3rd Quarter Results
Prudential PLC
17 October 2002
Embargo: 07.00 hrs Thursday 17 October 2002
PRUDENTIAL PLC THIRD QUARTER 2002 NEW BUSINESS RESULTS
Highlights (all figures are nine-month comparisons unless otherwise specified):
• Total Group insurance and investment sales of £20.3 billion, an increase
of 34 per cent on the first nine months of 2001.
• Group insurance sales on an APE basis of £1.4 billion up 3 per cent (total
insurance sales up 9 per cent). APE insurance sales of £481 million in the
third quarter of 2002 up 6 per cent on the third quarter of 2001 (total
insurance sales up 14 per cent).
• Almost 75 per cent of Group sales from outside the UK.
• Total sales at Prudential UK (excluding sales in 2001 through the direct
sales force which closed during that year) increased by 12 per cent to £4.4
billion.
• Net fund inflows at M&G of £272 million more than double those in the
first nine months of 2001.
• APE sales up 17 per cent at Jackson National Life, driven by strong sales
of both fixed and variable annuities.
• APE insurance sales in Asia increased by 8 per cent (up 22 per cent
excluding exceptional Central Provident Fund sales in Singapore in 2001).
Prudential's Group Chief Executive, Jonathan Bloomer, commented:
'Good contributions from across the Group, which were achieved in difficult
market conditions, have resulted in these strong sales figures and our strategy
of growing internationally, broadening our distribution reach and diversifying
our product range has once again been fully endorsed.
This strategy, combined with our financial strength and active management of
capital, has positioned us strongly to continue delivering profitable growth in
new business.'
Prudential UK
Prudential UK reported total sales of £4.4 billion in the first nine months of
2002, 12 per cent up on the same period last year (excluding sales made through
the direct sales force which closed in 2001). On an APE basis, sales of £565
million were down three per cent, reflecting an increasing emphasis on the more
profitable single premium products which are recorded at one-tenth of total
premium sales. These strong results endorse Prudential UK's strategy of focusing
on products where it has a market-leading position and strong multi-channel
distribution.
Total insurance sales via intermediary channels were up eight per cent to £2.9
billion with strong sales reported in life products and individual annuities.
Total sales through direct channels, where Prudential UK has developed a strong
business-to-business proposition, showed an increase of 21 per cent to £1.5
billion against the same nine-month period last year.
Sales of individual annuities at around £1.2 billion showed a marked improvement
over the same period last year (£0.9 billion), representing an increase of 37
per cent. Total sales for the third quarter alone were 63 per cent up on 2001.
In September, the innovative Flexible Income Drawdown Plan was launched to work
alongside the Flexible Lifetime Annuity, further strengthening Prudential's
market-leading position in this field.
Bulk annuity sales were 40 per cent down on the same nine-month period last year
to £286 million. However, third quarter sales were up 17 per cent on the second
quarter, and Prudential UK remains positive about the potential for future sales
and continues to see high levels of interest in this product area.
Life product sales increased by 22 per cent to £1.86 billion. Prudence Bond, the
market-leading with-profit bond which is sold via the intermediary channel,
continued its strong sales record with APE sales up 24 per cent to £151 million.
However, as expected, sales in the third quarter are lower than those
experienced at the start of the year due to the current economic climate.
Within the pensions market Prudential UK continues to focus on the larger
corporate schemes: it provides schemes to 20 per cent of FTSE 350 companies and
holds a market-leading position within the public sector market place. Total
sales of corporate pensions improved by 18 per cent on the prior year (single
premium sales increased by 30 per cent).
Against the backdrop of uncertain equity markets and an increasingly competitive
operating environment, Prudential UK continues to attract new business with its
strong brand, financial strength, and focused product range. Its recently-signed
agreement to distribute Prudence Bond via Abbey National's 756 branches gives it
access to their 15 million customers. This additional distribution channel is
expected to come into effect at the start of 2003 and reflects Prudential UK's
strategy of building multi-channel distribution and focusing capital on areas of
the business that give it competitive advantage.
M&G
M&G's gross retail fund inflows for the first nine months of 2002 were £773
million, up eight per cent on 2001, despite uncertain equity markets. These
figures exclude the successful rollover of the M&G Recovery Investment Trust
into a new investment vehicle which contributed a further £171 million.
Net fund inflows of £272 million were more than double the comparable period in
2001. According to figures published by the Investment Management Association
(IMA) to the end of August 2002, redemptions across the industry remained
static. However, M&G continued to counter this trend with a fall of 18 per cent
in the value of redemptions over the same time period.
M&G continued to increase its share in both the total retail market and PEP/ISA
market, with market share growing by 18 per cent and 28 per cent respectively,
according to figures published to August by the IMA.
Current equity market conditions have led to a flight towards fixed interest
products, in particular investment grade corporate bond funds, where M&G is
positioned as a market leader. This is evident from net sales of the M&G
Corporate Bond Fund, which more than trebled over the first nine months of 2002,
compared to the same period last year.
Egg
Egg will be announcing its third quarter Results on Wednesday 23 October 2002.
Prudential Europe
Sales on an APE basis increased by six per cent to £19 million. Total sales of
£50 million were down from £54 million in the first nine months of 2001.
Jackson National Life
Jackson National Life (JNL) recorded an 18 per cent increase in total sales to
£4.5 billion in the first nine months of the year compared to the corresponding
period in 2001, reflecting strong sales of variable and fixed annuities (total
sales in the third quarter of 2002 were up 35 per cent on the third quarter of
2001). APE sales during the period increased by 17 per cent to £464 million.
These strong results once again demonstrated JNL's ability to deliver strong
performance in difficult market conditions and were testament to its excellent
track record of product innovation and ability to broaden distribution channels.
Total single premium sales during the period increased by 18 per cent. Total
sales of annuity products to retail customers of £3 billion were 39 per cent per
cent up on the first nine months of 2001 (third quarter annuity sales increased
by 37 per cent on the second quarter of 2002 and 74 per cent on the third
quarter of 2001), driven principally by strong variable and fixed annuity sales.
Variable annuity sales of £852 million were 39 per cent up on the first nine
months of 2001. Sales in the third quarter of 2002 were 22 per cent up on the
second quarter, reflecting the successful launch of Perspective II, a new
variable annuity product, in January of this year. Sales of fixed annuities of
£2 billion were 44 per cent up on the first nine months of 2001 (sales in the
third quarter were up 48 per cent on the second quarter of 2002 and up 65 per
cent on the third quarter of 2001).
During 2002, JNL has made a number of revisions to its product lines which have
had a positive impact on sales; in September 2002, 65 per cent of new annuities
business was from products launched this year.
Sales of equity linked indexed (ELI) annuities in the first nine months of 2002
of £204 million were four per cent ahead of the corresponding period last year
and sales have increased quarter-on-quarter in 2002.
Regular premium life sales of £18 million were 13 per cent up on the first nine
months of 2001.
Sales of stable value products of £1.4 billion were 11 per cent down, reflecting
JNL's primary focus on retail sales which we expect to continue for the
remainder of this year.
Looking ahead, we believe that there are significant growth prospects in the
United States, bringing with them outstanding opportunities for high quality,
efficient businesses like JNL which has a cost base well below the industry
average, modern IT systems and diversified products and distribution.
Prudential Corporation Asia
Prudential Corporation Asia (PCA) has delivered another strong performance with
total insurance sales on an APE basis increasing by eight per cent on the same
period last year to £358 million. Excluding last year's Central Provident Fund
(CPF) single premium sales in Singapore which were at exceptional levels due to
further government liberalisation of CPF funds, this increase was 22 per cent.
APE insurance sales in the third quarter of 2002 were up 17 per cent on the
second quarter of the year and 16 per cent up on the third quarter of 2001.
APE insurance sales (excluding CPF sales) in the more established markets of
Singapore, Hong Kong and Malaysia increased by an average 37 per cent on the
first nine months of 2001. However, the economic environment in these markets
has been challenging, particularly for unit-linked products, and growth rates
have been slowing.
In Taiwan, APE insurance sales were particularly strong in the third quarter, up
85 per cent compared to the second quarter of the year. Following the successful
launch of regular premium unit-linked products earlier this year, PCA has
introduced a new range of complementary non-unit-linked products which have
proved popular in the current economic environment.
In Japan, PCA continued to make solid progress with APE insurance sales up 36
per cent in the first nine months of 2002 compared to the corresponding period
last year (APE insurance sales in the third quarter of 2002 were up 22 per cent
on the second quarter). In PCA's other life markets (including China, Vietnam,
India and Korea), APE insurance sales increased by 74 per cent compared to the
first nine months of last year as these operations continued to build scale.
PCA's regional mutual funds assets under management of £3.7billion have remained
broadly level since 30 June 2002 despite the challenging market conditions (up
48 per cent on the third quarter of 2001), with net inflows in 2002 remaining
positive at £0.7 billion.
PCA has a proven track record of delivering strong, profitable growth and
despite the slowdown in some Asian economies, the long-term outlook remains very
positive. With its significant portfolio of businesses across the region,
multi-channel distribution capabilities, excellent strategic partners, and
customer-focused product expertise, PCA 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 Laura Presland 020 7548 3511
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, and Philip
Broadley, Group Finance Director.
2. There will be a conference call for international investors at 2:30pm (dial
in telephone number: +44 (0) 20 8240 8245, US callers 1 703 925 2406).
Callers to quote 'Prudential New Business' for access to the call.
A recording of this call will be available for replay for five working days
by dialling:
UK: 020 8288 4459, US: 1 703 736 7336, access code 614562.
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 sales.
5. Financial Calendar:
Payment of 2002 Interim Dividend Thursday 28 November 2002
2002 Full-Year New Business Figures Thursday 23 January 2003
2002 Full-Year Results Tuesday 25 February 2003
Ex-dividend date for 2002 final dividend Wednesday 19 March 2003
First-quarter 2003 New Business Figures Thursday 17 April 2003
2003 Annual General Meeting Thursday 8 May 2003
Payment of 2002 final dividend Wednesday 28 May 2003
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 3 2002
TOTAL INSURANCE AND INVESTMENT NEW BUSINESS
UK & Europe US Asia Total
2002 2001 +/- 2002 2001 +/- 2002 2001 +/- 2002 2001 +/-
Q3 Q3 (%) Q3 Q3 (%) Q3 Q3 (%) Q3 Q3 (%)
£m £m £m £m £m £m £m £m
Total 4,423 4,156 6% 4,483 3,811 18% 654 833 (21%) 9,560 8,800 9%
Insurance
Products
Total 891 806 11% - - - 9,832 5,545 77% 10,723 6,351 69%
Investment
Products -
Gross
Inflows (1)
Group Total 5,314 4,962 7% 4,483 3,811 18% 10,486 6,378 64% 20,283 15,151 34%
INSURANCE OPERATIONS
Single Regular Total Annual Equivalents (4)
2002 2001 +/-(%) 2002 2001 +/-(%) 2002 2001 +/-(%) 2002 2001 +/-(%)
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
£m £m £m £m £m £m £m £m
UK Insurance
Operations :
Direct
Distribution
(2) :
Individual 13 11 18% 9 13 (31%) 22 24 (8%) 10 14 (29%)
Pensions
Corporate 486 377 29% 79 105 (25%) 565 482 17% 128 143 (10%)
Pensions
Life 51 40 28% 3 3 0% 54 43 26% 8 7 14%
Individual 621 483 29% - - - 621 483 29% 62 48 29%
Annuities
Sub-Total 1,171 911 29% 91 121 (25%) 1,262 1,032 22% 208 212 (2%)
DSS Rebates 195 175 11% - - - 195 175 11% 20 18 11%
Total 1,366 1,086 26% 91 121 (25%) 1,457 1,207 21% 228 230 (1%)
Intermediated
Distribution (2):
Individual 74 169 (56%) 27 52 (48%) 101 221 (54%) 34 69 (51%)
Pensions
Corporate 70 50 40% 12 16 (25%) 82 66 24% 19 21 (10%)
Pensions
Life 1,793 1,464 22% 12 22 (45%) 1,805 1,486 21% 191 168 14%
Individual 597 409 46% - - - 597 409 46% 60 41 46%
Annuities
Bulk 286 475 (40%) - - - 286 475 (40%) 29 48 (40%)
Annuities
Sub-Total 2,820 2,567 10% 51 90 (43%) 2,871 2,657 8% 333 347 (4%)
DSS Rebates 45 55 (18%) - - - 45 55 (18%) 5 6 (17%)
Total 2,865 2,622 9% 51 90 (43%) 2,916 2,712 8% 338 352 (4%)
Total (2):
Individual 87 180 (52%) 36 65 (45%) 123 245 (50%) 45 83 (46%)
Pensions
Corporate 556 427 30% 91 121 (25%) 647 548 18% 147 164 (10%)
Pensions
Life 1,844 1,504 23% 15 25 (40%) 1,859 1,529 22% 199 175 14%
Individual 1,218 892 37% - - - 1,218 892 37% 122 89 37%
Annuities
Bulk 286 475 (40%) - - - 286 475 (40%) 29 48 (40%)
Annuities
Sub-Total 3,991 3,478 15% 142 211 (33%) 4,133 3,689 12% 541 559 (3%)
DSS Rebates 240 230 4% - - - 240 230 4% 24 23 4%
Total 4,231 3,708 14% 142 211 (33%) 4,373 3,919 12% 565 582 (3%)
Closed - 166 - - 17 - - 183 - - 34 -
distribution
channel (3)
Total UK 4,231 3,874 9% 142 228 (38%) 4,373 4,102 7% 565 615 (8%)
Insurance
Operations
European
Insurance
Operations:
Insurance 34 40 (15%) 16 14 14% 50 54 (7%) 19 18 6%
Products
Total 34 40 (15%) 16 14 14% 50 54 (7%) 19 18 6%
European
Insurance
Operations
Total UK & 4,265 3,914 9% 158 242 (35%) 4,423 4,156 6% 585 633 (8%)
European
Insurance
Operations
US Insurance
Operations:
Fixed 1,978 1,375 44% - - - 1,978 1,375 44% 198 138 43%
Annuities
Equity 204 197 4% - - - 204 197 4% 20 20 0%
Linked
Indexed
Annuities
Variable 852 613 39% - - - 852 613 39% 85 61 39%
Annuities
Sub-total 3,034 2,185 39% - - - 3,034 2,185 39% 303 219 38%
Annuities
Guaranteed 297 170 75% - - - 297 170 75% 30 17 76%
Investment
Contracts
GIC - Medium 1,134 1,440 (21%) - - - 1,134 1,440 (21%) 113 144 (22%)
Term Note
Life - - - 18 16 13% 18 16 13% 18 16 13%
Total US 4,465 3,795 18% 18 16 13% 4,483 3,811 18% 464 396 17%
Insurance
Operations
Asian
Insurance
Operations:
Insurance 329 556 (41%) 325 277 17% 654 833 (21%) 358 333 8%
Products (5)
Total Asian 329 556 (41%) 325 277 17% 654 833 (21%) 358 333 8%
Insurance
Operations
Group Total 9,059 8,265 10% 501 535 (6%) 9,560 8,800 9% 1,407 1,362 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 1.48 (2001 - 1.44).
Schedule 2
PRUDENTIAL PLC - NEW BUSINESS - QUARTER 3 2002
INVESTMENT OPERATIONS
M&G & UK Operations Asia Mutual Funds Hong Kong MPF Products Total Investment
(7) Products
2002 2001 +/-(%) 2002 2001 +/-(%) 2002 2001 +/-(%) 2002 2001 +/-(%)
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
£m £m £m £m £m £m £m £m
Opening FUM 10,328 11,652 (11%) 3,206 1,649 94% 90 - - 13,624 13,301 2%
(as at
31/12/01)
Gross 891 806 11% 9,774 5,474 79% 58 71 (18%) 10,723 6,351 69%
inflows
Less ( 651) ( 791) 18% (9,060) (4,578) (98%) ( 9) ( 3) (200%) (9,720) (5,372) (81%)
redemptions
Net flows 240 15 1500% 714 896 (20%) 49 68 (28%) 1,003 979 2%
Other ( 108) - - ( 20) ( 23) 13% - - - ( 128) ( 23) (457%)
movements
Market and (2,091) (1,969) (6%) ( 247) ( 56) (341%) ( 18) ( 1) (1700%) (2,356) (2,026) (16%)
currency
movements
Net (1,959) (1,954) (0%) 447 817 (45%) 31 67 (54%) (1,481) (1,070) (38%)
movement in
FUM
Closing FUM 8,369 9,698 (14%) 3,652 2,466 48% 121 67 81% 12,142 12,231 (1%)
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 +/- (%)
Q3 Q3 Q3 Q3 Q3 Q3
£m £m £m £m £m £m
Opening FUM (as at 1,546 1,775 (13%) 8,782 9,877 (11%) 10,328 11,652 (11%)
31/12/01)
Gross inflows 118 87 36% 773 719 8% 891 806 11%
Less redemptions ( 150) ( 196) 23% ( 501) ( 595) 16% ( 651) ( 791) 18%
Net flows ( 32) ( 109) 71% 272 124 119% 240 15 1500%
Other movements - - - ( 108) - - ( 108) - -
Market and currency ( 404) ( 272) (49%) ( 1,687) ( 1,697) 1% ( 2,091) ( 1,969) (6%)
movements
Net movement in FUM ( 436) ( 381) (14%) ( 1,523) ( 1,573) 3% ( 1,959) ( 1,954) (0%)
Closing FUM 1,110 1,394 (20%) 7,259 8,304 (13%) 8,369 9,698 (14%)
Asia Mutual Funds
India (9) Taiwan (9) Other Asia Mutual Funds
2002 2001 +/- (%) 2002 2001 +/- (%) 2002 2001 +/- (%) 2002 2001 +/- (%)
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
£m £m £m £m £m £m £m £m
Opening FUM 1,072 695 54% 2,076 934 122% 57 20 185% 3,206 1,649 94%
(as at
31/12/01)
Gross inflows 2,672 1,473 81% 6,922 3,988 74% 180 13 1285% 9,774 5,474 79%
Less (2,535) (1,209) (110%) (6,518) (3,361) (94%) ( 7) ( 8) 13% (9,060) (4,578) (98%)
redemptions
Net flows 137 264 (48%) 404 627 (36%) 173 5 3360% 714 896 (20%)
Other ( 20) ( 23) 13% - - - - - - ( 20) ( 23) 13%
movements
Market and ( 9) ( 3) (200%) ( 231) ( 46) (402%) ( 7) ( 7) 0% ( 247) ( 56) (341%)
currency
movements
Net movement 108 238 (55%) 173 581 (70%) 166 ( 2) 8400% 447 817 (45%)
in FUM
Closing FUM 1,180 933 26% 2,249 1,515 48% 223 18 1139% 3,652 2,466 48%
INSURANCE OPERATIONS - ANALYSIS
Single Regular Total Annual Equivalent
2002 2001 +/-(%) 2002 2001 +/-(%) 2002 2001 +/-(%) 2002 2001 +/-(%)
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3
£m £m £m £m £m £m £m £m
Asian Insurance Operations
Insurance Products:
Singapore 194 459 (58%) 33 26 27% 227 485 (53%) 52 72 (28%)
Hong Kong 89 66 35% 62 48 29% 151 114 32% 71 55 29%
Malaysia 11 9 22% 37 29 28% 48 38 26% 38 30 27%
Taiwan 13 3 333% 100 116 (14%) 113 119 (5%) 101 116 (13%)
Japan (10) 7 11 (36%) 29 21 38% 36 32 13% 30 22 36%
Other (11) 15 8 88% 64 37 73% 79 45 76% 66 38 74%
Total Asian Insurance 329 556 (41%) 325 277 17% 654 833 (21%) 358 333 8%
Premiums
US BANKING PRODUCTS
2002 2001 +/- (%)
Q3 Q3
£m £m
US Banking Products
Total Deposit 658 564 17%
Liabilities
Retail Assets 674 708 (5%)
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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