1st Quarter Results
Prudential PLC
18 April 2002
Embargo: 07.00 hrs Thursday 18 April 2002
PRUDENTIAL PLC FIRST QUARTER 2002 NEW BUSINESS RESULTS
• Total Group insurance and investment sales of £6.7 billion, up 35 per
cent.
• Record total UK insurance sales of £1.8 billion, an increase of 20 per
cent on the first quarter of 2001.
• Net sales at M&G up 59 per cent on the first quarter of 2001.
• APE sales up 7 per cent at Jackson National Life, principally driven by
sales of fixed annuities and stable value products.
• APE insurance sales in Asia (excluding exceptional Central Provident Fund
sales in 2001) up 24 per cent. Mutual funds under management grew 7 per cent
to £3.4 billion in the quarter.
Prudential's Group Chief Executive, Jonathan Bloomer, commented:
'Good results from across the Group contributed to this strong start to the
year. Our strategy of growing internationally, broadening our distribution reach
and diversifying our product range has once again been fully endorsed.'
UK INSURANCE OPERATIONS
The UK insurance business reported record total sales of £1.8 billion, up 20 per
cent on the same period last year (total sales were up 31 per cent excluding
sales of £126 million in 2001 through the direct sales force which closed during
that year). Sales on an APE basis (excluding sales in 2001 through the direct
sales force) were up 13 per cent.
In November of last year, we set out our UK strategy in which we stated that the
focus of the business would be on high growth medium to long-term savings
products including annuities, with-profits bonds and corporate pensions. We have
seen strong growth in these product areas during the first quarter of 2002, with
total sales of individual annuities up 16 per cent, life products (including
with-profits bonds) up 96 per cent and corporate pensions up 35 per cent on the
first quarter of last year. These figures exclude sales through the direct sales
force in 2001. These results demonstrate the success that the business is
achieving in building strong multi-channel distribution while continuing to
drive down operating costs.
APE sales via intermediary channels (through independent financial advisers and
consulting actuaries) were £128 million, 22 per cent above the prior year. This
was due mainly to an increase in sales of Prudence Bond, up 113 per cent on the
first quarter of last year to £72 million, reflecting customer preference for
more cautious investments while volatility in equity markets continues. In
January, we launched an enhanced 'no initial charge' with-profits product to
build on the success of Prudence Bond and this has been enthusiastically
received by IFAs. In March, International Prudence Bond was launched which is an
offshore version of the market-leading Prudence Bond in the UK and is the first
new product to be sold under the Prudential International name following the
re-branding of Prudential-owned Scottish Amicable European.
Sales of individual annuities improved on the first quarter of 2001 with total
sales of £315 million up 16 per cent. In particular, direct annuity sales have
remained strong with a year-on-year increase of 17 per cent. Bulk annuity sales
through intermediaries of £58 million were down from £144 million in the first
quarter of last year, reflecting the uneven nature of this market. Nonetheless,
we expect the bulk annuities market to continue to grow and we are seeing
unprecedented levels of interest in this area.
Within the pensions market our focus has been on larger corporate schemes,
including stakeholder. The characteristics of the one per cent environment now
apply to a broad range of our pension products and in the first quarter of 2002,
sales of £330 million (APE £62 million) were written on stakeholder terms
(representing 90 per cent of total pension sales and 18 per cent of total sales
for the UK insurance business).
We are now the corporate pension scheme provider to one-fifth of FTSE 350
companies and in total manage more than 3,500 pension schemes. Our defined
contribution schemes currently give us access to 5 million people of whom over
400,000 are scheme members. In the first quarter of this year our corporate
pension sales remained strong, with total sales up 35 per cent on the same
period last year.
In the stakeholder market, we currently have over 20,000 designations including
the schemes for the Trades Union Congress and the British Chambers of Commerce
which we underwrite and a number of larger public sector schemes, giving us
access to around 2.5 million employees. Many of the larger employers have not
designated a stakeholder provider because their current pension arrangements do
not require them to do so. However, we believe that our strong defined
contribution offering, including stakeholder, positions us well to take
advantage of the move from defined benefit to defined contribution in the market
for larger company and public sector pensions.
M&G
Gross fund inflows at M&G during the first quarter of 2002 were £427 million.
This figure includes £171 million in respect of the successful rollover of a
maturing investment trust (the M&G Recovery Investment Trust) into a new
investment trust. Excluding this rollover, gross inflows of £256 million were
only one per cent less than the first quarter of 2001 despite uncertain equity
markets. Net fund inflows were up 59 per cent to £81 million.
Fund inflows from ISA sales from the beginning of January until the end of the
tax year were £89 million, down 20 per cent on the equivalent period last year.
This compares favourably with industry ISA season sales which are believed to be
down by between 30-40 per cent. M&G experienced a strong end to the ISA season,
with sales volumes in March and the first five days of April double those of the
previous two months combined and only 12 per cent down on 2001.
M&G's market leadership in fixed interest products was reflected in strong sales
of the M&G Corporate Bond Fund and the M&G High Yield Corporate Bond Fund in the
first quarter. Equity sales were also strong, accounting for 47 per cent of
gross fund inflows excluding investment trust monies.
EGG
Egg will be announcing its Financial Results and New Business Figures for the
first quarter on Wednesday 24 April 2002.
EUROPE
Total sales in the first quarter of £19 million were up 27 per cent on the same
period of last year. This result was primarily due to strong sales in France of
Prudential Europe Vie, the innovative equity-backed life insurance product.
UNITED STATES
APE sales in the first quarter of £136 million were seven per cent higher than
in the same period of 2001. This result was achieved against the background of
continued volatility and intense competition in the US market.
While sales of equity based products continued to be affected by the uncertain
economic climate, JNL again demonstrated its ability to deliver strong, stable
performance in difficult market conditions. Total sales of annuity products of
£668 million were in line with the first quarter of 2001. Both fixed and
variable annuity sales increased month-on-month in the first quarter of 2002.
Fixed annuity sales of £428 million were 23 per cent up on the first quarter of
2001. This performance was achieved in a market in which key competitors
continued to chase top line growth at the expense of product profitability.
These market conditions also affected sales of equity linked indexed (ELI)
annuities which, at £57 million, were down 21 per cent on the first quarter of
2001.
Variable annuity sales of £183 million, while 23 per cent down on the same
period last year, were up 18 per cent on the fourth quarter of 2001. In January,
JNL launched an innovative unbundled variable annuity designed to increase its
competitiveness in the variable annuity market without compromising its product
pricing discipline.
Sales of stable value products of £638 million were up 13 per cent on the same
period of 2001 and included £525 million written under the Medium Term Note
programme.
JNL has continued to make good progress in widening its product range and its
highly rated service and technology capability makes it well positioned for
continued growth and diversification.
ASIA
Prudential Corporation Asia's (PCA) focus on delivering the next phase of
profitable growth has been maintained with a strong increase in new life
business regular premiums, up 33 per cent on the same period last year to £89
million and mutual funds assets under management up 80 per cent to £3.4 billion.
Total sales of insurance products on an APE basis were £96 million, down one per
cent on the same period last year. However, after excluding single premium
Central Provident Fund (CPF) related sales in Singapore which were at
exceptional levels last year due to further government liberalisation of CPF
funds, APE sales of insurance products increased by 24 per cent.
Hong Kong and Malaysia have grown by 50 per cent and 57 per cent respectively
relative to the corresponding period last year, supported by improved agency
productivity and an increasing contribution from bancassurance. Prudential
Taiwan Life has seen strong growth of 15 per cent over the fourth quarter of
2001, due principally to the recently launched regular premium unit linked
product. In Singapore, regular premium sales increased by 29 per cent, and other
operations including Vietnam, India, China, Japan and Korea have also grown very
strongly to £27 million on an APE basis, up almost 60 per cent on last year.
Mutual funds assets under management of £3.4 billion were up seven per cent in
the first quarter. Net mutual fund inflows in the quarter were £120 million. In
Taiwan, net inflows remained strong at £231 million. In India, in line with the
industry, the net seasonal outflow of funds during the first quarter of 2002 was
largely due to tax planning at the end of the Indian fiscal year. In Hong Kong,
Prudential's share of BOCI Prudential Mandatory Provident Fund sales was £21
million with funds under management up 23 per cent in the quarter to £111
million.
PCA, with its significant portfolio of businesses across the region,
multi-channel distribution capabilities, excellent strategic partners, and
customer-focused product expertise, is very well placed to continue delivering
profitable growth in new business.
-ENDS-
ENQUIRIES TO:
Media Investors/Analysts
Geraldine Davies 020 7548 3911 Rebecca Burrows 020 7548 3537
Steve Colton 020 7548 3721
Clare Staley 020 7548 3719
Notes to Editors:
1. There will be a conference call today for wire services at 7.30am on
Tel: 020 8288 4700 hosted by Jonathan Bloomer, Group Chief Executive.
2. There will be a conference call for international investors at 2:30pm (dial
in telephone number: +44 (0) 20 8240 8245, US callers 1 334 323 4040).
Callers to quote 'Prudential New Business' for access to the call.
A recording of this call will be available for replay for one week by
dialling:
UK: 020 8288 4459, US: 1 703 736 7336, access code 638582.
3. Photographs are available at www.newscast.co.uk.
4. Annual premium equivalent (APE) sales comprise regular premium sales plus
one-tenth of single premium insurance and investment sales.
5. Financial Calendar:
Annual General Meeting Thursday 9 May 2002
Interim Results 2002/ Wednesday 24 July 2002
Second quarter new business figures 2002
Third quarter new business figures 2002 Thursday 17 October 2002
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 and results. By their nature, all
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances which are beyond Prudential's control including
among other things, UK domestic and global economic and business conditions,
market related risks such as fluctuations in interest rates and exchange rates,
the policies and actions of regulatory authorities, the impact of competition,
inflation, deflation, the timing, impact and other uncertainties of future
acquisitions or combinations within relevant industries, as well as the impact
of tax and other legislation and other regulations in the jurisdictions in which
Prudential and its affiliates operate. As a result, Prudential's actual future
financial condition, performance and results may differ materially from the
plans, goals, and expectations set forth in Prudential's forward-looking
statements.
Schedule 1
PRUDENTIAL PLC - NEW BUSINESS - QUARTER 1 2002 VERSUS QUARTER 1 2001
TOTAL INSURANCE AND INVESTMENT NEW BUSINESS
UK & Europe US Asia Total
2002 2001 +/- 2002 2001 +/- 2002 2001 +/- 2002 2001 +/-
(%) (%) (%) (%)
£m £m £m £m £m £m £m £m
Total Insurance Products 1,817 1,513 20% 1,311 1,229 7% 166 373 (55%) 3,294 3,115 6%
Total Investment Products - 281 296 (5%) - - - 3,169 1,582 100% 3,450 1,878 84%
Gross Inflows (1)
Group Total 2,098 1,809 16% 1,311 1,229 7% 3,335 1,955 71% 6,744 4,993 35%
INSURANCE OPERATIONS
Single Regular Total Annual Equivalents (4)
2002 2001 +/- 2002 2001 +/- 2002 2001 +/- 2002 2001 +/-
(%) (%) (%) (%)
£m £m £m £m £m £m £m £m
UK Insurance Operations :
Direct Distribution (2) :
Individual Pensions 5 3 67% 3 2 50% 8 5 60% 3 2 50%
Corporate Pensions 269 179 50% 23 36 (36%) 292 215 36% 50 54 (7%)
Life 17 5 240% 1 - - 18 5 260% 3 1 200%
Individual Annuities 190 162 17% - - - 190 162 17% 19 16 19%
Sub-Total 481 349 38% 27 38 (29%) 508 387 31% 75 73 3%
DSS Rebates 195 175 11% - - - 195 175 11% 20 18 11%
Total 676 524 29% 27 38 (29%) 703 562 25% 95 91 4%
Intermediated Distribution (2):
Individual Pensions 32 54 (41%) 9 15 (40%) 41 69 (41%) 12 21 (43%)
Corporate Pensions 20 17 18% 7 4 75% 27 21 29% 9 6 50%
Life 795 403 97% 4 8 (50%) 799 411 94% 84 48 75%
Individual Annuities 125 110 14% - - - 125 110 14% 12 11 9%
Bulk Annuities 58 144 (60%) - - - 58 144 (60%) 6 14 (57%)
Sub-Total 1,030 728 41% 20 27 (26%) 1,050 755 39% 123 100 23%
DSS Rebates 45 55 (18%) - - - 45 55 (18%) 5 5 0%
Total 1,075 783 37% 20 27 (26%) 1,095 810 35% 128 105 22%
Total (2):
Individual Pensions 37 57 (35%) 12 17 (29%) 49 74 (34%) 16 23 (30%)
Corporate Pensions 289 196 47% 30 40 (25%) 319 236 35% 59 60 (2%)
Life 812 408 99% 5 8 (38%) 817 416 96% 86 49 76%
Individual Annuities 315 272 16% - - - 315 272 16% 31 27 15%
Bulk Annuities 58 144 (60%) - - - 58 144 (60%) 6 14 (57%)
Sub-Total 1,511 1,077 40% 47 65 (28%) 1,558 1,142 36% 198 173 14%
DSS Rebates 240 230 4% - - - 240 230 4% 24 23 4%
Total 1,751 1,307 34% 47 65 (28%) 1,798 1,372 31% 222 196 13%
Closed distribution channel (3) - 115 - - 11 - - 126 - - 22 -
Total UK Insurance Operations 1,751 1,422 23% 47 76 (38%) 1,798 1,498 20% 222 218 2%
European Insurance Operations:
Insurance Products 14 11 27% 5 4 25% 19 15 27% 6 5 20%
Total European Insurance 14 11 27% 5 4 25% 19 15 27% 6 5 20%
Operations
Total UK & European Insurance 1,765 1,433 23% 52 80 (35%) 1,817 1,513 20% 228 223 2%
Operations
US Insurance Operations:
Fixed Annuities 428 348 23% - - - 428 348 23% 43 35 23%
Equity Linked Index Annuities 57 72 (21%) - - - 57 72 (21%) 6 7 (14%)
Variable Annuities 183 239 (23%) - - - 183 239 (23%) 18 24 (25%)
Sub-total Annuities 668 659 1% - - - 668 659 1% 67 66 2%
Guaranteed Investment 113 154 (27%) - - - 113 154 (27%) 11 15 (27%)
Contracts
GIC - Medium Term Note 525 411 28% - - - 525 411 28% 53 41 29%
Life - - - 5 5 0% 5 5 0% 5 5 0%
Total US Insurance Operations 1,306 1,224 7% 5 5 0% 1,311 1,229 7% 136 127 7%
Asian Insurance Operations:
Insurance Products (5) 77 306 (75%) 89 67 33% 166 373 (55%) 96 97 (1%)
Total Asian Insurance 77 306 (75%) 89 67 33% 166 373 (55%) 96 97 (1%)
Operations
Group Total 3,148 2,963 6% 146 152 (4%) 3,294 3,115 6% 460 448 3%
Notes to Schedules:
(1) Represents cash received from sale of investment products.
(2) Excluding sales through closed distribution channel.
(3) Closed distribution channel relates to the Direct Sales Force.
(4) Annual Equivalents (AE), calculated as regular new business contributions + 10% single new business
contributions, are subject to roundings.
(5) The Central Provident Fund in Singapore was further liberalised in 2001 resulting in exceptional sales volume
in the first half of 2001.
(6) Sales for overseas operations have been calculated using average exchange rates. The applicable rate for
Jackson National Life is 1.43 (2001 - 1.46).
Schedule 2
PRUDENTIAL PLC - NEW BUSINESS - QUARTER 1 2002 VERSUS QUARTER 1 2001
INVESTMENT OPERATIONS
M&G & UK Operations Asia Mutual Funds Hong Kong MPF Total Investment Products
Products (7)
2002 2001 +/- 2002 2001 +/- 2002 2001 +/- 2002 2001 +/-
(%) (%) (%) (%)
£m £m £m £m £m £m £m £m
Opening FUM (as at 10,402 11,892 (13%) 3,206 1,649 94% 90 - - 13,698 13,541 1%
31/12/01)
Gross inflows 281 296 (5%) 3,148 1,557 102% 21 25 (16%) 3,450 1,878 84%
Less redemptions (246) (285) 14% (3,028) (1,421) (113%) (2) - - (3,276) (1,706) (92%)
Net flows 35 11 218% 120 136 (12%) 19 25 (24%) 174 172 1%
Other movements (108) - - (19) (12) (58%) - - - (127) (12) (958%)
Market and (49) (661) 93% 131 141 (7%) 2 5 (60%) 84 (515) 116%
currency movements
Net movement in (122) (650) 81% 232 264 (12%) 21 30 (30%) 131 (356) 137%
FUM
Closing FUM 10,280 11,242 (9%) 3,438 1,914 80% 111 30 270% 13,829 13,186 5%
INVESTMENT OPERATIONS - ANALYSIS
M&G Retail & UK Operations Investment Products
UK Operations (8) M&G M&G & UK Operations
2002 2001 +/- 2002 2001 +/- 2002 2001 +/-
(%) (%) (%)
£m £m £m £m £m £m
Opening FUM (as at 1,620 2,015 (20%) 8,782 9,877 (11%) 10,402 11,892 (13%)
31/12/01)
Gross inflows 25 38 (34%) 256 258 (1%) 281 296 (5%)
Less redemptions (71) (78) 9% (175) (207) 15% (246) (285) 14%
Net flows (46) (40) (15%) 81 51 59% 35 11 218%
Other movements - - - (108) - - (108) - -
Market and 54 (95) 157% (103) (566) 82% (49) (661) 93%
currency movements
Net movement in 8 (135) 106% (130) (515) 75% (122) (650) 81%
FUM
Closing FUM 1,628 1,880 (13%) 8,652 9,362 (8%) 10,280 11,242 (9%)
Asia Mutual Funds
India Taiwan (9) Other Asia Mutual Funds
2002 2001 +/- 2002 2001 +/- 2002 2001 +/- 2002 2001 +/-
(%) (%) (%) (%)
£m £m £m £m £m £m £m £m
Opening FUM (as at 1,072 695 54% 2,076 934 122% 57 20 185% 3,206 1,649 94%
31/12/01)
Gross inflows 764 435 76% 2,342 1,120 109% 42 2 2000% 3,148 1,557 102%
Less redemptions (916) (438) (109%) (2,111) (980) (115%) (1) (3) 67% (3,028) (1,421) (113%)
Net flows (152) (3) (4967%) 231 140 65% 41 (1) 4200% 120 136 (12%)
Other movements (19) (12) (58%) - - - - - - (19) (12) (58%)
Market and 54 29 86% 81 113 (28%) (3) (2) (50%) 131 141 (7%)
currency movements
Net movement in (117) 14 (936%) 312 253 23% 37 (3) 1333% 232 264 (12%)
FUM
Closing FUM 955 709 35% 2,388 1,188 101% 95 17 459% 3,438 1,914 80%
INSURANCE OPERATIONS - ANALYSIS
Single Regular Total Annual Equivalent
2002 2001 +/- 2002 2001 +/- 2002 2001 +/- 2002 2001 +/-
(%) (%) (%) (%)
£m £m £m £m £m £m £m £m
Asian Insurance Operations
Insurance Products:
Singapore 52 284 (82%) 9 7 29% 61 291 (79%) 14 35 (60%)
Hong Kong 9 13 (31%) 20 13 54% 29 26 12% 21 14 50%
Malaysia 3 2 50% 11 7 57% 14 9 56% 11 7 57%
Taiwan 4 - - 23 24 (4%) 27 24 13% 23 24 (4%)
Japan (10) 4 5 (20%) 9 6 50% 13 11 18% 9 7 29%
Other (11) 5 2 150% 17 10 70% 22 12 83% 18 10 80%
Total Asian 77 306 (75%) 89 67 33% 166 373 (55%) 96 97 (1%)
Insurance Premiums
US BANKING AND UK GENERAL INSURANCE OPERATIONS
2002 2001 +/-
(%)
£m £m
US Banking Products
Total Deposit 633 519 22%
Liabilities
Retail Assets 704 676 4%
UK General Insurance
UK Gross Premiums - 91 -
Written
Notes to Schedules:
(7) Mandatory Provident Fund product sales in Hong Kong are included at Prudential's 36% interest of the Hong Kong
MPF operation.
(8) Scottish Amicable and Prudential branded Investment Products.
(9) Opening FUM restated to incorporate Discretionary Asset Management Business in Taiwan and Portfolio Management
Services in India.
(10) Insurance sales for Japan are included from 13 February 2001, the date of acquisition of Orico Life Insurance
Company Limited.
(11) In Asia, 'Other' Insurance Products include Thailand, Indonesia, The Philippines, Vietnam, India (26%
interest), China and Korea.
(12) Balance sheet figures have been calculated at closing exchange rates.
This information is provided by RNS
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