18 Nov 2014

Prudential plc Third Quarter 2014 Interim Management Statement

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Prudential plc Third Quarter 2014 Interim Management Statement

  • Prudential sustaining strong profitable growth
  • Group new business profits of £1,514 million year-to-date, up 17 per cent1
  • Asia new business profit increased 15 per cent1, to £775 million
  • Eastspring third party net inflows of £3.7 billion2
  • US new business profit increased 16 per cent1, to £530 million
  • UK new business profit increased 28 per cent, to £209 million
  • M&G third party net inflows of £5.9 billion year-to-date, with external funds under management up 8 per cent

Tidjane Thiam, Group Chief Executive, said:

“Prudential has continued to make good progress in the third quarter, with new business profit3 for the first nine months of the year of £1,514 million, up 17 per cent on a constant exchange rate basis (up 6 per cent on an actual exchange rate basis). We have seen strong contributions across the Group, with year-to-date double-digit growth in both new business profit and new business APE sales in each of our three life insurance businesses in Asia, the US and the UK, and net inflows of £9.6 billion2 in our asset management businesses.

“In Asia, new business profit increased by 15 per cent to £775 million, driven by APE sales growth of 14 per cent, both at constant exchange rates, demonstrating the strength of our broad based regional platform. Our diversification by country, product and distribution channel is at the heart of our Asia strategy and has enabled continued growth despite short-term challenges in some of our key countries in the region. Our long-term growth potential in the region is strong, underpinned by favourable structural dynamics in our chosen markets.

“In the US, we continue to manage new business volumes within our annual risk appetite and to pro-actively diversify our product mix. Jackson’s new business profit increased by 16 per cent at constant exchange rates to £530 million, reflecting attractive product economics in our traditional variable annuity business and increased contribution from Elite Access.

“New business profit in our UK life business increased by 28 per cent to £209 million, a strong performance. In our retail business, APE sales are nearly at the same levels as last year, despite the disruption in the individual annuity market, reflecting increased appetite among individual investors for our savings and investments products, particularly our with-profits bonds. Our selective approach to wholesale business has seen us write six bulk annuity transactions in the year-to-date, contributing new business profit of £88 million.

“Our performance in 2014 across geographies is strong: our disciplined execution in pursuing clearly defined long-term opportunities in Asia, the US and the UK, has continued to drive profitable growth, in spite of a challenging environment. We remain confident about our prospects for the rest of the year and our ability to create lasting long-term value for our customers and shareholders.”

BUSINESS UNIT REVIEW

As highlighted in our previous 2014 financial results announcements, there has been significant fluctuation in the value of a number of currencies in our key markets. In periods of currency volatility, the translation into UK sterling of our country results will be significantly impacted by currency effects, potentially masking the underlying performance of our businesses operating in foreign currencies. In that context, it is worth noting that the actual flows that we collect from our customers in Asia and the US are received in local currency, and that those flows are reinvested in local currency so that our businesses are fundamentally domestic businesses. As a result, we believe that the most appropriate way to assess the operational performance of our businesses is to look at what they have achieved on a local currency basis, in other words in terms of the actual flows they have collected which are expressed and measured in local currency, rather than the translation of those flows into sterling. Therefore, in this section, each time we comment on the performance of our businesses, we focus on performance measured in local currency (presented here by reference to percentage growth expressed at constant exchange rates) unless otherwise stated.

ASIA
The quality of our regional platform has ensured the continued delivery of profitable growth despite challenging conditions in some of our key markets. In the first nine months of 2014, new business profit grew 15 per cent to £775 million (1 per cent on an actual exchange rate (AER) basis), driven by APE sales growth of 14 per cent to £1,544 million (AER: 1 per cent).

In the discrete third quarter, APE sales increased by 17 per cent to £548 million, the highest quarterly sales volume in the year-to-date, with double-digit growth across both agency and bancassurance channels. In particular, the renewed and expanded agreement with Standard Chartered Bank (SCB), which commenced on 1 July, has had a good start with third quarter APE sales 40 per cent higher year-on-year and up 30 per cent compared to the second quarter of 2014.

Our focus on our health and protection offering through the agency channel in our chosen markets of South East Asia including Hong Kong continues to underpin the strength of our performance in this region. These ‘sweet spot’4 markets saw new business profit increase by 17 per cent and APE sales increase by 14 per cent in the first nine months of the year. In the discrete third quarter, new business profit from these markets grew by 25 per cent year-on-year, reflecting strong contributions from both our agency and our bancassurance channels.

Hong Kong delivered excellent APE sales growth of 36 per cent to £424 million. This strong performance has been led by our agency channel, through a combination of growth in active agents and higher agent productivity, and the on-going popularity of our products with customers from mainland China. We are seeing strong momentum across our product range, with increased levels of health and protection sales and continued demand for our established participating products.

In Singapore, APE sales increased 9 per cent to £258 million. This performance is mainly a result of an increase in agency volumes, which grew 19 per cent led by regular premium business, reflecting growth in active manpower and improvements in agent productivity. In the bancassurance channel, our arrangement with Maybank ceased during the third quarter, negatively impacting sales. On a like for like basis, bancassurance sales grew by 12 per cent in the third quarter and we continue to benefit from the strength of our partnerships with United Overseas Bank (UOB), and with SCB where monthly sales reached record levels in September.

Indonesia has had a challenging year-to-date with natural disasters impacting the first quarter, and uncertainty about the outcome of the Presidential elections impacting overall industry performance in the second and third quarters. Against these short-term headwinds, APE sales of £264 million are 4 per cent lower than the prior year. However, we have outperformed the market as we have increased our market share in the year-to-date. We have seen positive month-on-month momentum in the quarter, confirming that once current headwinds subside, the long-term potential of the life insurance market in Indonesia remains compelling: we are well placed to meet the protection and savings needs of a rapidly growing middle class who are mostly uninsured.

In Malaysia, the economic climate has been challenging. The country has experienced lower levels of private consumption and higher public debt, uncertainty regarding reforms to fuel subsidies and the introduction of a new Goods and Services Tax (GST) effective from 2015. In this context, our APE sales have grown by 3 per cent in the first nine months. We continue to make good progress in the Bumi channel, where we have focused our efforts for a few years now, achieving a 20 per cent increase in our APE sales of Takaful products. Although that business has lower case sizes and therefore contributes less to the APE sales growth, we are laying the foundations of future profitable growth in a segment that constitutes the majority of the population of Malaysia.

In our other sweet spot4 markets, we have continued to make good progress. The success of our distribution deal with Thanachart Bank is transforming the scale of our business in Thailand with APE sales growth of 46 per cent to £60 million. Vietnam APE sales were up 15 per cent, primarily reflecting increases in agency productivity. In the Philippines, overall APE sales for the nine months fell by 3 per cent as we continue to increase the focus of the business on regular premium sales. Discrete third quarter APE sales grew by 9 per cent. Sales of regular premium are at the heart of our performance in Asia and we are implementing this well tried approach with success in this nascent market where APE sales of regular premium products were up 25 per cent in the quarter.

Among our other markets, our joint venture with CITIC in China continues to see growing contributions in both the agency and bank channels, with APE sales increasing 27 per cent overall. In India, our joint venture with ICICI is performing well in a challenging market, with APE sales up 6 per cent year-to-date. Our third quarter sales increased strongly and were 29 per cent above prior year, benefitting from the recent improvement in sentiment in India. Our niche operations in Korea and Taiwan remain focused on selective participation, with combined year-to-date APE sales growth of 11 per cent.

Our asset management business, Eastspring Investments, saw record net third party inflows2 of £3.7 billion in the first 9 months of the year, up 95 per cent. These net inflows were driven by several large new institutional mandates and inflows from retail funds in India, China, Japan and Taiwan. Overall funds under management5 at 30 September 2014 were £72.6 billion, up 24 per cent on prior year as a result of the positive net inflows and market movements.

The scale, resilience and diversity of our business platform in Asia combined with the powerful, long-term structural trends of a rapidly growing and increasingly wealthy middle class population with significant savings and protection needs, continues to underpin our long-term profitable growth prospects in the region.

US
Jackson’s new business profit was up 16 per cent (AER: 8 per cent) to £530 million in the first nine months of 2014. We continue to write business at overall new business margins close to post crisis highs, demonstrating the positive effect of pro-active product and pricing actions that have helped to mitigate the adverse impact of the low interest rate environment.

Jackson achieved total retail APE sales of £1,172 million in the year-to-date, representing an increase of 12 per cent. These sales were achieved while continuing to write new business at aggregate internal rates of return in excess of 20 per cent and with a payback period of two years. Including institutional sales, total APE sales increased 11 per cent to £1,235 million.

APE sales from variable annuities increased 19 per cent to £1,103 million, with continued improvement in the diversification of our product mix. The success of Elite Access, our variable annuity without living benefits, saw APE sales up 29 per cent at £229 million, contributing to an increase in the share of non-living benefit variable annuity sales to a new high of 33 per cent of total variable annuity APE sales (2013: 30 per cent).

Jackson remains focused on managing sales volumes of variable annuities with living benefits to maintain an appropriate balance of our revenue streams and to match our annual risk appetite. In the third quarter, sales of variable annuities with living benefits were 13 per cent lower than the second quarter in 2014.

At 30 September 2014, Jackson had statutory separate account assets of £75.9 billion, up 13 per cent (AER: 16 per cent) compared to the end of December 2013, as a result of both positive net flows and the significant growth in the underlying market value of the separate account assets over the period.

Fixed annuity APE sales of £41 million remained flat compared to 2013, while fixed index annuity APE sales of £28 million decreased 64 per cent, primarily as a result of product changes implemented in late 2013 to ensure appropriate returns on shareholder capital.

Curian Capital, the specialised asset management company of Jackson that provides innovative fee-based separately managed accounts, had assets under management of £7.4 billion at the end of September 2014 compared with £6.4 billion at the same point in 2013, as a result of positive net flows and market appreciation during the period.

Jackson’s strategy is unchanged, with a primary focus on delivering earnings and cash. We continue to price new business on a conservative basis, targeting value over volume. Jackson completed a review of policyholder behaviour during the third quarter, which showed that experience is generally in line with our assumptions. Our hedging remains focused on optimising the economics of our exposures over time while maintaining a strong balance sheet.

UK, Europe and Africa
Our UK business continues to focus on its core strengths of with-profits and retirement solutions. Our strong brand, investment track record and experience in providing income in retirement have enabled us to deliver a 28 per cent increase in new business profit to £209 million and APE sales growth of 20 per cent to £648 million during the first nine months of 2014.

The significant reforms of the pensions industry announced by the UK Government, including removal of the requirement to purchase a pension annuity from April 2015, have resulted in an increasing proportion of customers deferring the decision to convert their pension savings into retirement income. The more recent announcement on changes to tax treatment of pensions after death is consistent with these wider pension reforms and is welcomed. The increased flexibility afforded by these reforms should ultimately help create an environment where more people are encouraged to save. The changes have also opened up opportunities for us to meet customer needs for alternative retirement solutions, including income drawdown.

Within our retailbusiness, we saw strong sales across our range of retail investment products, in particular in onshore and offshore bonds, individual pensions and income drawdown, which collectively increased 37 per cent. These balanced a 47 per cent reduction in individual annuities, reflecting the slowdown in the market following the UK Budget announcement. Overall retail APE sales of £507 million were only 3 per cent lower than the first nine months of 2013, and increased by 5 per cent in the discrete third quarter on the strength of sales in investment products. Retail new business profit was 22 per cent lower year-to-date, largely due to the reduced sales of individual annuities.

Onshore bondsAPE sales of £162 million increased by 29 per cent, reflecting the strength of our investment proposition. APE sales from onshore with-profits bonds of £149 million, were 30 per cent higher, with continuing demand for our non-guaranteed bond. We expect significant ongoing demand for our with-profits bond, with customers attracted by the benefit of a smoothed return to help manage market volatility.
Other retail productsincluding offshore bonds, income drawdown and individual pensions increased by 42 per cent to £142 million. Offshore bond APE sales were 56 per cent higher, reflecting the growing popularity of our with-profits fund. Income drawdown APE sales grew by 128 per cent and individual pensions APE sales increased by 30 per cent, both driven by the strength of our with-profits PruFund offering.

In total, PruFund assets under management have increased 20 per cent to £10.9 billion since the start of the year.

Corporate pensionsAPE sales of £117 million were 15 per cent lower, in line with the trend seen this year, mainly due to changes to government sector pension schemes. We remain the largest provider of Additional Voluntary Contribution plans within the public sector, where we provide schemes for 72 of the 99 public sector authorities in the UK (2013: 68 of the 99).

In the wholesale market, we wrote two additional new bulk annuity deals in the third quarter of 2014, making a total of six in the year-to-date (2013: one), generating cumulative APE sales of £141 million and new business profit of £88 million in the first nine months (2013: APE sales £15 million, new business profit £8 million). Our expertise and capabilities in this market including considerable longevity experience, operational scale and solid investment track record, are increasingly in demand. Our approach to bulk transactions in the UK will continue to be one of selective participation, focusing on those opportunities where we can bring both significant value to our customers and meet our shareholder return requirements.

While the UK retirement income market continues to undergo significant change, our business remains well placed to prosper in this new environment through its ongoing focus on its core strengths of with-profits and retirement solutions.

On 10 November 2014, Prudential Assurance Company Limited announced an agreement to sell its 25 per cent equity stake in the PruHealth and PruProtect joint venture to Discovery Group Europe Limited (“Discovery”) for £155 million in cash. This transaction sees Prudential UK realise its investment at attractive terms and creates strategic flexibility to participate in the UK protection market.

We are pleased to have announced our entry into the Kenyan life insurance market during the third quarter, with the acquisition of Shield Assurance Company Limited. This represents our second operation in the nascent African life insurance industry, following the acquisition of Express Life in Ghana, which completed earlier this year.

M&G
M&G has had a good quarter. Year-to-date retail net fund inflows totalled £5.3 billion with £1.5 billion of this received during the third quarter. Continental Europe continues to drive the growth, with net inflows of £6.2 billion for the first nine months of the year (2013: £6.4 billion), more than offsetting net outflows of £1.1 billion in the UK. The strength of our performance in Continental Europe has increased funds under management from this region to a record high of £29.6 billion, up 34 per cent over the past 12 months. Total retail funds under management stand at £73.0 billion, up 13 per cent compared with 30 September 2013, with assets from Continental Europe now accounting for 41 per cent (2013: 34 per cent) of the total.

M&G’s institutionalbusiness saw year-to-date net inflows of £0.6 billion (2013: £3.0 billion). Both the current year and prior year periods are impacted by flows from a single large but low-margin mandate. Excluding these, institutional net inflows were more consistent with prior year, at £1.4 billion (2013: £1.5 billion). Sales of alternative credit products remain strong, especially inflation-linked investment strategies, along with leveraged loan, infrastructure and real estate finance mandates. Overall, institutional funds under management increased to £61.6 billion, up 3 per cent year-on-year.

M&G attracted total net fund inflows of £1.7 billion during the third quarter, contributing to cumulative net inflows for the nine months to September 2014 of £5.9 billion (2013: £8.9 billion). Total external client assets of £134.6 billion at 30 September 2014 represent an increase of 8 per cent compared to one year ago. Total funds under management now stand at £257.3 billion (2013: £242.2 billion), with third-party external assets accounting for 52 per cent (2013: 51 per cent) of the total.

M&G continues to seek diversification by both asset class and geography, while remaining focused on delivering excellent investment performance and service to its clients.

BALANCE SHEET
Our balance sheet remains resilient and conservatively positioned. As at 30 September 2014, our IGD surplus was estimated at £4.1 billion, after deducting the 2014 interim dividend of £0.3 billion. The estimated IGD surplus is equivalent to a cover of 2.3 times.

OUTLOOK
The Group has delivered a strong performance in the third quarter.

In recent weeks we have seen increased volatility in investment markets, reflecting rising uncertainty. This is driven by a number of factors including the potential impacts of the withdrawal of central bank support in the US, the persistent difficulties of the Eurozone, the significant movements observed in commodity prices and rising geo-political risks. Against this challenging backdrop, our results demonstrate the quality of our strategy and of our execution, focusing on the provision of products and services that address our customers’ long-term needs in our chosen markets and on capturing the specific structural growth opportunities available to us in Asia, the US and the UK.

In Asia, the diversity of our platform, the quality of our strategy and the provision of products meeting the needs of our customers continue to drive our performance. This year, we have operated with significant macroeconomic and political uncertainty, in Indonesia, in Thailand and most recently in Hong Kong. Despite these challenges, we have continued to execute well, taking actions when and where necessary to continue to deliver a strong performance at the regional level, whatever challenges we meet at a country by country level. We continue to build on our regional distribution platform by expanding our agency distribution while also strengthening our bancassurance channel, most recently this year through the renewal of the pan regional Standard Chartered relationship for another fifteen years. The strength of our brand, the value our products bring to our thirteen million customers, our expanding distribution presence and the quality of our teams leave us well positioned to continue to deliver value to customers and sustained, profitable growth for our shareholders.

In the US and the UK we continue to operate with discipline within our chosen market segments, prioritising the generation of earnings and cash over volume. Our UK life business aims to build on its strong existing expertise in investment products, particularly in with-profits, and in the retirement market to deliver a strong performance in a more supportive context where new opportunities have appeared, following the recent reforms.

In these times of growing uncertainty, pro-active risk management and a resilient, conservatively-managed balance sheet are more important than ever. The Group’s balance sheet, solvency capital and liquidity remain strong and defensively positioned, ensuring that we are well-placed to meet our long-term commitment to our customers through all stages of the economic cycle.

We remain confident about our prospects for the rest of the year and our ability to create lasting long-term value for our customers and shareholders.

Q3 2014 Business Unit financial highlights

New Business Profit (post tax)6 YTD 2014 YTD 2013 YTD 2014 v 2013
AER AER CER AER CER
Asia £775m £767m £673m 1% 15%
US £530m £492m £455m 8% 16%
UK £209m £163m £163m 28% 28%
Total Group Insurance £1,514m £1,422m £1,291m 6% 17%
Q3 2014 Q3 2013 Q3 2014 v 2013
AER AER CER AER CER
Asia £281m £265m £243m 6% 16%
US £154m £181m £167m (15)% (8)%
UK £64m £63m £63m 2% 2%
Total Group Insurance £499m £509m £473m (2)% 5%
Sales - APE YTD 2014 YTD 2013
YTD 2014 v 2013
AER AER CER AER CER
Asia £1,544m £1,523m £1,354m 1% 14%
US £1,235m £1,202m £1,113m 3% 11%
UK £648m £540m £540m 20% 20%
Total Group Insurance £3,427m £3,265m £3,007m 5% 14%
Q3 2014 Q3 2013 Q3 2014 v 2013
AER AER CER AER CER
Asia £548m £513m £470m 7% 17%
US £364m £405m £377m (10)% (3)%
UK £215m £185m £185m 16% 16%
Total Group Insurance £1,127m £1,103m £1,032m 2% 9%
Investment Flows YTD 2014 YTD 2013 YTD 2014 v 20137
AER AER CER AER CER
Gross inflows
Retail £21.6bn £21.3bn £21.3bn 1 % 1 %
Institutional £6.8bn £10.6bn £10.6bn (36)% (36)%
M&G - total £28.4bn £31.9bn £31.9bn (11)% (11)%
Eastspring Investments8 £10.6bn £9.6bn £8.8bn 10% 20%
Total Group £39.0bn £41.5bn £40.7bn (6)% (4)%
Net inflows
Retail £5.3bn £5.9bn £5.9bn (10)% (10)%
Institutional £0.6bn £3.0bn £3.0bn (81)% (81)%
M&G - total £5.9bn £8.9bn £8.9bn (34)% (34)%
Eastspring Investments8 £3.7bn £2.0bn £1.9bn 82% 95%
Total Group £9.6bn £10.9bn £10.8bn (12)% (11)%
Q3 2014 Q3 2013 Q3 2014 v Q3 20137
AER AER CER AER CER
Gross inflows
Retail £6.8bn £5.9bn £5.9bn 15% 15%
Institutional £2.3bn £5.4bn £5.4bn (57)% (57)%
M&G - total £9.1bn £11.3bn £11.3bn (19)% (19)%
Eastspring Investments9 £3.7bn £2.2bn £2.1bn 67% 81%
Total Group £12.8bn £13.5bn £13.4bn (5)% (4)%
Net inflows
Retail £1.5bn £1.1bn £1.1bn 35% 35%
Institutional £0.2bn £4.0bn £4.0bn (96)% (96)%
M&G - total £1.7bn £5.1bn £5.1bn (67)% (67)%
Eastspring Investments9 £1.2bn £0.0bn £0.0bn n/a n/a
Total Group £2.9bn £5.1bn £5.1bn (43)% (43)%
Funds Under Management5 YTD 2014 YTD 2013 YTD 2014 v YTD 20137
AER AER CER AER CER
M&G £257.3bn £242.2bn £242.2bn 6% 6%
Eastspring Investments £72.6bn £59.7bn £58.6bn 22% 24%
Total Group £329.9bn £301.9bn £300.8bn 9% 10%
External Funds Under Management
M&G £134.6bn £124.3bn £124.3bn 8% 8%
Eastspring Investments10 £22.9bn £18.5bn £18.0bn 24% 27%
Total Group £157.5bn £142.8bn £142.3bn 10% 11%

ENDS

Enquiries:

Media Investors/Analysts
Jonathan Oliver +44 (0)20 7548 3719 Raghu Hariharan +44 (0)20 7548 2871
Tom Willetts +44 (0)20 7548 2776 Richard Gradidge +44 (0)20 7548 3860

1 The period since June 2013 has seen depreciation of currencies in some of the Group’s key Asia markets and significant strengthening of sterling. In order to reflect underlying performance, and to be consistent with the currency of transactions of our businesses in Asia and the US, period on period percentage increases referred to in this interim management statement are stated on a constant exchange rate basis. Increases on an actual exchange rate basis, which incorporate the effect of the exchange rate movements, are shown in the financial highlights section
2 Net investment inflows excluding year-to-date Eastspring Money Market Funds net inflows of £0.1 billion (2013: net outflows of £0.1 billion)
3 As communicated in the full year 2013 results and as reported at Q1 2014 and at HY 2014 the presentation of EEV results has been altered to a post-tax basis from 2014. All references to new business profit in this release are on a post-tax basis
4 Sweet spot markets include Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam
5 Total funds under management include all external and internal funds
6 New business profits have been calculated by applying the assumptions set out in schedule 5
7 Percentages based on unrounded numbers
8 Gross and net investment inflows excluding year-to-date Eastspring Money Market Funds. Investment flows exclude Eastspring Money Market Funds (MMF) gross inflows of £50.4 billion (2013: £45.5 billion) and net inflows of £0.1 billion (2013: net outflows of £0.1 billion)
9 Gross and net investment inflows excluding discrete third quarter Eastspring Money Market Funds. Investment flows for the discrete third quarter exclude Eastspring Money Market Funds gross inflows of £18.3 billion (2013: £14.7 billion) and net inflows of £0.1 billion (2013: net outflows of £0.2 billion)
10 External funds under management for Eastspring excluding Money Market Funds as set out in schedule 3

Notes:

1. Annual premium equivalent (APE) sales comprise regular premium sales plus one-tenth of single premium insurance sales and are subject to rounding.
2. Present Value of New Business Premiums (PVNBP) are calculated as equalling single premiums plus the present value of expected new business premiums of regular premium business, allowing for lapses and other assumptions made in determining the EEV new business contribution.
3. NBP assumptions for the period are detailed in the accompanying schedule 5.
4. Period-on-period percentage increases are stated on a constant exchange rate basis unless otherwise stated. Constant exchange rates results are calculated by translating prior period results using the current period foreign exchange rate i.e. current period average rates for the income statement and current period closing rates for the balance sheet.
5. There will be a conference call today for the media at 09.15 (UK) / 17.15 (Hong Kong) hosted by Tidjane Thiam, Group Chief Executive. Dial in telephone number: (UK) +44 (0)20 3139 4830 (Hong Kong) +852 3068 9834 Pin: 72659606#.
6. There will be a conference call today for analysts and investors at 10.30 (UK) / 18.30 (Hong Kong) hosted by Tidjane Thiam, Group Chief Executive. Dial in telephone number: +44 (0)20 3139 4830 / 0808 237 0030 (Freephone UK) Pin: 77765171# Playback (PIN: 651007#) +44(0)20 3426 2807 / 0808 237 0026 (Freephone UK – available from 12.30 (UK Time) on 18 November 2014 until 23.59 (UK Time) on 17 December 2014). Please follow the link for international dial-in numbers – http://wpc.1726.planetstream.net/001726/FEL_Events_International_Access_List.pdf
7. High resolution photographs are available to the media free of charge at www.prudential.co.uk/prudential-plc/media/media_library or by calling the media office on +44 (0) 207 548 2466.
8. Sales for overseas operations have been reported using average exchange rates for the period as shown in the attached schedules. Reference to prior year figures in the commentary is on an actual exchange rate basis unless stated. An alternative method of presentation is on a constant exchange rate basis shown in supplementary schedules 1B, 2B, 2C, 4B and 4C.
9. 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 more than 166 years and has £457 billion in assets under management (as at 30 June 2014). Prudential plc is not affiliated with Prudential Financial, Inc., or its subsidiary, The Prudential Insurance Company 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 and including, without limitation, statements containing the words “may”, “will”, “should”, “continue”, “aims”, “estimates”, “projects”, “believes”, “intends”, “expects”, “plans”, “seeks” and “anticipates”, and words of similar meaning, 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, including fluctuations in interest rates and exchange rates and the potential for a sustained low-interest rate environment, 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 continuing designation as a global systemically important insurer; the impact of competition, economic growth, 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, accounting standards or relevant regulatory frameworks, 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 its most recent 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 any of 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.
11. The financial information presented in this Interim Management Statement and accompanying schedules is unaudited.

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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).