Download asia - Prudential plc

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