13 Mar 2012

Prudential plc 2011 Full Year Results

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

ASIA DRIVES PROFITABLE GROWTH AND CASH

IFRS:

  • Operating profit of £2,070 million, up 7 per cent
  • Asia life insurance business operating profit1 of £709 million, up 32 per cent, for the first time the largest contributor2 to Group operating profit
  • Total profit before tax3 of £1,943 million, up 33 per cent
  • Shareholders’ funds of £9.1 billion, up 14 per cent

New Business:

  • EEV new business profit of £2,151 million, up 6 per cent
  • Asia EEV new business profit of £1,056 million, up 22 per cent (excluding India)

Embedded Value:

  • Operating profit of £3,978 million, up 8 per cent
  • Asia life insurance business operating profit1 of £1,764 million, up 22 per cent
  • Shareholders’ funds of £19.6 billion, up 8 per cent, equivalent to 771 pence per share

Capital & Dividend:

  • Underlying free surplus generation4 up 16 per cent to £1,983 million
  • Net remittances from business operations up 18 per cent to £1,105 million; Asia net cash remittance of £206 million
  • Insurance Groups Directive (IGD) capital surplus estimated at £4.0 billion; solvency requirements covered 2.75 times
  • Investment in new business of £553 million, a decrease of 14 per cent
  • 2011 full year dividend increased by 5.6 per cent to 25.19 pence per share, from the new higher base established at full year 2010
  • Minimal direct exposure to PIIGS5 sovereign and bank debt

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

“Prudential has delivered another strong performance in 2011 led by Asia, where our life insurance business1 for the first time became the single largest contributor2 to our Group IFRS operating profit. Since 2008, Asia’s contribution to this benchmark profit measure has almost trebled from £257 million to £709 million.

“As a Group, we have continued to grow across our key metrics of IFRS, new business profit and cash while maintaining a robust capital position. This performance has been achieved against both a more challenging global economy in 2011 and the demanding comparator of 2010, our best year ever until now. In line with our strategy of value optimisation and capital conservation, higher sales and higher profit in 2011 have been achieved while consuming less capital in both relative and absolute terms than in 2010.

“The heart of our strategy remains Asia, where our positive momentum has been maintained in 2011, with total IFRS operating profit up 30 per cent and a cash remittance to the Group of £206 million. Asia is generating both growth and cash and our focus on the fast-growing markets of South-East Asia continues to pay off. In the US, Jackson is one of the leading providers of variable annuities in the world’s largest retirement market. Compared to 2010, we have continued to grow our sales profitably while increasing cash generation, with new business profit up 7 per cent and new business margin at a level significantly above historic levels. In the UK, we continued to focus on value over volume and on increased IFRS operating profit. In asset management, both M&G and our business in Asia have seen continued net inflows and record IFRS operating profit.

“We remain on track to deliver the 2013 profit growth and cash generation objectives we announced in December 2010. In this uncertain macroeconomic environment, our clear strategy and the strength of our products and distribution – combined with our balanced portfolio of businesses and market-leading positions in Asia – mean we are well positioned to deliver continued relative outperformance in the medium-term.”

Contact:      
       
Media   Investors/Analysts  
Jonathan Oliver +44 (0)20 7548 3719 David Collins +44 (0)20 7548 2871
Robin Tozer +44 (0)20 7548 2776 Amit Deshpande +44 (0)20 7548 2290

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 and expanded by the Additional Guidance on EEV disclosures published in October 2005. 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. There will be a conference call today for media at 09.15am GMT hosted by Tidjane Thiam, Group Chief Executive. UK dial-in telephone number: +44 (0)20 3140 0668, Hong Kong dial-in telephone number: +852 3060 9173, Passcode: 906393#.
   
5. A presentation to analysts will be webcast live at 12.30pm GMT from UBS, 1 Finsbury Avenue, London, EC2M 2PP. This can be viewed live, and as a replay, on the corporate website via the link below:
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, ie from 12.00pm GMT) Dial-in: +44 (0)20 8817 9301, Playback: +44 (0)20 7769 6425, Passcode: 6853865#. This will be available from approximately 3.30pm GMT on 13 March 2012 until 11.59pm GMT on 20 March 2012.
A copy of this announcement can be found at www.prudential.co.uk/prudential-plc/media

   
6. High resolution photographs are available to the media free of charge at www.prudential.co.uk/prudential-plc/media/media_library
   
7. Total number of Prudential plc shares in issue as at 31 December 2011 was 2,548,039,330.
   
8.
2011 Full Year Dividend
Ex-dividend date 28 March 2012 (UK, Ireland and Singapore shareholders)
29 March 2012 (Hong Kong shareholders)
Record date 30 March 2012
Payment of dividend 24 May 2012 (UK, Ireland and Hong Kong shareholders)
On or about 31 May 2012 (Singapore shareholders)
1 June 2012 (ADR holders)
   
9. About Prudential plc
Prudential plc is incorporated in England and Wales, 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 £351 billion in assets under management (as at 31 December 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.
   
10. Forward-Looking Statements
This document may contain ‘forward-looking statements’ with respect to certain of Prudential's plans and its goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements that are not historical facts, including statements about Prudential’s beliefs and expectations, are forward-looking statements. These statements are based on plans, estimates and projections as at the time they are made, and therefore undue reliance should not be placed 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 ‘Risk factors’ heading in this document and the Annual Report and the ‘Risk Factors’ heading 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 ‘Risk Factors’ heading of any subsequent Prudential Half Year Financial Report. Prudential's most recent Annual Report, Form 20-F and any subsequent Half Year Financial Report are/will be available on its website at www.prudential.co.uk.
Any forward-looking statements contained in this document speak only as of the date on which they are made. Prudential expressly disclaims any obligation to update the forward-looking statements contained in this document 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 UK Prospectus Rules, the UK Listing Rules, the UK Disclosure and Transparency Rules, the Hong Kong Listing Rules, the SGX-ST listing rules or other applicable laws and regulations.

1 Excluding Eastspring Investments, development costs and Asia regional head office expenses.
2 If long-term business is considered separately from asset management and UK general insurance commission.
3 Attributable to shareholders.
4 Free surplus generated from in-force business net of amounts invested in new business.
5 Portugal, Italy, Ireland, Greece, Spain

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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).