividend:

  • Insurance Groups Directive (‘IGD’) capital surplus estimated at £4.3 billion
  • Underlying free surplus generation up 21 per cent to £1,714 million
  • 2010 full year dividend increased by 20 per cent to 23.85 pence per share

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

“We have achieved a strong performance in 2010, with results significantly ahead on all key measures. Our disciplined approach to capital allocation, proactive risk management and focus on profitability are generating both growth and cash for our shareholders.

These principles have served us well during the financial crisis, allowing us to emerge from the 2008–2009 period with a stronger balance sheet, higher profits, higher cash flows and an increased dividend. Each part of the Group plays a key role in our strategy. Our flexibility and diversification have been instrumental in allowing us to navigate successfully the economic and market cycle. We have set ourselves ambitious objectives for cash generation not only from Asia but also from other parts of the Group.

The quality of our strategic options, our discipline in putting value ahead of volume and our focus on execution should allow us to continue to grow profitably and to generate significant returns for our shareholders. This is evidenced by the upwards rebasing of the dividend that we have announced today.”

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 3300

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. Asia 2010 and 2009 comparative APE new business sales, new business profit (NBP) and investment in new business exclude the Japanese insurance operations which we have closed to new business with effect from 15 February 2010 and 2009 comparatives exclude the Taiwan agency business disposed of during the second quarter of 2009.
3. Annual premium equivalent (APE) sales comprise regular premium sales plus one-tenth of single premium insurance sales.
4. 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, the shareholders' share of actuarial and other gains and losses on defined benefit pension schemes, costs associated with the terminated AIA transaction, and the gain arising upon the dilution of the Group’s holding in PruHealth. Consistent with the prior year presentation the effect of disposal and results of the Taiwan agency business are shown separately. In addition for EEV basis results, operating profit excludes the effect of changes in economic assumptions and the mark to market value movement on core borrowings.
5. In 2010, the Group amended the presentation of IFRS operating profit for its US insurance operations to remove the net equity hedge accounting effect (incorporating related amortisation of deferred acquisition costs) and include it in short term fluctuations. Prior year comparatives have been amended accordingly. 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.
6. There will be a conference call today for wire services at 09.00am GMT hosted by Tidjane Thiam, Group Chief Executive. Dial in telephone number: +44 (0)20 3140 0668. Passcode: 7193929#.
7. A presentation to analysts will be webcast live at 10.30am GMT 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 10.00 GMT). Dial in: +44 (0)20 8817 9301 Passcode: 4407994#. Playback: +44 (0)20 7769 6425, Passcode, 4407994#. This will be available from approximately 13.30 (GMT) on 9 March 2011 until 23.59 (GMT) on 16 March 2011.
8. High resolution photographs are available to the media free of charge at www.newscast.co.uk on +44 (0) 20 3137 9137 or by calling Prudential press office on +44 (0)20 7548 2466.
9. Total number of Prudential plc shares in issue as at 31 December 2010 was 2,545,594,506.
10. Financial Calendar 2011:

First Quarter 2011 Interim Management Statement 27 April 2011
AGM 19 May 2011
2011 Half Year Results 2 August 2011
Third Quarter 2011 Interim Management Statement 8 November 2011
2010 Full Year Dividend
Ex-dividend date 30 March 2011 (UK, Irish and Singapore shareholders)
31 March 2011 (Hong Kong shareholders)
Record date 1 April 2011
Payment of dividend 26 May 2011 (UK, Irish and Hong Kong shareholders)
On or about 2 June 2011 (Singapore shareholders)
11. 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 £340 billion in assets under management (as at 31 December 2010). 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.
12. 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, as well as under the heading "Risk factors" in any subsequent Prudential Half Year Financial Report. Prudential's most recent Annual Report and any subsequent Half Year Financial Report 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 Excluding Japan which ceased writing new business in 2010.

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

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