Coronavirus Update

Prudential Plc - Final Year Results

This content has been sourced from: https://www.investegate.co.uk/prudential-plc/rns/p...

PRUDENTIAL PLC

FULL YEAR 2019 RESULTS

 

PRUDENTIAL DELIVERS RESILIENT BROAD-BASED GROWTH IN ASIA

Performance highlights on a constant (and actual) exchange rate basis

  • Group adjusted operating profit1 from continuing operations of $5,310 million, up 20 per cent2 (20 per cent3)
  • Asia adjusted operating profit1 up 14 per cent2 (up 13 per cent3); Asia embedded value up 23 per cent3 to $39.2 billion
  • Double-digit growth2 in new business profit4 in eight markets in Asia
  • Preparations commenced for a minority IPO of Jackson
  • LCSM shareholder surplus5 estimated at $9.5 billion, equivalent to cover ratio of 309 per cent
  • Second interim ordinary dividend of 25.97 cents per share

Mike Wells, Prudential plc's Group Chief Executive, said: "We have delivered another positive performance during 2019, despite significant macroeconomic and geopolitical volatility. Our clear strategy and strong execution have enabled us both to deliver profitable growth and to position ourselves for further growth into the future.

"In Asia, we are focused on growth opportunities. We are building the long-term value of our fast-growing franchise by deepening our strong relationships with existing customers and by acquiring new customer relationships. We are continuing to strengthen our agency and bank channels in Asia, and harnessing the opportunities of digital technology, including Pulse by Prudential, our new end-to-end digital health app. We see continuing opportunities for selective inorganic investment.

"Outside Hong Kong, we delivered a 17 per cent2 increase in APE6 sales and a 29 per cent2 rise in new business profit4. This includes China where APE6 sales were up by 53 per cent2. Fewer visitors from mainland China caused a fall in total Hong Kong APE6 sales by 11 per cent2 and a fall in new business profit4 of 12 per cent2. Adjusted operating profit from Asia insurance operations was $2,993 million, growing by 14 per cent2 with Hong Kong up by 24 per cent2 to $734 million demonstrating the resilience of our business. Our Asia asset manager, Eastspring, performed well, with net external inflows of $8.9 billion7 (2018: net outflows $(2.1) billion7) contributing to average assets under management up 15 per cent3 and adjusted operating profit of $283 million, up 18 per cent2.

"In the US, the world's largest retirement savings market and the continuing transition of millions of Americans into retirement creates a substantial opportunity for Jackson's products. US APE6 sales increased by 8 per cent driven by fixed income and fixed index annuities, in line with our diversification strategy. New business profit4 declined by 28 per cent, reflecting lower interest rates and changes in product mix. US adjusted operating profit1 increased by 20 per cent to $3,070 million, reflecting the impact of lower market-related amortisation of deferred acquisition costs. Higher equity markets also led to US separate account assets increasing by 19 per cent3 to $195.1 billion. Our US business continued its long term track record of delivering cash to the Group, remitting a dividend of $525 million8 during the year.

"As previously stated, in order to diversify at pace, Jackson will need access to additional investment, which we believe would best be provided by third parties. We are today announcing that the Board has determined that the preferred route to achieve this is a minority Initial Public Offering (IPO) of Jackson. We have already taken a number of management actions to support this path. We will now begin detailed engagement with our key stakeholders, with a view to ensuring that Jackson will have the capital strength as a separately listed business to support its continued success as a broad provider of retirement solutions for America's aging population.

"We continue to monitor closely the development of the coronavirus outbreak and are focused on the health and well-being of our customers and staff. The outbreak has slowed economic activity and dampened our sales momentum in Hong Kong and China. Given these conditions, lower levels of new sales activity in affected markets are to be expected with a consequential effect on new business profit. Our in-force business is proving robust. The broad geographic spread of our business across the region and the strength of our recurring premium business model lends considerable resilience to our earnings.  

"I am confident that, with our clear focus on our structural growth markets and our continuing operational improvements, we will continue to deliver profitable growth for our investors and benefits for our stakeholders over the medium and long term."

Summary financials

 

 2019 $m

 

 2018 $m

Change on

AER basis

Change on

CER basis

 

 

 

 

 

Adjusted operating profit from continuing operations1

5,310

4,409

20%

20%

 

 

 

 

 

Operating free surplus generated from continuing operations before US

EEV modelling enhancements9,10

3,764

3,410

10%

10%

 

 

 

 

 

Life new business profit from continuing operations4

4,405

4,707

(6)%

(6)%

 

 

 

 

 

IFRS profit after tax from continuing operations11

1,953

2,881

(32)%

(33)%

 

 

 

 

 

Net cash remittances from business units from continuing operations8,12

1,465

1,417

3%

-

 

 

 

 

 

LCSM shareholder surplus over Group minimum capital requirement5

$9.5bn

$9.7bn

(2)%

-