Prudential plc - FY21 Results - Business Review

Rhea-AI Summary

Prudential PLC reported a strong performance for the financial year 2021, with APE sales increasing by 8% to $4,194 million and new business profit rising 13% to $2,526 million. The company successfully completed its strategic repositioning to focus on Asia and Africa. Adjusted operating profit from continuing operations was up 16% to $3,233 million. The Group announced a second interim dividend of 11.86 cents per share, bringing the total for the year to 17.23 cents. The business continues to adapt amid the pandemic and geopolitical challenges, maintaining a strong balance sheet.

Positive

• APE sales increased by 8% to $4,194 million.
• New business profit rose by 13% to $2,526 million.
• Adjusted operating profit from continuing operations up 16% to $3,233 million.
• Strategic repositioning to Asia and Africa completed.
• Successful equity raise of $2.4 billion in Hong Kong.

Negative

• IFRS profit after tax from continuing operations decreased by 10% to $2,214 million.
• Hong Kong new business levels impacted by border closures.

Prudential PLC Full Year 2021 Results
Prudential Delivers Continued Operational Progress and Completes Strategic Re-Positioning
Performance Highlights for the Continuing Business¹ on a Constant (and Actual) Exchange Rate Basis²

• APE sales³ up 8 per cent (10 per cent) to $4,194 million
• New business profit⁴ up by 13 per cent (15 per cent) to $2,526 million
• Strategic re-positioning to Asia and Africa completed
• Adjusted operating profit⁵ from continuing operations up 16 per cent (17 per cent) to $3,233 million
• Second interim ordinary dividend of 11.86 cents per share, 17.23 cents per share for the full year

LONDON, UK / ACCESSWIRE / March 9, 2022 / Mike Wells, Group Chief Executive of Prudential plc, said: "Prudential has delivered high-quality, resilient growth as we completed the strategic re-positioning of our business to focus solely on Asia and Africa. We have continued to deliver for our customers against the backdrop of the Covid-19 pandemic, and I would like to record my deep gratitude to our staff and agents for their outstanding efforts. We have announced that I will retire from my role at the end of March 2022. I am grateful to have had the opportunity to work with the staff and Board of Prudential, and look forward to watching the Group's further success.

"Our digitally enabled, multi-channel and geographically diversified business enabled us to increase APE sales³ by 8 per cent⁶ and deliver growth⁶ in 10 of our 14 insurance markets⁷, despite the obvious challenges of Covid-19. New business levels in Hong Kong remained impacted by the continuing Mainland China border closure. Excluding Hong Kong, 2021 APE sales grew by 16 per cent⁶ driven by our businesses in Mainland China, India, Malaysia, the Philippines, Singapore and Thailand. We delivered 13 per cent⁶ growth in Group new business profit⁴ through an improvement in business mix, and therefore margin, and the growth in new sales.

"The Group's high-quality business, based on regular-premium income, focus on health and protection, and high levels of customer retention, supports resilient, compounding growth. This enabled the Group's life businesses to deliver adjusted operating profit⁵ growth of 8 per cent⁶ despite higher Covid-19-related claims, with seven of our 14 life markets generating double-digit⁶ adjusted operating profit⁵ growth. Eastspring's adjusted operating profit was up 10 per cent⁶, with its funds under management reaching $258.5 billion, with continued inflows from the Group's life businesses. Collectively our life and asset management businesses delivered 8 per cent⁶ growth in adjusted operating profit⁵ and 7 per cent⁶ growth in operating free surplus generation⁸. After delivery of the planned central cost savings, total Group adjusted operating profit for the continuing business was up 16 per cent⁶.

"We continue to invest for the long term in new products, additional distribution capabilities and enhanced digital capabilities, to build our presence as a leading agency and bancassurance player and to access new pools of customers. Our product and other initiatives helped attract over 2.5 million customers in 2021 who were not existing policyholders of Prudential, contributing to an increase in our total life customer base to 18.6 million (2020: 17.4 million excluding Jackson). New business policies sold to both new and existing customers rose 16 per cent to 3.9 million and included 109,000 policies which were sold direct to the consumer through digital systems, including Pulse. These new policies included 2.2 million health and protection cases, reflecting our customers' increased focus on this area in light of the pandemic.

"We have completed the strategic re-positioning of our business into one focused entirely on Asia and Africa. In the fourth quarter, we carried out a successful $2.4 billion⁹ equity raise in Hong Kong. In December 2021 and January 2022 cash from this issuance was deployed in deleveraging our balance sheet in a $2.25 billion debt reduction programme. These actions, together with the associated reduction in interest costs, have enhanced our financial flexibility in light of the breadth of opportunities to invest for growth in Asia and Africa.

"We enter 2022 with a strong balance sheet and capital position. The timing of the opening of the Hong Kong border remains uncertain and Covid-19 will continue to have an impact. The current conflict in Ukraine could have wider implications for global economic and market conditions as well as geopolitical relations. However, we believe our multi-channel approach and focus on quality business and operating efficiency is the right strategy for dealing with volatile operating conditions. We are confident that our investment in new business, distribution and product enhancements will continue to meet the needs of our customers and build value for our shareholders over the long term."

Summary financials		2021 $m			2020 $m		Change on AER basis3				Change on CER basis3
New business profit from continuing operations1,4		2,526			2,201			15	%			13	%
Operating free surplus generated from continuing operations1,8		2,071			1,888			10	%			7	%
Adjusted operating profit from continuing operations1,5		3,233			2,757			17	%			16	%
IFRS profit after tax from continuing operations1		2,214			2,468			(10	)%			(12	)%
IFRS (loss) profit for the period after write-down of Jackson to fair value		(2,813	)		2,185			n/a				n/a
	31 Dec 2021									31 Dec 2020*
	Total Per share									Total		Per Share
EEV shareholders' equity		$47.4bn			1,725¢				$54.0bn		2,070¢
IFRS shareholders' equity		$17.1bn			622¢				$20.9bn		800¢

* Includes Jackson. Excluding Jackson EEV of the continuing Group was $41.9bn (1,607¢ per share) and IFRS shareholders' equity was $12.4bn at 31 December 2020.

Notes

1 Continuing operations represents the Asia, Africa and head office functions of the Group following the demerger of Jackson.

2 Further information on actual and constant exchange rate bases is set out in note A1 of the IFRS financial statements.

3 APE sales is a measure of new business activity that comprises the aggregate of annualised regular premiums and one-tenth of single premiums on new business written during the year for all insurance products, including premiums for contracts designated as investment contracts under IFRS 4. It is not representative of premium income recorded in the IFRS financial statements. See note II of the Additional unaudited financial information for further explanation.

4 New business profit, on a post-tax basis, on business sold in the period, calculated in accordance with EEV Principles.

5 In this press release 'adjusted operating profit' refers to adjusted IFRS operating profit based on longer-term investment returns from continuing operations. This alternative performance measure is reconciled to IFRS profit for the period in note B1.1 of the IFRS financial statements.

6 On a constant exchange rate basis.

7 13 Asia markets plus Africa.

8 Operating free surplus generated from insurance and asset management operations before restructuring costs. For insurance operations, operating free surplus generated represents amounts emerging from the in-force business during the year net of amounts reinvested in writing new business and excludes non-operating items. For asset management businesses, it equates to post-tax operating profit for the year. Restructuring costs are presented separately from the business unit amount. Further information is set out in 'movement in Group free surplus' of the EEV basis results.

9 After deduction of underwriting fees and other estimated expenses connected with the equity raise.

Contact:

Media		Investors/analysts
Simon Kutner	+44 (0)7581 023260	Patrick Bowes	+44 (0)20 3977 9702
Tan Ping Ping	+65 9845 8904	William Elderkin	+44 (0)20 3977 9215

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SOURCE: Prudential PLC

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FAQ

What were Prudential PLC's total APE sales for 2021?

Prudential PLC's total APE sales for 2021 were $4,194 million, reflecting an 8% increase.

How much did Prudential PLC's new business profit increase in 2021?

New business profit increased by 13% to $2,526 million in 2021.

What is Prudential PLC's adjusted operating profit for the financial year 2021?

Prudential PLC reported an adjusted operating profit of $3,233 million for 2021, up 16%.

What is the total dividend declared by Prudential PLC for the full year 2021?

The total dividend declared by Prudential PLC for the full year 2021 is 17.23 cents per share.

What challenges did Prudential PLC face in Hong Kong during 2021?

Prudential PLC's new business levels in Hong Kong were impacted by the continuing Mainland China border closure.