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IIS 48 th Annual Conference Strategies for Global Growth Prudential plc in Asia PowerPoint Presentation
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IIS 48 th Annual Conference Strategies for Global Growth Prudential plc in Asia

IIS 48 th Annual Conference Strategies for Global Growth Prudential plc in Asia

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IIS 48 th Annual Conference Strategies for Global Growth Prudential plc in Asia

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  1. IIS 48th Annual Conference Strategies for Global Growth Prudential plc in Asia Barry Stowe Chief Executive Prudential Corporation Asia June 2012

  2. Asia: Compelling Growth Opportunities for Savings and Protection Projected Growth in Asian Middle Class m 6.1x • Outlook for Asian economies is robust despite current global volatility: • GDP outperformance • Strong public and household finances • Relatively stable political environment • Asia’s middle class growing rapidly • Asset accumulation a high priority: • Limited welfare safety nets • Funding children’s education • Retirement • Increasing demand for protection: • Early death, serious illness or disability • Rising incidence of chronic diseases Asia-Pacific’s proportion of global middle class 28% 54% 66% Source: OECD 1

  3. Asia: Life Insurance Sector Landscape Life New Business Market Shares 2011 Multinational Domestic • Material barriers to entry • Availability of licenses • Varying local regulations • Capital requirements • Establishing brand • Building distribution capabilities • Wide range of competitors • Different definitions of success but increasing materiality driving greater transparency and accountability • Competition principally around distribution competencies • Products are readily copied • Little competition on pricing Market Size £bn 14.7 7.4 10.1 5.1 1.7 1.2 1.4 0.2 1.0 0.2 3.4 2

  4. Recent Regulatory Trends • Customer centricity • Disclosures • Professionalism of distributors • Bancassurance models • Data privacy • Mandated audit and risk management committees • More sophisticated capital management, e.g. RBC • International standards, e.g. AML Asia: Life Insurance Regulatory Environment continues to evolve • Regulators supportive of continued development of life industry, minimal appetite for sovereign provision • Regulation changes tend to be largely positive for sound development of industry • Sophisticated insurers, operating to international standards will typically benefit from regulatory developments • Focus on consumer protection and increasing transparency and accountability for compliance and risk management 3

  5. Asia: Life Insurance Distribution Landscape Building and then managing high quality distribution is key strategic imperative Industry Distribution Mix for 2011 • Traditional tied agency is dominant distribution channel: • Attractive economics • Customer preference for face-to-face • Agency success depends on abilities to recruit, train, motivate and retain • Bancassurance is fast growing and has a variety of models: • In-house insurers • Exclusive relationships • Multiple relationships • Mandated multi relationships • Other channels less significant • DM/TM: restricted by privacy rules • IFA/Brokers: capital, compliance and infrastructure can be challenging Agency Bancassurance Other Note: Asia new business market distribution mix ex India & Japan Source: Prudential plc analysis

  6. Prudential plc in Asia: Growth Strategies Clear strategy with disciplined execution has built material Asian business Today Prudential plc has over 15 million Customers in Asia • Multichannel distribution: • Tied agency scale and productivity • Excellence in bancassurance • Product differentiation: • Capital efficiency • Regular premium savings and protection • Comprehensive mutual fund range • Emphasis on Customer: • ‘Always Listening, Always Understanding’ • Award winning service • Operational Strengths: • Secure best people in industry • Federated model • Rigorous compliance • International standards of risk management • Local Community Engagement: • CSR activities focused on Children, Financial Literacy and Disaster Relief

  7. Prudential plc in Asia: Strategy delivering strong, profitable growth IFRS operating profit2 New business profit1 £m £m 2.4x 4.1x 50% of Group New Business Profit 38% of Group IFRS Operating Profit Net remittances £m 7.4x 130 One-off3 19% of Group Net Remittances 1 Exclude Japan Life. and Taiwan Agency 2 Net of development costs 3 One-off from Malaysia representing the remittance of distributable earnings accumulated over recent years

  8. Summary • Core growth drivers for savings and protection business in Asia remain firmly in place and include limited provision of social welfare and continued expansion of middle classes • Diverse competitive environment with variety of challenges for multinationals looking to enter or expand rapidly in Asia including need to build distribution • Regulatory environment is generally supportive and continues to evolve with emphasis on quality and consumer protection • Prudential commenced its Asia strategy in 1994 and while ‘first mover’ status has advantages, the quality of execution is key • Today Prudential is one of region’s leading life insurers with multiple market leading positions and has a track record of delivering material value to shareholders