Asia Business Overview update Delivering our strategy • Building out broad-based distribution • Investing in our brand across the region • Managing our product suite • Maintaining financial and capital discipline • Nurturing Government and regulatory relationships ���������������������� 12
Asia Business Overview update Key initiatives across our agency channel Indonesia Hong Kong • Expansion outside Jakarta: non-Jakarta • ‘PRUmyhealth’ campaign to drive critical now 50% illness sales • Recruitment seminars: 30 cities, 30 times / • Launched ‘Elite’ recruitment campaign month • Reactivation focus: special workshops for non- • Expanded 10 e-learning facilities in cities ex- active managers and producers Jakarta � Agency H&P mix over 30% � Leading agency salesforce: over 40% market share Singapore Malaysia • Launched ‘STAR’ programme to drive higher • Developing new locations across the country conversion and activation rates with a focus on ‘Bumi’ • Targeting HNWs: Launch of ‘PRUvantage’ • Campus recruitment programs portfolio • ‘Faculty of Takaful Business’ to train and • Launched ‘Yes You Can’ initiative to drive develop agency force productivity of lower tier financial advisors � 58% of new recruits are Bumi � 42% of total agents are Bumi; Largest in the market � APE productivity per agent best in the industry 1 � Market leader in takaful sales 1 Source: Life Insurance Association of Singapore ���������������������� 13
Asia Business Overview update Continued progress in bancassurance Bancassurance partners • Deep penetration through over 14,500 branches • Multiple partners, accessing all socio- economic classes (77 partners in total) • Leveraging best practices across partnerships SCB: 42% growth. Philippines and Takaful launched. UOB: >100% growth. ���������������������� 14
Asia Business Overview update D elivering new business profit New business profit – HY 2009 1 , £m New business profit – HY 2012 1 , £m UK UK 122 152 Asia 286 Asia 547 Indonesia Indonesia 50 179 1 Excludes Japan and Taiwan agency ���������������������� 15
Asia Business Overview update Delivering IFRS operating profit Life IFRS operating profit – HY 2009 1 , £m Life IFRS operating profit – HY 2012 1 , £m UK UK 303 336 Asia 207 Asia 406 Indonesia 42 Indonesia 123 1 Net of development costs ���������������������� 16
Asia Business Overview update Delivering cash Cash remittances – HY 2009, £m Cash remittances – HY 2012, £m UK UK 268 230 Asia Asia 21 126 ���������������������� 17
Asia Business Overview update Long term opportunity Evolution of US GDP per capita, 1990 US$ 1 35,000 US GDP per capita 30,000 25,000 20,000 15,000 10,000 5,000 0 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 1 Geary-Khamis dollar, based on purchasing power parities with 1990 as benchmark year - one 1990 dollar has the same purchasing power as the US dollar in 1990. Prudential estimates ���������������������� 18
Asia Business Overview update Long term opportunity Evolution of China GDP per capita 1980 - 2010, against the US GDP per capita,1990 US$ 1 35,000 US GDP per capita 30,000 25,000 20,000 15,000 China 10,000 2010 China 2000 China 5,000 China 1990 1980 0 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 1 Geary-Khamis dollar, based on purchasing power parities with 1990 as benchmark year - one 1990 dollar has the same purchasing power as the US dollar in 1990. Prudential estimates ���������������������� 19
Asia Business Overview update Long term opportunity Evolution of Indonesia GDP per capita 1980 - 2010, against the US GDP per capita,1990 US$ 1 35,000 US GDP per capita 30,000 25,000 20,000 15,000 10,000 IDN 2010 IDN IDN 2000 IDN 5,000 1990 1980 0 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 1 Geary-Khamis dollar, based on purchasing power parities with 1990 as benchmark year - one 1990 dollar has the same purchasing power as the US dollar in 1990. Prudential estimates ���������������������� 20
Asia Business Overview update Long term opportunity Evolution of Malaysia GDP per capita 1980 - 2010, against the US GDP per capita,1990 US$ 1 35,000 US GDP per capita 30,000 25,000 20,000 Malaysia 15,000 2010 Malaysia 2000 10,000 Malaysia 1990 Malaysia 1980 5,000 0 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 1 Geary-Khamis dollar, based on purchasing power parities with 1990 as benchmark year - one 1990 dollar has the same purchasing power as the US dollar in 1990. Prudential estimates ���������������������� 21
Asia Business Overview update Long term opportunity Evolution of Singapore GDP per capita 1980 - 2010, against the US GDP per capita,1990 US$ 1 35,000 US GDP Singapore per capita 2010 30,000 Singapore 25,000 2000 20,000 Singapore 1990 15,000 Singapore 1980 10,000 5,000 0 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 1 Geary-Khamis dollar, based on purchasing power parities with 1990 as benchmark year - one 1990 dollar has the same purchasing power as the US dollar in 1990. Prudential estimates ���������������������� 22
Asia Business Overview update Long term opportunity GDP per capita in 2010, against the US GDP per capita,1990 US$ 1 35,000 US GDP Hong Kong per capita 30,000 Singapore 25,000 Taiwan Korea 20,000 15,000 Malaysia 10,000 Thailand China Indonesia Vietnam India 5,000 Philippines 0 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 1 Geary-Khamis dollar, based on purchasing power parities with 1990 as benchmark year - one 1990 dollar has the same purchasing power as the US dollar in 1990. Source: Maddison project, Prudential estimates. ���������������������� 23
Jackson Business Overview update Value over volume approach in managing VAs Variable Annuities NBP, £m Variable Annuities sales, APE £m 611 589 432 402 447 316 252 179 HY 2009 HY 2010 HY 2011 HY 2012 HY 2009 HY 2010 HY 2011 HY 2012 ���������������������� 24
Jackson Business Overview update Delivering on our 2013 ‘Cash’ objectives Net remittances , £m 322 247 144 122 80 39 2007 2008 2009 2010 2011 HY 2012 ���������������������� 25
Jackson Business Overview update Bolt-on acquisition of REALIC • Transaction IRR of over 20% and short payback period • Immediate accretion to IFRS earnings per share Financially attractive • Immediate uplift to EEV per share • Scope for additional synergies as REALIC is transitioned to Jackson platform • Addition of 1.5 million life policies and $10bn of assets Strategically enhancing • Diversifies the earnings sources (Insurance income) Increases 2013 • Jackson’s 2013 dividend objective increased from £200m to £260m ‘Cash’ objective ���������������������� 26
UK Business Overview update Delivering on our 2013 ‘Cash’ objectives Selective participation 1 Robust balance sheet strength New business profit, £m Inherited estate, £bn HY 2009 (44) 122 6.8 6.4 6.1 6.1 HY 2010 (35) 134 HY 2011 (25) 123 (20) 130 HY 2012 2009 2010 2011 HY 2012 New business strain New business profit 1 Retail business only ���������������������� 27
Asset Management Business Overview update M&G achieved #1 position in UK retail IFRS operating profit 2 , £m UK retail FUM 1 , £bn 39.3 175 38.7 172 122 113 108 20.1 19.8 18.6 17.7 75 15.6 15.3 13.8 12.7 HY 2007 HY 2008 HY 2009 HY 2010 HY 2011 HY 2012 60% 58% 63% 60% 55% 53% xx% Cost / income ratio 1 As at end-of-June 2012. Source: Investment Management Association 2 Excludes Prudential Capital ���������������������� 28
Dividend Business Overview update Resilient and growing dividend Dividend, pence per share 25.19 +5.6% 23.85 +20% 19.85 +5% 18.90 Total dividend +5% 18.00 17.24 17.24 13.56 12.91 Final dividend 12.30 +5.7% 8.40 7.95 6.61 6.29 5.99 Interim dividend 5.70 2007 2008 2009 2010 2011 HY 2012 ���������������������� 29
Prudential plc 2012 half year results Agenda Business Review Tidjane Thiam Financial Review Nic Nicandrou Outlook and Q&A Tidjane Thiam ���������������������� 30
Delivering ‘Growth and Cash’ Growth & Cash & Overview Profitability Capital HY 2012 builds on recent strong performance HY 12 £m HY 12 HY 11 vs. HY 11 1,069 +7% 1,141 New business profit 1,162 1,028 +13% IFRS operating profit 1 Growth 2,109 2,147 -2% EEV operating profit 806 745 +8% EEV per share (pence) 726 690 +5% Net remittance 1,039 1,093 -5% Free surplus generation Cash Dividend per share (pence) 8.40 7.95 +5.7% 1 HY 2011 adjusted for the retrospective application of the new DAC policy. ���������������������� 31
Growth in value and volume Growth & Cash & Overview Profitability Capital Balancing value creation and capital consumption NBP , £m NBP margin, % 1,141 Group Life IRR: >20% 59% 56% +7% 1,069 547 465 +18% Payback: 4 years 63% 61% Asia Life IRR: >20% 458 442 -3% Payback: 2 years 68% 61% US Life IRR: >20% Payback 1 : 3 years +4% 36% 37% 146 152 IRR: >20% UK Life 23 22 Wholesale 123 130 Retail HY 11 HY 12 1 Shareholder-backed business Payback: Expected period over which future undiscounted free surplus generation recoups initial new business investment. ���������������������� 32
New business profit Growth & Cash & Overview Profitability Capital Strong underlying progress New business profit , £m New business margin, % 59% 1,069 HY 11 HY 11 Economic (116) Effect (6%) Economic Effect 57 Mix/Pricing 3% Mix/Pricing 131 Volume 56% 1,141 HY 12 HY 12 ���������������������� 33
Profitability – IFRS Growth & Cash & Overview Profitability Capital IFRS profits up 13% 1,184 IFRS operating profit 1 , £m +19% 994 Life Group HY 2011 HY 2012 1,162 +13% 1,028 HY 2011 HY 2012 1 HY 2011 adjusted for the retrospective application of the new DAC policy. ���������������������� 34
Profitability – IFRS Growth & Cash & Overview Profitability Capital Diversified Life earnings – Asia up 26% Life operating profit by region , £m US operating profit , £m 1,184 +19% 442 Operating profits 994 340 336 +1% 332 UK 703 ‘Gross profits’ +6% 661 442 +30% 340 US Decelerated DAC 25 Accelerated (66) DAC (204) Core DAC (175) (82) NBS 406 (80) +26% Asia 1 322 HY 2011 HY 2012 HY 2011 HY 2012 1 Net of Asia development expenses (HY 11: £(2)m, HY 12: £(3)m). ���������������������� 35
Profitability – IFRS Growth & Cash & Overview Profitability Capital Diversified and resilient Life earnings IFRS operating income 1 , £m Growth % HY 12 vs. HY 11 1,759 1,603 (1)% 7% 8% 9% (4)% 11% 31% +1% 33% 29% +20% 26% 24% +22% 22% HY 2011 HY 2012 Insurance margin Fee income Spread income With-profits Expected return on shareholder assets 1 Excludes margin on revenues, acquisition and administration expenses and DAC amortisation. ���������������������� 36
IFRS operating profit – source of earnings Growth & Cash & Overview Profitability Capital Life insurance - Asia Total operating profit 1 HY 12 HY 11 +/- £m except reserves £bn 322 26% 406 = Total Life income Admin Expenses Acquisition Costs DAC adjustments - - +/- 926 13% (242) (3%) (349) (23%) 1,051 (250) (428) 33 (13) nm Spread Technical and With-profits Fee income income other margin 18 17 6% 55 46 20% 66 67 (1%) 892 785 14% Spread Margin on 168 176 (8) AMF (bps) 107 103 4 Expected returns 636 560 14% (bps) revenues Average Average Insurance 6.5 5.2 25% 12.3 13.0 (5%) 256 225 14% 20 11 82% reserves reserves margin Continued growth in in- Increase reflects growth force book and higher of Asian reserves H&P sales 1 HY 2011 adjusted for the retrospective application of the new DAC policy. ���������������������� 37
IFRS operating profit – source of earnings Growth & Cash & Overview Profitability Capital Life insurance - US Total operating profit 1 HY 12 HY 11 +/- £m except reserves £bn 340 30% 442 = Total Life income Total Life expenses 2011 Expense deferrals - + 856 10% (680) (6%) 945 (722) 398 405 (2%) - Technical and Spread Fee income other margin DAC amortisation income 153 113 35% 349 365 (4%) 408 327 25% (179) (241) 26% Spread 238 262 (24) AMF (bps) 198 195 3 Expected returns (bps) Average Average 29.3 27.9 5% 41.2 33.5 23% 35 51 (31)% reserves reserves Increase reflects growth Decline due to spread in separate account compression balances and repricing benefits 1 HY 2011 adjusted for the retrospective application of the new DAC policy. ���������������������� 38
IFRS operating profit – source of earnings Growth & Cash & Overview Profitability Capital Life insurance - UK Total operating profit HY 12 HY 11 +/- £m except reserves £bn 332 1% 336 = Total Life income Total Life expenses DAC adjustments - +/- 459 2% (126) (1%) 467 (127) (4) (1) nm Spread Technical and Expected returns Fee income income other margin 69 9% 75 132 122 8% 35 29 21% 79 85 (7%) Spread Margin on With-profits 104 108 (4) AMF (bps) 33 26 7 68 78 (13%) (bps) revenues Average Average Insurance 146 154 (5%) 25.3 22.6 12% 21.3 22.0 (3%) 11 7 57% reserves reserves margin Increase driven by growth Decrease due to reduction in annuity book in policyholder bonuses ���������������������� 39
Profitability – IFRS Growth & Cash & Overview Profitability Capital IFRS profits up 13% 1,184 IFRS operating profit 1 , £m +19% 994 Life Group HY 2011 HY 2012 HY 11 HY 12 M&G 172 175 1,162 280 267 Asset -5% +13% 1,028 PruCap 27 24 Management Eastspring 43 34 and Other businesses US AM 17 17 HY 2011 HY 2012 UK GI 21 17 HY 2011 HY 2012 1 HY 2011 adjusted for the retrospective application of the new DAC policy. ���������������������� 40
IFRS operating profit – source of earnings Growth & Cash & Overview Profitability Capital Asset management Asset management HY 12 HY 11 +/- operating profit 1 £m except reserves £bn 209 215 (3%) M&G operating Eastspring profit Investments 175 172 2% 34 43 (21%) Other income 2 Total income 2 Underlying income Total expenses Total expenses 354 330 7% 7 7 25 25 (72%) (186) (183) (2%) 97 101 (4%) (63) (58) (9%) Cost / income Cost / income Average fees Average fees 36 34 2 37 38 (1) (bps) ratio 3 (bps) ratio 3 Average assets Average assets 197 191 3% 53% 55% (2)ppt 52 52 - 66% 59% 7ppt (£bn) (£bn) 1 Excludes PruCap and US asset management business. 2 Includes performance-related fees and M&G’s share of operating profit from PPMSA. 3 Cost/income ratio excludes performance-related fees, carried interest and profit from associate. ���������������������� 41
Profitability – IFRS Growth & Cash & Overview Profitability Capital IFRS profits up 13% 1,184 IFRS operating profit 1 , £m +19% 994 Life Group HY 2011 HY 2012 HY 11 HY 12 M&G 172 175 1,162 280 267 Asset -5% +13% 1,028 PruCap 27 24 Management Eastspring 43 34 and Other businesses US AM 17 17 HY 2011 HY 2012 UK GI 21 17 HY 11 HY 12 Net Interest (140) (140) HY 2011 HY 2012 HY 2011 HY 2012 Corporate/ (118) (120) RHO Other income Solvency II (27) (27) and expenses costs (246) (289) -17% / restructuring Other/ (3) (2) Restructuring RPI/CPI change 42 - 1 HY 2011 adjusted for the retrospective application of the new DAC policy. ���������������������� 42
Profitability – EEV Growth & Cash & Overview Profitability Capital Return on Embedded Value of 16% In-force 1 , £m HY 11 HY 12 Experience 206 192 variance Life business, £m -4% Assumption 42 70 1,071 1,023 changes Variances 246 /Other 259 Dev costs (2) (3) +1% 2,164 2,140 Unwind 825 490 764 -9% 537 UK -3% 805 HY 2011 HY 2012 US 831 New business profit 2 , £m +13% 869 772 Asia 1,2 1,141 +7% 1,069 HY 2011 HY 2012 HY 2011 HY 2012 1 Net of Asia development expenses (HY 11: £(2)m, HY 12: £(3)m). 2 Excluding Japan. ���������������������� 43
Equity shareholders’ funds Growth & Cash & Overview Profitability Capital Resilient and growing IFRS Equity 1 EEV Equity £bn EPS (p) £bn EPS (p) 0.9 35 1.5 61 After-tax operating profit Investment variance 2 0.1 3 (0.1) (4) 1.0 38 1.4 57 Profit for the period Unrealised gain on AFS 3 0.2 8 0.0 0 (0.1) (1) (0.1) (5) Foreign exchange and other (0.4) (17) (0.4) (17) Dividend 0.7 28 1.0 35 Retained earnings 8.6 336 19.6 771 Opening shareholders’ equity 9.3 364 20.6 806 Closing shareholders’ equity Increase in shareholder equity 4 +13% +7% 1 HY 2011 adjusted for the retrospective application of the new DAC policy. 2 Includes non-operating profit. 3 For IFRS relates to JNL fixed income portfolio accounted as available for sale. For EEV, represents mark to market movements on JNL assets backing surplus and required capital. 4 Adjusted for 2011 final dividend paid in the period. ���������������������� 44
Equity shareholders’ funds Growth & Cash & Overview Profitability Capital Resilient and growing EEV (per share) 1 , pence CAGR CAGR +16% 866 806 60 60 771 +38% 715 116 116 112 108 603 +8% 142 142 135 79 134 118 806 +13% 548 548 524 473 406 2 2009 2010 2011 HY 12 Dividends Total 2 In-Force Required Capital Free Surplus Cumulative Dividends 1 Including goodwill attributable to shareholders. 2 Total dividends paid since 1 January 2009 of 63p, less deduction for scrip. ���������������������� 45
Cash and capital generation Growth & Cash & Overview Profitability Capital Free surplus stock Evolution of free surplus , £m x% Free surplus cover +22% 1,403 M&G 150 UK 291 4,175 (364) 199% 195% US 591 (129) 2 (156) 3,449 3,421 Asia 371 M&G 229 M&G 348 (726) Reinvestment Rate = 26% UK 581 UK 515 Underlying free surplus £1,039m US 1,333 US 1,326 Asia 1,260 Asia 1,278 Free Underlying Investment Other Market Free surplus Net cash Free surplus in-force in new movements related before Group remitted to surplus Jan 1 surplus business and timing items actions Group 30 Jun 2012 1 generated differences 2012 1 Asia and US include asset management and UK includes GI commission. 2 Includes gain of £42m as a result of the divestment of M&G’s holding in PPMSA. ���������������������� 46
Cash and capital generation Growth & Cash & Overview Profitability Capital Net remittances: 73% of Group objectives achieved Group objectives 2010-13 , £bn Remittance ratio >55% HY 09 HY 10 HY 11 HY 12 £m £m £m £m £6.5bn UK with-profit 284 202 223 216 UK shareholder- (16) 61 42 14 £3.8bn backed US - - 320 247 73% Asia 21 67 105 126 £4.7bn 73% £2.8bn M&G 1 86 130 - 2 123 Net remittances Cumulative underlying Cumulative net 375 460 690 726 to group free surplus remittances 1 Includes Prudential Capital. 2 In 2011 M&G remitted its full year dividend in the second half of the year. ���������������������� 47
Balance sheet Growth & Cash & Overview Profitability Capital Defensive positioning maintained Maintained capital strength • IGD surplus £4.2bn equivalent to a cover of c270% • With-profits estate £6.1bn Credit position improved • UK: £2.1bn default provision maintained • Unrealised gains on US debt securities of £2.5bn (FY 2011: £2.1bn). US impairments of £25m in HY 2012 Strong liquidity position • £1.2bn of central cash resources and £2.1bn of untapped liquidity facilities • Next call date Dec 2014 for $750m T1 perpetual bond Continued balance sheet conservatism • Variable annuity hedging remains robust • Minimal direct shareholder exposure to PIIGS sovereign and bank debt ���������������������� 48
Jackson Growth & Cash & Overview Profitability Capital Capital, hedging and policyholder behaviour • Impact of market movements offset by hedging program • Total adjusted capital excludes gains on interest rate Total swaps: $649m at Jun 2012 (Dec 2011: $474m) adjusted Capital • Earned guarantee fees of 120 bps per annum (c$400m in US$bn HY 2012). Guarantee fees continue to be sufficient to cover cost of hedging 3.9 31 Dec 2011 Operating profit 0.5 • Annual policyholder behaviour experience review in Q2 confirmed prudence of our assumptions (0.4) Dividend Reserves/Hedging - • Equities allocations remain below our 82% pricing 0.1 Other assumption: 30 Jun 2012 4.1 – New business: 54% equities (versus 62% in HY 11) – In-force book: 63% equities (at end HY 12) • Only 17% of book ‘in the money’ from issued levels at end H1 ���������������������� 49
Balance sheet Growth & Cash & Overview Profitability Capital Total PIIGS sovereign and bank debt of only £344m Breakdown of the shareholder Shareholder invested assets – PIIGS countries debt securities portfolio, % as at 30 June 2012, £m PIIGS sovereign & bank debt Sovereign Bank debt <1% Senior Tier I Tier II Covered Total Institution - - - Banco Comercial Portugues 14 14 Portugal - Espirito Santo Financial Group 12 12 - - - Ireland - Bank of Ireland 14 - - - 14 Total £60.3bn Intesa SanPaolo 11 47 - - 58 Italy 44 Unicredit - 9 - - 9 Greece - - - - - - - Spain Banco Santander 10 1 3 42 137 192 Total 45 61 59 42 137 299 Total PIIGS sovereign & bank debt = £344m ���������������������� 50
Prudential plc 2012 half year results Agenda Business Review Tidjane Thiam Financial Review Nic Nicandrou Outlook and Q&A Tidjane Thiam ���������������������� 51
Outlook ����������������������
Q&A ����������������������
Appendix ����������������������
Dividend Interim dividend increased by 5.7% Dividend, pence per share Total dividend • Interim dividend increased by 5.7 per cent to 8.40 pence per share • Ex-dividend date: 22 August 2012 Final dividend • Record date: 24 August 2012 +5.7% • Payment of dividend: 27 September 2012 Interim dividend ���������������������� 56
Net cash remittances Group Business unit net remittances, £m 726 +5% 690 123 M&G (incl PruCap) 460 247 US 375 334 283 230 UK 126 Asia HY 2007 HY 2008 HY 2009 HY 2010 HY 2011 HY 2012 ���������������������� 57
Net cash remittances UK and other Business unit net remittances, £m Non UK-Life CAGR +40% 496 425 268 265 263 237 230 197 192 107 97 91 HY 2007 HY 2008 HY 2009 HY 2010 HY 2011 HY 2012 UK Life Other ���������������������� 58
New business growth Group life APE Life APE 1 , £m +11% H1 10: £1,655m H2 10: £1,830m H1 11: £1,824m H2 11: £1,857m H1 12: £2,030m 1,066 1,021 977 964 936 888 880 848 807 809 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 1 Excluding Japan. ���������������������� 59
New business growth Group life new business profit Life new business profit 1 , £m +7% H1 10: £892m H2 10: £1,136m H1 11: £1,069m H2 11: £1,082m H1 12: £1,141m 683 616 605 571 536 498 465 466 453 427 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 1 Excluding Japan. ���������������������� 60
New business growth Group life returns on new business investment Post-tax new business profit per £ of new business strain 1 1 Free surplus invested in new business; excludes Japan. ���������������������� 61
Asia Life APE by quarter Asia APE 1 trend by quarter, £m 2008 2009 2010 2011 HY 2012 1,174 1,209 1,501 1,660 899 1 Excludes Japan and Taiwan agency; prepared on an AER basis. ���������������������� 62
Asia Life APE by market Asia APE by market, £m +30% +17% +37% +8% +49% +13% -18% -6% -5% +50% +73% China 50% 3 Vietnam Indonesia Hong Kong Singapore Malaysia 1 Taiwan India 26% 2 Korea Philippines Thailand 1 st 4 th 1 st 1 st 11 th 1 st 19 th 3 rd 1 st 1 st 11 th Ranking HY 2011 HY 2012 1 Includes Takaful sales @100%. 2 Ranking amongst foreign JVs; market share amongst all insurers. 3 Ranking amongst foreign JVs, market share amongst all foreign and JVs. Source: Based on formal (Competitors’ results release, local regulators and insurance associations) and informal (industry exchange) market share data. Ranking based on new business (APE or weighted FYP depending on the availability of data) ���������������������� 63
Asia Life APE sales by product - % 2 2 3 3 3 3 3 3 3 3 3 4 4 4 4 5 5 5 5 6 7 7 14 19 18 19 17 21 20 23 27 26 28 29 26 30 30 25 33 33 33 34 33 35 18 17 18 20 20 19 22 30 24 27 27 24 25 30 27 31 29 24 32 34 33 30 65 62 60 59 59 57 55 46 44 44 44 43 42 39 38 37 36 34 31 29 28 28 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 Linked Health Par Other ���������������������� 64
Asia Life New business margins New business margin by Analysis of movement in Asia country as % of APE New business profit margin, % 62.6% HY 2011 HY 2012 +0.9% 60.9% China 40% 41% -0.2% -2.4% Hong Kong 72% 57% India 21% 19% Indonesia 76% 87% Korea 41% 43% Taiwan 26% 19% 73% Others 70% HY 2011 Economic Product/ Other HY 2012 Total 63% 61% Assumptions Channel/ Country Mix ���������������������� 65
Asia Life Net inflows and persistency Asia Life inflows 1 , £bn Asia Life inflows (ex-India) 1 , £bn 2.0 1.9 1.9 1.8 1.7 1.7 1.7 1.6 1.5 1.5 1.3 1.2 6.4% 6.2% 6.0% 5.9% 5.5% 5.2% 5.1% 4.8% 4.8% 4.5% 4.4% 2.2% H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 H1 12 H1 10 H2 10 H1 11 H2 11 H1 12 Surrenders/withdrawals as % of opening liabilities 1 Defined as movements in shareholder-backed policyholder liabilities arising from premiums (after deducting insurance & other margins. ���������������������� 66
Asia Life APE and NBP margin APE HY 2012, £m New business profit HY 2012, £m APE growth, HY 2012 vs. HY 2011 NBP margin, % of APE +24% +17% -6% +13% 72% 27% 41% 19% 680 487 133 53 36 33 14 10 SE Asia & HK Korea & China India SE Asia & HK Korea & China India Taiwan Taiwan ���������������������� 67
US retail sales and deposits HY 2012 Retail sales and deposits , $m HY 2011 = $11,988m HY 2012 = $12,278m $371 $493 $17 $24 $1,333 $1,396 $794 $671 $218 $9,423 $9,526 Fixed Annuities Elite Access Life insurance Variable Annuities Index Annuities Curian ���������������������� 68
US Life Variable annuities volumes VA volumes by quarter , sales US$m 69% YTD 66% 42% 43% 81% 72% 5,258 4,974 4,553 • ‘Features War’ 4,383 4,212 4,176 3,756 3,686 3,658 3,335 3,134 2,909 2,368 2,370 2,324 2,250 2,052 1,780 1,769 1,505 1,508 1,412 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 12 th 11 th 12 th 12 th 12 th 12 th 12 th 12 th 8 th 5 th 4 th 4 th 4 th 4 th 3 rd 3 rd 3 rd 3 rd 3 rd 3 rd 3 rd 3 rd 1 Ranking FY New business margin Elite Access $218m 1 Estimated. ���������������������� 69
US Life New business margin New business margin – % APE 73% 71% 66% 45% 37% 34% 31% 25% 20% Variable Annuities Fixed Annuities Fixed-Index Annuities HY 2010 HY 2011 HY 2012 ���������������������� 70
US Life Variable annuity distribution Variable annuity sales by distribution channel, US$bn HY 2012 includes $0.2bn of ‘Elite Access’ sales 9.6 +1% 9.5 IBD: Independent Broker/Dealer, RBD: Regional Broker Dealer. ���������������������� 71
US IFRS profit DAC impact on results Impact on results of DAC amortisation, £m 2011 HY 2011 HY 2012 Gross profits 1 1,313 661 703 New business strain 2 (156) (80) (82) DAC Amortisation - Core (316) (175) (204) - (acceleration) / deceleration (190) (66) 25 Operating result 651 340 442 Core as % of Gross profits 24% 26% 29% 1 Gross profits equals IFRS operating profit pre acquisition costs and pre DAC. 2 Represents acquisition costs no longer deferrable following the adoption of altered US GAAP principles for deferred acquisition costs. ���������������������� 72
US Life Policyholder behaviour Optional benefits elected, % of initial benefits elected (New business) No benefit GMWB (for life) ���������������������� 73
US Life Asset growth Growth in statutory admitted assets, US$bn 117.1 107.6 97.5 81.0 76.7 68.4 58.7 70.9 69.3 48.9 62.8 33.3 55.6 30.0 20.9 22.3 50.9 14.7 46.6 10.4 43.0 7.1 40.2 4.4 5.1 5.6 50.0 48.6 48.9 48.7 48.1 47.7 47.1 46.7 45.2 43.8 42.2 37.9 34.6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 HY 2012 General account Separate account ���������������������� 74
Life IFRS operating profit Source of earnings Technical and other Spread income Fee income With-profits margin The net investment The fees net of Profits derived from Our share of bonus return we make investment expenses the insurance risks of declared by the with- primarily on annuity charged on our linked mortality, morbidity profits fund in the and other spread and separate account and persistency period based business business for managing the assets Expected return on Administration DAC and other Acquisition costs shareholder assets expense adjustment The operating return Acquisition costs Expenses and renewal Costs deferred at we make on incurred on commissions incurred inception net of costs shareholder net assets shareholder-backed by the shareholder in amortised during life of new business including managing the in-force contract and one off commission book items ���������������������� 75
Life IFRS operating profit Source of earnings Technical and other Spread income Fee income With-profits INCOME margin LIFE Expected return on shareholder assets - +/- EXPENSES LIFE Acquisition Administration DAC Other costs expenses adjustments adjustments = LIFE OPERATING PROFIT ���������������������� 76
Life IFRS operating profit Source of earnings – Group (1/3) Source HY 2012 HY 2011 +/- INCOME Total Life income £m LIFE 2,463 2,241 10% - +/- EXPENSES Total Life expenses DAC adjustments 1 LIFE (1,527) (1,397) (9)% 248 150 65% = Total Life operating profit 1,184 994 19% 1 HY 2011 restated for DAC accounting adjustments. ���������������������� 77
Life IFRS operating profit Source of earnings – Group (2/3) Source HY 2012 HY 2011 +/- £m DAC adjustments 1 Total Life income Total Life expenses - +/- 2,463 2,241 10% (1,527) (1,397) (9)% 248 150 65% Technical and With-profits Spread income Fee income other margin 164 171 (4)% 536 533 1% 509 423 20% 1,124 983 14% Spread Margin on Bonus 175 191 (16) AMF (bps) 136 124 12 704 638 10% 35 37 (2) (bps) revenues (bps) Average Average Average Insurance reserves 61.1 55.7 10% reserves 74.8 68.4 9% 420 345 22% reserves 94.1 92.7 2% margin (£bn) (£bn) (£bn) Expected returns 130 131 (1)% 1 HY 2011 restated for DAC accounting adjustments. ���������������������� 78
Life IFRS operating profit Source of earnings – Group (3/3) Source HY 2012 HY 2011 +/- £m Total Life expenses (1,527) (1,397) (9)% Administration Acquisition costs 1 expenses 1 (972) (900) (8)% (555) (497) (12)% Admin expense APE 2 82 80 2 2,030 1,824 11% ratio (bps) Average reserves Acquisition cost 124.1 10% 48% 49% (1) ppt 135.9 (£bn) ratio 1 Relate to shareholder-backed business only. HY 2011 restated for DAC accounting adjustments. ���������������������� 79
Life IFRS operating income – Asia Sources of income Asia IFRS operating income 1 , £m Growth % HY 2012 vs. HY 2011 415 366 5% +82% 4% +6% 3% 13% +20% 5% 13% 16% (1)% 18% 62% +14% 61% HY 2011 HY 2012 Insurance margin Fee income Spread income With-profits Expected return on shareholder assets 1 Excludes margin on revenues, acquisition and administration expenses and DAC adjustments. ���������������������� 80
Life IFRS operating income – US Sources of income US IFRS operating income 1 , £m Growth % HY 2012 vs. HY 2011 945 856 4% (31)% 6% (4)% 37% 43% +25% 43% 38% +35% 16% 13% HY 2011 HY 2012 Insurance margin Fee income Spread income Expected return on shareholder assets 1 Excludes margin on revenues, acquisition and administration expenses and DAC amortisation. ���������������������� 81
Life IFRS operating income – UK Sources of income UK IFRS operating income 1 , £m Growth % HY 2012 vs. HY 2011 399 381 18% +9% 18% 37% (5)% 40% 33% +8% 32% +21% 9% 8% 3% 2% +57% HY 2011 HY 2012 Insurance margin Fee income Spread income With-profits Expected return on shareholder assets 1 Excludes margin on revenues, acquisition and administration expenses and DAC amortisation. ���������������������� 82
Policyholder liabilities Shareholder backed business – Group Policyholder liabilities 1 roll-forward , £bn 3.9 141.8 4.8 (0.5) 133.5 (0.8) 0.9 132.7 Net inflows 2 £5.2bn 4% of CER opening reserves of which: unit linked & separate account £3.8bn; other reserves £1.4bn Liabilities Foreign CER Asia US UK Investment Liabilities 1 Jan 2012 exchange opening net inflows net inflows net inflows related 30 Jun 2012 liabilities and other 1 Shareholder-backed business. 2 Defined as movements in shareholder-backed policyholder liabilities arising from premiums, surrenders, maturities and deaths. ���������������������� 83
Policyholder liabilities Shareholder backed business – Asia Policyholder liabilities roll-forward, £m 1,938 497 19,424 18,269 18,036 (1,047) (233) Net inflows 1 £891m 5% of CER opening policyholder liabilities Liabilities Foreign CER opening Premiums Maturities, Investment Liabilities 30 1 Jan 2012 Exchange liabilities deaths and related and Jun 2102 surrenders other 1 Defined as movements in shareholder-backed policyholder liabilities arising from premiums, surrenders, maturities and deaths. ���������������������� 84
Policyholder liabilities Shareholder backed business – US Policyholder liabilities roll-forward, £m 7,303 1,906 75,264 69,189 68,589 (2,534) (600) Net inflows 1 £4,769m 7.0% of CER opening reserves Liabilities Foreign CER Opening Premiums Maturities, Investment Liabilities 30 1 Jan 2012 Exchange liabilities deaths and related and Jun 2012 surrenders other 1 Defined as movements in shareholder-backed policyholder liabilities arising from premiums, surrenders, maturities and deaths. ���������������������� 85
Policyholder liabilities Shareholder backed business – UK Policyholder liabilities roll-forward 1 , £m 2,018 1,507 47,096 46,048 (2,477) Net inflows 1 £(459)m -1% of opening reserves Liabilities Shareholders’ Shareholders’ Investment Liabilities 30 1 Jan 2012 Premiums maturities, deaths related and Jun 2012 and surrenders other 1 Defined as movements in shareholder-backed policyholder liabilities arising from premiums, surrenders, maturities and deaths. ���������������������� 86
Asset management Group 3 rd party net-inflows Asset Management movement in 3 rd party FUM 1 , £m 426 112,351 4,941 110,204 (2,147) 106,984 Asia 1 Opening 3rd M&G Sub-Total Investment Closing 3rd party FUM net flows markets/other party FUM 1 Excludes Asia MMF and PPMSA. 87 ����������������������
Asset Management M&G net retail sales Average monthly gross and net retail sales , £m 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 HY 2012 Gross sales Net sales ���������������������� 88
IFRS shareholders’ funds HY 2012 movement Analysis of movement in IFRS shareholders’ funds, £m +14% 42 87 1,162 196 74 9,732 9,292 (32) (54) (307) 8,564 (440) Shareholders’ Operating Short term Actuarial Gain on Tax and Net FX impact Other Sub-total Dividend Shareholders’ funds profit fluctuations loss / gain minority movement US (net of tax) funds dilution of 1 Jan in Inv returns on DB Group interests unrealised 30 Jun pension value change Holdings schemes 336p +45p -1p +3p +2p -12p +8p -2p +2p =381p -17p = 364p Pence per share Note: No. of shares in issue 31 Dec 2011: 2,548m, 30 Jun 2012: 2,556m; movement in pence per share has been applied on a pro-rata basis. 89 ����������������������
EEV operating profits Life operating variances – Group Group Life operating variances, £m % of experience variances and assumption changes over opening EEV 1 0.8% 0.1% 1.1% 0.5% (0.4)% 0.6% 1.4% 1.3% Unwind Experience variances and assumption changes 1 Opening EEV of Life operations, excluding goodwill. ���������������������� 90
EEV operating profit Life operating variances – Asia Asia Life operating variances, £m Experience variances and assumption changes as a % of opening EEV1 0.3% (0.6)% 1.9% (0.3)% (2.4)% (1.0)% (0.3)% 0.0% Unwind Experience variances and assumption changes 1 Opening EEV of Life operations, excluding goodwill. ���������������������� 91
EEV operating profit In-force performance Asia in-force 1 , £m US in-force, £m UK in-force, £m (up 5% to £322m) (down 3% to £363m) (down 14% to £338m) 19 (10) (16) (18) Persistency & Mortality / Spread Other items UK Other items withdrawals Morbidity and Corporation Other items 1 tax change HY 2011 HY 2012 1 Net of Asia development expenses (HY 11: £(2)m, HY 12: £(3)m). ���������������������� 92
EEV shareholders’ funds Geographic split Geographical split June 2012, £bn EEV shareholders’ funds , £bn Total Group EEV = 20.6 20.6 19.0 ROEV 1 16.7 Asia 16% 14.0 13.7 13.3 10.9 US 22% UK 13% 45% 9.3 M&G 2 8.3 44% 7.2 43% 39% 5.4 29% 4.0 3.2 24% 2.3 21% Central HY 2006 HY 2007 HY 2008 HY 2009 HY 2010 HY 2011 HY 2012 Asia Rest of the Group 1 ROEV is based on opening shareholders' funds. 2 Including acquired goodwill. ���������������������� 93
EEV shareholders’ funds HY 2012 movement Analysis of movement in EEV shareholders’ funds, £m +7% 2,109 225 42 103 92 21,045 (371) (113) 20,605 (554) (125) (440) 19,637 Shareholders’ Operating Short term Economic Mark to Actuarial Gain on Tax and FX impact Other Sub-total Dividend Shareholders’ funds Profit assumption market own minority (net of tax) funds fluctuations gain on own dilution of 1 Jan in investment changes debt DB pension Group interest 30 Jun returns scheme holdings +8p -13p -4p +4p +2p -20p -5p +4p -17p 771p +76p = 823p = 806p Pence per share Note: No. of shares in issue 30 Jun 2012: 2,556m, 31 Dec 2011: 2,548m; movement in pence per share has been applied on a pro-rata basis. ���������������������� 94
IGD capital Base and sensitivities IGD sensitivity analysis 1 IGD surplus , £bn 20% fall in equity markets £(550)m 40% fall in equity markets £(750)m 152% 283% 305% 275% 270% 10x expected defaults £(650)m 4.3 4.2 4.0 100bps fall in interest rates 3.4 With Permitted Practice 2 Without Permitted Practice 4.6 1.5 4.2 4.0 3.2 2008YE 2009YE 2010YE 2011YE 2012HY HY 12 Interest rates HY 12 Interest rates –100bps Solvency Ratio –100bps 1 All sensitivities measured as at 30 June 2012. The 40% fall in equity markets assumes a 20% immediate fall followed by a 20% fall over the next 20-trading days. 2 The current regulatory permitted practice used by Jackson values all interest rate swaps at book value rather than fair value. ���������������������� 95
IGD capital Movement during the period IGD capital – movement in 2012 (£bn) IGD surplus 31 December 2011 4.0 Net capital generation 0.9 Market movement impact (0.1) 2011 Dividend payment (final) (0.4) External financing and other central costs (net of tax) (0.2) IGD surplus 30 June 2012 4.2 ���������������������� 96
Invested assets Group overview Breakdown of invested assets – HY 2012, £bn Total PAR Unit- Shareholders Group Funds Linked Asia Life US Life UK Life Other Total 128.3 58.9 9.1 6.0 27.1 25.3 1.9 60.3 Debt securities 90.5 23.4 66.0 0.8 0.3 0.0 0.0 1.1 Equity 10.8 8.6 0.7 0.0 0.0 1.5 0.0 1.5 Property Investments 6.2 1.3 0.0 0.0 3.6 1.3 0.0 4.9 Commercial mortgage loans 3.8 1.6 0.0 0.4 0.6 0.0 1.2 2.2 Other loans 12.4 8.8 1.4 0.5 0.2 1.4 0.1 2.2 Deposits 8.3 4.7 0.1 0.3 2.6 0.4 0.2 3.5 Other Investments Total 260.3 107.3 77.3 8.0 34.4 29.9 3.4 75.7 ���������������������� 97
Invested assets Group shareholder exposures – Sovereign debt Breakdown of the shareholder SH sovereign exposures by regions & ratings 1 , £m debt securities portfolio, % US UK Europe Asia Other Total AAA - 3,323 463 144 - 3,930 AA-BBB 2,365 - 103 1,942 24 4,434 Below BBB - - - 774 4 778 Total 2,365 3,323 566 2,860 28 9,142 Total 15% Sovereign £60.3bn Europe by key countries, £m Germany “PIIGS” Other Total Europe 463 45 58 566 Portugal Italy Ireland Greece Spain Total PIIGS - 44 - - 1 45 1 Includes Credit Default Swaps. ���������������������� 98
Invested assets Group shareholder exposures – hybrid bank debt Breakdown of the shareholder debt securities portfolio, % Exposure to Tier 1 and Tier 2 hybrid bank debt, £m Banks 3% Other US UK France Germany “PIIGS” Other Total Eurozone Total Tier 1 1 101 30 - 3 66 229 430 £60.3bn Tier 2 382 618 58 1 98 99 339 1,595 1 Includes Credit Default Swaps. ���������������������� 99
Invested assets UK asset quality – credit reserve UK shareholder debt securities Strength of the £2.1bn credit reserve portfolio by rating 1 BB or below • No defaults of shareholder-backed debt securities 2% BBB AAA • Continued sale of financial subordinated debt 22% 26% holdings • Allowance for credit risk as at 30 June 2012 Total materially in line with prior year 2 £25.3bn – Pillar 1 (IGD) 66 bps (FY 2011: 66 bps) – IFRS 43 bps (FY 2011: 42 bps) 17% • Pillar 1 and EEV assumptions equivalent to 35% 33% AA of current spread over swaps (FY 2011: 33%) 2 A 76% A or above 1 Ratings from different agencies aggregated for presentational purpose. Also includes internal ratings. 2 For Prudential Retirement Income Limited (PRIL). ���������������������� 100
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