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This presentation 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. “CAN EMERGING MARKETS GENERATE SUPERIOR RETURNS?” Goldman Sachs European Financials Conference, 11 June 2002 JONATHAN BLOOMER GROUP CHIEF EXECUTIVE PRUDENTIAL PLC PRUDENTIAL PLC: A STRATEGIC OVERVIEW A leading international retail financial services player Focus on medium and long term savings A market leader in our chosen territories - UK - US - Asia Diversified products and distribution channels Scale and resources for future growth, internationally Balancing short-term and long-term strategies to deliver value to our shareholders GROWTH FROM INTERNATIONAL DIVERSIFICATION New business sales FY2001 New business sales by region 1996- 2001 £m 25000 US 25% UK/Europe 37% 20000 15000 10000 Asia 38% 5000 0 1996 1997 1998 UK & Europe 1999 US 2000 Asia 2001 ASIA: POTENTIAL FOR SUSTAINED GROWTH The most densely-populated region in the world: China and India each have more than 3x US population Population (millions) China 1,266 India 1,007 Indonesia Japan 210 127 Vietnam 78 Philippines 81 Thailand 63 Indonesia has higher population than France, UK and Germany combined 9% 8.0 8% 6.4 3% Malaysia 23 2% Taiwan 22 1% Hong Kong 7 0% Singapore 4 6.7 6.9 4.9 5% 47 8.6 5.9 6% 4% 8.1 7.5 7% S. Korea Source: UBSW 30 Aug 01 Average GDP growth % 1971-2000 3.3 3.5 Japan Phil India Indo Thai HK Malay Korea Sing Taiwan China Asia delivers consistently high GDP growth despite several economic crises in last 30 years MARKET SIZE AND GROWTH: A GLOBAL PERSPECTIVE Asian Life and retail bank deposits are larger than UK and US and growing rapidly; Asian MF balances are relatively smaller but growing fast Life Premiums (2000, £bn) Mutual Funds FUM (2000, £bn) 350 (2000, £bn) 6,000 5,000 300 5,000 2,500 250 4,000 2,000 Japan 200 Japan 150 100 50 1,500 3,000 1,000 2,000 500 ROA 0 0 Asia 1990-99 1 Japan Growth (%) 11 ROA Retail Bank Deposits UK 7 US 4 Asia UK 1997-00 20 Japan 17 Growth (%) 14 ROA Source: Swiss Re; Group Position Assessment; Federal Reserve 1,000 Japan ROA ROA 0 US 25 Asia 1995-99 1 Japan Growth (%) 10.5% UK 5 US 6 LIFE INSURANCE MARKETS IN ASIA LIFE PENETRATION INCREASES AS ECONOMIES DEVELOP: US$10,000 IS INFLECTION POINT Life Penetration Market Growth Penetration, 19991 12% 10% = $1bn in NB Premiums S Korea Japan 8% 6% Taiwan 4% Hong Kong Singapore India Malaysia 2% China Thailand Philippines Indonesia 0% Vietnam 1,000 10,000 100,000 Per Capita GDP2, US$ (log scale) 1. Source: Swiss Re; 2. Source: CIA New Business Premiums, $m Japan Korea Taiwan China India Hong Kong Singapore Thailand Malaysia Philippines Indonesia Vietnam 16,413 7,966 4,564 851 1,375 850 540 354 380 140 214 78 Growth 2% 11% 11% 22% 20% 9% 9% 12% 11% 12% 15% 22% ASIA: OPPORTUNITIES FOR FOREIGN PROVIDERS RFS BALANCES IN DOMESTIC AND FOREIGN COMPANIES 98% 98% Foreign players have had difficulties capturing market share 97/98 economic crisis lowered some barriers US and European companies see scale of opportunity in Asia But significant hurdles are still in place 95% 88% 12% Indonesia Domestic 2% 2% Japan Korea Foreign Source: Morgan Stanley Research, Aug 01 5% Thailand LONG-TERM VISION FOR DEVELOPMENT OF PRESENCE IN ASIA ACHIEVE SUSTAINABLE RFS LEADERSHIP WITH LEVELS OF CUSTOMER ACCESS, SHARE OF WALLET, PROFITABILITY, AND SCALE COMPARABLE TO LEADING RETAIL FINANCIAL SERVICES GROUPS Distribution Improve efficiency and effectiveness of current distribution channels Expand distribution options: – access more customers – give customers choice in accessing Prudential – maximise “stickiness” and productivity of each relationship through crossselling Geography Expand into Asian markets with the largest and most profitable pools of target customers Target Customers Professional/mass affluent segment Products Provide products that continue to meet customer needs Offer broader range of needsbased, Retail Financial Services products: – life and pensions – mutual funds – general insurance – banking to cement and deepen customer relationship RELATIVE LIFE MARKET POSITION No of Markets in Top 5 6-8 AIG Prudential 4-5 2-3 Great Eastern 0-1 Aegon CGNU Mass Mutual US Prudential RSA Sun Life Cathay Life 1-2 3-6 Manulife NY Life Zurich 7-8 Market Presences/Licences Source: PCA analysis Allianz ING Axa 9+ PRUDENTIAL’S STRATEGIC PRIORITIES: CAPITALISE ON THE OPPORTUNITIES Build a scale presence in North Asia and Greater China - largest profit pools and target customer bases Grow and strengthen tied agency forces Continue to evolve towards multi-distribution model - building upon recent successes in bank/direct distribution Build profitable and material regional Mutual Fund business Migrate to lower-cost operating configuration with multi-country processing Continue to develop structure and resource pool ASIA: FINANCIAL HIGHLIGHTS SALES NEW BUSINESS ACHIEVED PROFIT £m £m 450 434 255 250 +66 % 400 350 200 +70 % 300 256 150 250 +61 % 200 90 100 150 100 153 124 56 83 50 50 0 0 1998 Singapore Taiwan 1999 Malaysia Japan 2000 2001 Hong Kong Others 1998 1999 2000 2001 CAPITAL FLOWS IN ASIA: UPDATE Net capital flows £m 274 300 Japan and Korea acquisitions Increased investment in Indonesia and Taiwan 250 Summary (1994 to 2001) £m Acquisitions 533 Working capital 264 Repatriations (106) Net capital 691 200 144 158 150 76 100 50 (1) 22 7 11 1996 1997 0 -50 1994 1995 Working capital 1998 Repatriations 1999 2000 2001 Acquisitions CONCLUSION: BENEFITS CAN BE REAPED FROM SUCCESSFUL PARTICIPATION IN EMERGING MARKETS Markets are attractive and will remain so for the foreseeable future To succeed a participant needs: - strong and capable management team strong track record of performance delivery financial strength profitable business model ability to leverage pan-regional presence continued focus on costs clear view of future opportunities and challenges Strategy and capabilities must be designed to deliver profitable growth PRUDENTIAL PLC