Asia Compounding revenues New & renewal premiums Life weighted premium income 1,2 , £bn CER Prudential growth 2007-2016 4 x Prudential customers 4 12.6 2 x MSCI Asia ex Japan 3 10.4 15 m 7 m 8.8 Renewal 7.5 9.1 6.4 7.6 Prudential insurance 5.6 4.8 6.6 penetration 5 4.0 5.5 3.6 4.7 3.1 4.1 3.5 2.9 2.5 New 2.1 + 20 bps 3.5 2.8 2.2 2.0 1.7 1.5 1.3 1.1 1.0 1.1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 Weighted premium income comprises gross earned premiums at 100% of renewal premiums, 100% of first year premiums and 10% of single premiums 4 Change in customer numbers from 7m in December 2006 to 15m in December 2016. 2 Comparatives have been stated on an constant exchange rate basis. Historic have been restated to exclude sales from Korea Life, classified as held for sale. 2014 excludes 5 Prudential opening insurance penetration (2006-2015) calculated by dividing Prudential total premium by total GDP (Source: IMF). Prudential total premium determined by intra-group reinsurance contracts between the UK and Asia with-profits businesses Prudential market share multiplied by total market life premium (Source: Swiss Re). Calculated for HK, IDN, MY, SG, TH, PH, VN, TW. Excludes China and India as a result of 3 Source: Datastream. restricted market access. Prudential insurance penetration increased from 0.4% in 2006 to 0.6% in 2015. . 10 2016 FULL YEAR RESULTS
Asia Growing assets Eastspring FUM 1,2 , £bn 118 89 4.1x 77 60 58 52 50 42 37 37 29 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 Comparatives have been stated on an actual exchange rate basis 2 Funds under management includes both internal and external FUM. 11 2016 FULL YEAR RESULTS
Asia Delivering compounding growth IFRS operating profit 1 , £m 2x 3 2017 objective 2 1,644 1,286 1,108 2x 1,058 959 1,826 757 2x 579 476 728 266 613 226 199 504 508 427 350 285 237 109 111 89 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H 2H 1. Comparatives have been stated on an actual exchange rate. Comparatives have also been restated to exclude the contribution from ‘Held for sale’ Korea. 2012 includes the one off gain on sale of stake in China Life of Taiwan of £51m. 2. 2017 objective is defined as at least 15% CAGR from 2012-17 based on an Asia 2012 IFRS operating profit of £909m (excluding one off of £51m) assuming exchange rates at December 2013. 3. 2x based on implied multiple using 2012 IFRS operating profit of £909m increasing at a 15% CAGR to 2017 12 2016 FULL YEAR RESULTS
US Disciplined execution Delivering VA net inflows in an evolving environment VA net $ 6.0 bn inflows Increasing separate account assets underpin 8% Separate + 11 % earnings 1 growth account assets 2 RBC 485 % Strong capital position ratio 1. Life IFRS operating profit 2 Growth rates have been stated on an constant exchange rate basis 13 2016 FULL YEAR RESULTS
UK Navigating change + 75 % Capital light business model PruFund 10yr return 1 (ABI mixed investment 20%-60%: +39%) PruFund + 50 % AUM Strong demand for PruFund product range M&G + 67 % Performance 2 (Funds above median – 1 year) Improving M&G fund performance and growing FUM M&G + 8 % FUM (External) 1. ABI Mixed Investment 20%-60% Shares TR; performance from 29 December 2006 to 30 December 2016 2. Over the one year to the end of December 2016, 34 retail funds accounting for 67% of M&G retail funds and representing 76% of M&G retail funds under management have delivered top or upper quartile performance. Quartile rankings are based on returns which are net of fees. 14 2016 FULL YEAR RESULTS
Group Strong progress on 2017 objectives Asia Group IFRS operating profit 2 , £m Underlying free surplus 1,3 , £bn Underlying free surplus 1,2 , £m At least £10bn £0.9bn to £1.1bn At least 15% CAGR 1,641 872 CAGR 17% 884 9.2 859 1,644 909 2014 - 2017 Objective 2016 2017 2012 2016 2017 XX Comparatives stated at reported currency basis XX Expressed at Dec 2013 FX rates Note: The objectives assume exchange rates at December 2013 and economic assumptions made by Prudential in calculating the EEV basis supplementary information for the half year ended 30 June 2013, and are based on regulatory and solvency regimes applicable across the Group at the time the objectives were set. The objectives assume the existing EEV, IFRS and Free Surplus methodology at December 2013 will be applicable over the period Following the announcement of the proposed sale of the Korea life business in November 2016, reported amounts exclude the results of the Korea life business. As this sale is expected to complete in 2017. The relevant 2017 objective (Asia IFRS operating profit) has been adjusted. 1 Underlying free surplus generated comprises underlying free surplus generated from long-term business (net of investment in new business) and that generated from asset management operations. The 2012 comparative is based on the retrospective application of new and amended accounting standards and excludes the one-off gain on sale of our stake in China Life of Taiwan of £51 million 2 Constant exchange rates results translated using exchange rates at December 2013. 3 Underlying free surplus generated comprises underlying free surplus generated from the Group's long-term business (net of investment in new business) and that generated from asset management operations. Further information is set out in notes 9 of the EEV basis results 15 2016 FULL YEAR RESULTS
Group Key take-aways Results reinforce structural growth drivers Asia continues to underpin growth Disciplined execution to offset known headwinds Strong balance sheet, defensive positioning Well positioned to deliver long-term value 16 2016 FULL YEAR RESULTS
Nic Nicandrou Chief Financial Officer 17 2016 FULL YEAR RESULTS
Key financial highlights Continued delivery of “Growth and Cash” New business profit 1,2,3 , £m IFRS operating profit 1,2 , £m Free surplus generation 1,2 , £m +24% +7% +18% 3,588 3,088 +11% -2% +10% 4,256 3,043 3,969 2,492 CER CER CER 2015 2016 2015 2016 2015 2016 EEV per share 4 (pence) Group Solvency II surplus 5,6 , £bn Dividend per share (pence) +22% +£2.8bn 48.78 Special 10.00 1,510 12.5 43.50 1,240 +12% Ordinary 38.78 9.7 31 Dec 2015 31 Dec 2016 31 Dec 2015 31 Dec 2016 2015 2016 1 Comparatives have been stated on an actual exchange rate basis 2 Excludes the results attributable to the held for sale Korea life business 3 Excludes contribution from UK bulk annuities 4 Includes goodwill. Comparative based on opening EEV shareholders’ funds after £(0.5)bn adjustment for the impact of Solvency II on UK insurance 5 Before allowing for second interim ordinary dividend (2015: before allowing for second interim ordinary dividend and special dividend) 6 The Group shareholder position excludes the contribution to the Group SCR and Own Funds of ring fenced With-Profit Funds and staff pension schemes in surplus. The 31 December 2016 estimated solvency position includes the impact of recalculated transitionals at the valuation date which has reduced the Group shareholder surplus from £12.9bn to £12.5bn 18 2016 FULL YEAR RESULTS
Strong progression in key earnings drivers Asia Life growing in scale and quality New regular premium APE 1 Life weighted premium Diverse mix of Insurance income 1,3 income 1,2 , £bn £m +15% Indonesia +20% +21% 283 +17% Singapore 164 FY16 12.6 £ 1,040 m 153 +45% Hong Kong 10.4 107 + 24 % +7% Malaysia 85 9.1 Renewal 69 vs 2015 68 7.6 +19% Vietnam 3,359 2,805 China +122% 67 % Of total income 4 Thailand +19% New 3.5 2.8 Taiwan +15% FY15 FY16 FY15 FY16 Other 5 (CER) (CER) 1 Excludes the results attributable to the held for sale Korea life business 2 Weighted premium income comprises gross earned premiums at 100% of renewal premiums, 100% of first year premiums and 10% of single premiums 3 Growth based on constant exchange rates 4 Total income includes insurance income, spread income, fee income, with profits income and expected returns on shareholder assets and excludes margin on revenues 5 Other represents Philippines, India, Cambodia and non-recurring 19 2016 FULL YEAR RESULTS
Strong progression in key earnings drivers Asset management businesses building fee earning base Movement in separate account assets , $bn Movement in life invested assets , £bn +8% 17.9 181.5 8.6 148.8 164.8 24.7 6.0 US UK 6.7 PruFund 16.5 134.2 (7.9) Other 1 1 Jan 2016 Net inflows Markets / 31 Dec 2016 1 Jan 2016 Net flows Markets / 31 Dec 2016 other other Movement in external FUM , £bn Movement in total FUM , £bn +8% +8% 18.5 5.2 117.9 136.8 Eastspring 126.4 6.3 M&G +1.6 +0.6 104.6 (4.1) (0.1) +0.9 (0.3) (1.8) (2.0) (1.1) 1 Jan 1Q 2Q 3Q 4Q Other Markets / 31 Dec 1 Jan 1Q 2Q 3Q 4Q Inst’n Markets / 31 Dec 2016 2 flows 3 Other 2016 2016 flows Other 2016 Retail / institutional flows Retail flows 1 Includes corporate pension, legacy with-profits and annuity business 2 Comparative has been stated on a constant exchange rate basis 3 Represents internal flows (£5.9bn) and third party money market funds (£0.4bn) 20 2016 FULL YEAR RESULTS
Capital allocation High capital velocity Capital velocity , £m Expected undiscounted free surplus from life in-force 1 , £bn 3,331 4.5 12.0 15.8 10.5 13.3 4.0 Years 3.5 6-10 3.0 2.5 Year 5 3,088 2.0 Year 4 1.5 322 Year 3 1.0 Year 2 302 903 0.5 Year 1 485 0.0 Free surplus New Free surplus 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 invested in business emergence (undiscounted) new business profit From 2015 From 2015 life in-force From 2016 Actual life in-force including market effects new business 1 For life business, represents the undiscounted expected transfer of in-force business and required capital to free surplus as at FY16 21 2016 FULL YEAR RESULTS
Group solvency position High quality and resilient capital Solvency II capital position 1,2 Solvency II capital sensitivities 1,2 Sources of capital excluded 31 December 2016, £bn 31 December 2016 from Solvency II £m £bn £ 12.5 bn Surplus Shareholder share of estate Operating capital generation 3 £ 2.7 bn With-profit capital YE16 surplus cover 201% 201 % Cover Permitted practice in the US Equities -40% (7)% Asia de-recognition Interest rates -50bp 4 US diversification benefit (9)% Interest rates +100bp 4 +13% 24.8 Credit spreads +100bp 5 (3)% 12.3 Surplus 6 ~£21bn 15% UK downgrades (5)% Cover 6 ~240% Own Funds SCR 1 The Group and UK Shareholder positions excludes the contribution to the Group SCR and Own Funds of ring fenced With-Profit Funds and staff pension schemes in surplus. The 31 December 2016 estimated solvency position includes the impact of recalculated transitionals at the valuation date which has reduced the Group shareholder surplus from £12.9bn to £12.5bn 2 Before allowing for 2016 second interim ordinary dividend 3 Includes £0.4bn from specific asset and liability actions taken in 2016 to improve the solvency position and de-risk the balance sheet 4 Assumes transitional recalculation which is subject to PRA approval 5 For Jackson, includes credit defaults of 10 times the expected level 6 This adjusted surplus / ratio does not comply with Solvency II rules and has not been reviewed by the PRA 22 2016 FULL YEAR RESULTS
Group IFRS profit Growth in Asia and US fee business underpin 2016 earnings IFRS operating profit 1 2016 vs 2015 , £m IFRS operating profit by business unit 1 , £m 123 FY15 2 FY16 CER AER FY15 CER 3,810 400 4,333 1,286 + 15 % + 28 % Asia 1,644 Asia 213 1,702 + 7 % + 20 % US 2,048 US fee business profit 4 266 1,195 US spread profit 5 (105) ( 31 ) % ( 31 ) % UK 828 M&G profit 6 (28) Anticipated declines (176) UK core (43) 442 M&G 425 ( 4 ) % ( 4 ) % (55) Other Other 3 (656) ( 5 ) % ( 5 ) % (689) FY16 4,058 157 4,256 3,969 ( 2 ) % + 7 % 4,256 41 UK management actions UK new annuities 8 and one-offs 7 1 Excludes the result attributable to the held for sale Korea life business 2 On an actual exchange rate basis 3 Includes PruCap, head office costs, interest received from a tax settlement, Solvency II costs and restructuring costs 4 Fee business represents profits from variable annuity products. As well as fee income, revenue for this product line includes spread income from investments directed to the general account and other variable annuity fees included in insurance margin 5 Spread business is the net operating profit for fixed annuity, fixed indexed annuity and Guaranteed Investment Contracts and largely comprises spread income less costs 6 Excludes M&G performance-related fees of £33m (2015: £22m) 7 Includes amounts relating to UK management actions relating to longevity reinsurance of £197m (2015: £231m), other optimisation actions of £135m (2015: £169m) and provision for the cost of undertaking a review of past non-advised annuity sales practices and related potential redress of £(175)m (2015: £nil) 8 Comprises contribution from retail annuities of £41m (2015: £34m) and bulk annuities £nil (2015: £89m) 23 2016 FULL YEAR RESULTS
Asia Life Strong and consistent growth across key metrics New business New business profit 1 , £m IFRS operating profit 1 , £m APE growth of 19% to £3,599m 4Q APE > £1bn, with >20% growth in 8 countries 2 +22% +15% Hong Kong +21% China +47% Philippines +27% Taiwan +23% Singapore +24% India +58% Vietnam +30% Cambodia +46% 2,030 1,503 1,660 1,303 NBP growth exceeds APE increase • Driven by business mix FY15 (CER) FY16 FY15 (CER) FY16 • H&P +22% Free surplus generation 1 , £m EEV shareholders’ funds , £bn IFRS operating profit Contribution from life in-force: +19% to £1,469m +35% 6 countries with > 15% growth +15% Increasing contribution from smaller countries 18.7 734 Embedded value 638 13.9 RoEV 3 of 22% EEV increased c.2x from end of 2012 FY15 (CER) FY15 FY16 FY16 1 Excludes the results attributable to the held for sale Korea life business 2 On a constant exchange rate basis 3 Based on opening shareholders’ funds including goodwill 24 2016 FULL YEAR RESULTS
US Disciplined execution of fee-based strategy New business profit, £m IFRS operating profit, £m New business -13% +7% Lower APE consistent with industry disruption following DOL reforms 913 NBP positively impacted by mix effects 2,048 790 1,921 FY15 (CER) FY16 FY15 (CER) FY16 IFRS operating profit Free surplus generation , £m IFRS operating profit by product, £m Fee income up +3% Change 4 +19% FY16 • 5% growth in av. separate account assets Fee business 1 1,523 + 21 % Spread margin 24bps lower at 217bps 1,565 1,315 Spread business 2 323 ( 25 )% FY16 3 FY15 (CER) 1 Fee business represents profits from variable annuity products. As well as fee income, revenue for this product line includes spread income from investments directed to the general account and other variable annuity fees included in insurance margin 2 Spread business is the net operating profit for fixed annuity, fixed indexed annuity and Guaranteed Investment Contracts and largely comprises spread income less costs 3 Includes a benefit of £236m from contingent financing of specific US statutory reserves 4 On a constant exchange rate basis 25 2016 FULL YEAR RESULTS
UK Life Retail propositions driving growth in new environment New business profit 1 , £m IFRS operating profit, £m Life IFRS operating profit, £m FY15 +33% -32% FY16 In-force annuities 375 332 With-profits transfer 269 269 268 1,167 201 799 644 Core in-force 601 FY15 FY16 FY15 FY16 Other activities Longevity reinsurance 3 231 197 Free surplus generation 2 , £m PruFund APE , £m Other optimisation actions 4 169 135 UK provision - (175) -4% +52% New bulk annuities 89 - New individual annuities 34 41 873 813 778 1,167 574 1,167 Total Life 799 799 FY15 FY15 FY16 FY16 1 Relates to retail business only 2 Net free surplus generation includes amounts relating to specific asset and liability management actions taken in 2016 to improve the solvency position of our UK life businesses and further mitigate market risk. These actions generated an overall positive effect of £351m (2015: £275m). 2016 also includes a provision for the cost of undertaking a review of past non- advised annuity sales practices and related potential redress of £(145)m net of tax (2015: £nil) 26 3 Transactions executed in 2016 extended the longevity reinsurance programme to cover £14.4bn of IFRS annuity liabilities (31 December 2015 on a Pillar 1 basis: £8.7bn) 4 Relates to specific asset and liability management actions taken in 2016 to improve the solvency position of our UK life businesses and further mitigate market risk 2016 FULL YEAR RESULTS
Asset management Improved performance in second half Total FUM, £bn IFRS operating profit, £m FY16 external retail net outflows of £6.3bn +8% -4% 4Q16 retail net inflows of £0.9bn Revenue 1 down 2% at £923m M&G Retail (13)%, av. Retail AUM 2 (13)% • • Institutional +17%, shift in mix to 265 442 425 246 third party assets Cost income ratio +2pt to 59% FY15 FY16 FY15 FY16 FY16 net inflows of £1.8bn +13% +10% 2H16 net inflows of £2.2bn Eastspring Revenue up 5%, weaker mix 141 128 • Stronger institutional flows 118 105 • Higher internal asset growth FY15 FY16 FY15 FY16 Cost income ratio down 2pts to 56% (CER) (CER) 1 Excluding performance-related fees 2 Excludes South Africa 27 2016 FULL YEAR RESULTS
Group Free surplus generation momentum maintained Life and asset management free surplus generation 1 , £m (CER) Life in-force result 1 , £m (CER 2 ) FY16 FY15 Change FY16 FY15 Change 1,064 14% Asia 1,210 2,817 9% Expected return from in-force 3,060 US 3 1,608 16% 1,866 Experience result 3,4 609 35% 824 UK 4 878 3% 907 124 (20)% Investment return on free surplus 99 New business strain 1 , £m (CER 5 ) 3,550 12% Life in-force result 3,983 518 (2)% FY16 FY15 Change Asset management and Other 508 426 12% Asia 476 4,068 10% Gross free surplus generation 4,491 301 (1)% US 298 Less: new business strain 5 792 14% 903 UK retail 6 42 207% 129 3,276 10% 23 (100)% Net free surplus generation 3,588 UK bulks - 1 The FY16 results for UK insurance operations have been prepared on a basis that reflects the Solvency II regime, effective from 1 January 2016. The 2015 comparative results for UK insurance reflect the Solvency I basis. Free surplus generation excludes central costs of £(666)m (2015: £(588)m) and the results attributable to the held for sale Korea Life business 2 FY15 restated on constant exchange rate basis, increasing Asia life in-force result by £113m and increasing US life in-force result by £182m 3 Includes a benefit of £236m from contingent financing of specific US statutory reserves 4 Includes amounts relating to specific asset and liability management actions taken in 2016 to improve the solvency position of our UK life businesses and further mitigate market risk. These actions generated an overall positive effect of £351m (2015: £275m). 2016 also includes a provision for the cost of undertaking a review of past non-advised annuity sales practices and related potential redress of £(145)m net of tax (2015: £nil) 5 FY15 restated on constant exchange rate basis, increasing Asia new business strain by £40m and US new business strain by £34m 6 Includes new business strain on retail non-profit annuities of £110m (2015: £2m) 28 2016 FULL YEAR RESULTS
Group Free surplus generation momentum maintained Life and asset management free surplus generation 1 , £m (CER) Free surplus generation 1 2016 vs 2015 , £m (CER) (25) FY16 FY15 Change FY15 CER 3,026 275 3,276 2,817 9% Expected return from in-force 3,060 Growth in in-force 243 Experience result 2 609 35% 824 Experience result 48 124 (20)% Investment return on free surplus 99 Investment return on 3,550 12% Life in-force result 3,983 (35) free surplus and AM 518 (2)% Asset management and Other 508 (26) New business strain 4,068 10% Gross free surplus generation 4,491 FY16 442 3,588 3,256 792 14% Less: new business strain 903 (110) Management actions UK annuities new 3,276 10% Net free surplus generation 3,588 and one-offs 2 business strain 1,3 1 The FY16 results for UK insurance operations have been prepared on a basis that reflects the Solvency II regime, effective from 1 January 2016. The 2015 comparative results for UK insurance reflect the Solvency I basis. Free surplus generation excludes central costs of £(666)m (2015: £(588)m) and the results attributable to the held for sale Korea Life business 2 Comprises amounts relating to specific asset and liability management actions taken in 2016 to improve the solvency position of our UK life businesses and further mitigate market risk. These actions generated an overall positive effect of £351m (2015: £275m). 2016 also includes a provision for the cost of undertaking a review of past non-advised annuity sales practices and related potential redress of £(145)m net of tax (2015: £nil) and a benefit of £236m from contingent financing of specific US statutory reserves. 3 Comprises £110m (2015: £2m) in respect of non-profit retail annuities and £nil (2015: £23m) in respect of bulk annuities 29 2016 FULL YEAR RESULTS
Group Resilient free surplus and strong central cash Movement in life and asset Movement in central cash, £m management free surplus 1,2 , £m FY15 FY16 467 Asia 516 (1,268) 470 US 420 (477) 301 UK 300 M&G 3 357 791 335 8,293 468 30 Other UK 147 (1,056) (1,718) 6,575 3,588 Asia 2 Based on 5,293 (1,267) 2,626 local statutory 1,718 418 2,173 US 2 (681) Based on (416) US RBC (199) UK 2 1,706 Based on Solvency II 1 Jan Net free Market Currency Cash Corporate 31 Dec Cash Dividends Central 1 Jan 31 Dec 2016 1 effects / effects remitted to surplus 2016 costs activities / 2016 remitted to paid 2016 other Group other generated Group 1 Free surplus as at 1 January 2016 restated for Solvency II effects. 2 UK free surplus is based on excess over Solvency II capital requirements; US free surplus is based on surplus in excess of 250% RBC Company Action Level; Asia free surplus is based on excess over own assessment of local required capital, based on a 1/25 year stress event. Asset management and other operations are included on an IFRS net assets basis (net of goodwill) 3 Includes PruCap 30 2016 FULL YEAR RESULTS
Equity shareholders’ funds Operating performance drives positive movement EEV Equity 1 IFRS Equity Per Per £bn share (p) £bn share (p) Operating profit after tax 3.4 131 5.5 215 (1.2) (47) (0.6) (22) Investment variance and other 0.0 1 n/a n/a Unrealised gain on AFS 1.0 40 3.8 148 Foreign exchange and reserve movements (1.3) (49) (1.3) (49) Dividend (0.2) (9) (0.4) (16) Held for sale Korea life business Retained earnings FY16 1.7 67 7.0 276 13.0 504 32.4 1,258 Opening shareholders’ equity Adjustment for impact of Solvency II 2 - - (0.5) (18) Closing shareholders’ equity 14.7 568 39.0 1,510 +22% 3 +13% Note: totals may not sum due to rounding and differences in shares in issue between 31 December 2015 and 31 December 2016 1 The 2016 results for UK insurance operations have been prepared on a basis that reflects the Solvency II regime, effective from 1 January 2016. The 2016 opening shareholders’ equity results for UK insurance reflect the Solvency I basis 2 Reflects the effect of adopting Solvency II in the calculation of the UK insurance EEV shareholders’ funds 3 Based on opening EEV shareholders’ funds after £(0.5)bn adjustment for the impact of Solvency II on UK insurance 31 2016 FULL YEAR RESULTS
Solvency II Strong capital position at Group and local level Group Shareholder Solvency II capital position 1 , £bn Local solvency capital position Surplus £9.7bn £12.5bn Solvency II 2015 2016 193% 201% cover 229% Asia 4 250% Local regulatory basis US 5 481% 485% Risk Based Capital 24.8 20.1 UK 12.3 Solvency II 10.4 Shareholder-backed 6 146% 163% With-profits 175% 179% Own SCR Own SCR Funds Funds 31 Dec 2015 2 31 Dec 2016 3 1 The Group Shareholder position excludes the contribution to the Group SCR and Own Funds of ring fenced With-Profit Funds and staff pension schemes in surplus. The 31 December 2016 estimated solvency position includes the impact of recalculated transitionals at the valuation date which has reduced the Group shareholder surplus from £12.9bn to £12.5bn 2 Before allowing for the 2015 second interim ordinary dividend and special dividend 3 Before allowing for the 2016 second interim ordinary dividend 4 Based on a total aggregated available capital over total aggregated capital requirements across Asian life businesses 5 Relates to Jackson National Life 6 Relates to PAC Ltd 32 2016 FULL YEAR RESULTS
Solvency II Strong Group capital position and lowered sensitivities FY16 movement in Solvency II capital 1 , £bn Solvency II surplus estimated sensitivities 1,3 Impact on SII Impact on coverage ratio solvency ratio 31 December 2015 2 9.7 FY16 estimated surplus £12.5bn 201% Operating experience 2.3 ~25pts (1.3) Management actions 40% equity fall £11.0bn 194% (7)% 0.4 Market effects (1.1) ~(15)pts 50bp interest rate fall 5 £11.9bn (9)% 192% Currency movements 1.6 Dividends paid 100bp interest rate rise 5 £13.5bn 214% +13% (1.3) Sub-debt issuance ~(2)pts 1.2 100bp credit £11.4bn 198% (3)% spread widening 6 Other 3 (0.3) 15% downgrade to £12.0bn (5)% 31 December 2016 4 196% 12.5 UK annuities 1 The Group Shareholder position excludes the contribution to the Group SCR and Own Funds of ring fenced With-Profit Funds and staff pension schemes in surplus. The 31 December 2016 estimated solvency position includes the impact of recalculated transitionals at the valuation date which has reduced the Group shareholder surplus from £12.9bn to £12.5bn 2 Before allowing for 2015 second interim ordinary and special dividend 3 Includes adjustments to opening balance sheet of £(0.1)m and impact of model refinements 4 Before allowing for 2016 second interim ordinary dividend 5 Assumes transitional recalculation which is subject to PRA approval 6 For Jackson, includes credit defaults of 10 times the expected level 33 2016 FULL YEAR RESULTS
Solvency II Transitional amortisation not expected to impact capital generation Risk margin release vs transitional amortisation for UK annuity business 1 (£m) Contribution of transitionals £2.5bn 200 margin release 150 Impact of risk Impact on Group Solvency II ratio ~20ppts 100 50 Represents core capital – no impact on dividend Impact of transitional 0 amortisation Offsets impact of risk margin established on -50 business in-force at 1 January 2016, primarily on -100 UK annuities -150 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Net impact 1 Net of tax 34 2016 FULL YEAR RESULTS
Group Dividend rebased Dividend per share (pence) Dividend per share (pence) 48.78 • Full year ordinary dividend +12% to 43.50p per share 43.50 Special 10.00 • Progressive dividend policy, balancing security and retention for investment in growth dividend • Second interim ordinary dividend of 30.57p (2015 second interim ordinary dividend of 26.47p) • Ex-dividend date: 30 March 2017 Ordinary +12% • Record date: 31 March 2017 43.50 38.78 dividend • Payment of 2016 second interim ordinary dividend o 19 May 2017 (UK, Ireland and Hong Kong) o On or about 26 May 2017 (Singapore and ADR holders) 2015 2016 35 2016 FULL YEAR RESULTS
Group Long-term value creation Life and AM assets 1 , IFRS operating profit 2 , EEV shareholders’ Dividends 3 , pence funds 1 , £bn £bn £m Life invested assets CAGR CAGR CAGR CAGR +11% +14% +10% +15% 418 348 334 293 280 48.78 39.0 4,256 3,969 10.00 32.4 29.2 2,937 3,154 2012 2013 2014 2015 2016 24.9 2,504 22.4 Asset management external AUM CAGR 29.19 33.57 36.93 38.78 43.50 +8% 183 167 163 148 134 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Special dividend 2012 2013 2014 2015 2016 1 Comparatives are as reported 2 Comparatives are adjusted for new and amended accounting standards and excludes Japan and Taiwan agency. Comparatives have also been restated to exclude the contribution from the held for sale Korea Life. 3 Ordinary dividend per share 36 2016 FULL YEAR RESULTS
Group Summary £ 3,088 m Growth and Cash metrics at new highs, led by Asia New business profit 1,2 + 24 % On track for 2017 financial objectives £ 4,256 m Strong progression in performance drivers IFRS operating profit 1 + 7 % Continued Asia new business momentum £ 3,588 m Resilient VA net inflows Free surplus generation 1 + 18 % Growth in PruFund assets Positive 4 th quarter for asset management £ 12.5 bn Solvency II surplus Balance sheet and solvency robust 201 % 12% increase in annual ordinary dividend 43.50 p Ordinary dividend + 12 % 1 Growth rates based on actual exchange rates. Excludes the results attributable to the held for sale Korea business 2 Excludes contribution from UK bulk annuities 37 2016 FULL YEAR RESULTS
Mike Wells Group Chief Executive 38 2016 FULL YEAR RESULTS
Group Priorities Leverage scale Accelerate Expand health & protection Asia Penetrate wealth Adapt product offerings Grow US Utilise competitive advantages & Enhance UK Rational capital deployment Leverage Group strength Optimise Adapt to changing regulation Capital Significant optionality 39 2016 FULL YEAR RESULTS
Asia Accelerate Over 500 k agents Leverage scale Expand and evolve agency model 10 k branches Life 2.4 % Top 3 position in insurance Leverage bancassurance 9 of 12 penetration 1 countries 4 Embed digital capability With 2015 2016 3.3 bn population access to Expand health Premier Health Insurance provider 1.6x & protection Out of pocket 42 % healthcare Significant protection gap driving growing health spend 885 spend 2 Grow participation 2015 2016 2012 2013 2014 2015 2016 Health and Protection APE £m £ 118 bn #1 Retail Fund manager 5 Penetrate wealth $ 2.5 tr Mutual funds Growing wealth and financial deepening £ 141 m AUM 3 IFRS operating 2015 2016 Expand products, distribution and processes profit Eastspring AUM 1 Insurance penetration source Swiss Re Sigma 2015. Insurance penetration calculated as premiums in % of GDP. Asia penetration calculated on a weighted population basis 4 12 markets excludes Korea and includes Laos 2 World Health Organisation - Global Health Observatory data repository (2013). Out of pocket as % of Total Health Expenditure. Asia calculated as average out of pocket 5 Source: Asia Asset Management – Fund Manager Surveys. Based on assets sourced in Asia ex-Japan, Australia and New Zealand. Ranked according to 3 Source: Investment Company Institute, industry associations and Lipper as of 1Q'16. Datastream as of Jun 2016. Mutual fund AUM calculated by multiplying 12% penetration with footprint GDP participating firms only. 40 2016 FULL YEAR RESULTS
US Grow £ 120 bn Premier retirement income player Largest retirement asset pool in the world 2 US £ 2.0 bn $ 16 tr retirement advisor assets 1 IFRS operating 2015 Leverage cost, performance & technology profit advantage to access new asset pools Separate Account assets Launched fee based VA and EA 1. Source: Cerulli Associates – advisor metrics 2015 2. Source: 2016 Willis Towers Watson Global Pension Assets Study 2016 41 2016 FULL YEAR RESULTS
UK Enhance £ 311 bn Well known brands with strong investment bias UK&E £ 1.3 bn Growth in + £ 3 tr Second largest asset management market in the UK AUM 1 world 3 IFRS operating M&G profit Assets under Accelerate transition to capital light business management 2 1. Source: The Investment Association. PWC Asset Management 2020. Prudential calculations. Growth rate based off Europe forecast CAGR of 4.4%. Increased in AUM from 2015 to 2023. 2. UK funds under management of £185bn plus M&G external funds under management of £137bn less cross holdings of £11bn. 3. Source: The CityUK 42 2016 FULL YEAR RESULTS
Group Optimise capital Strong capital position Strong capital position £ 12.5 bn Disciplined capital allocation 2016 SII surplus 1 Ratio 201% High capital velocity Strong returns Adapt to changing regulation 26 % 2016 IFRS ROE 2 Significant optionality 1 The Group and UK Shareholder positions excludes the contribution to the Group SCR and Own Funds of ring fenced With-Profit Funds and staff pension schemes in surplus. The 31 December 2016 estimated solvency position includes the impact of recalculated transitionals at the valuation date which has reduced the Group shareholder surplus from £12.9 billion to £12.5 billion 2 Operating profit after tax and non-controlling interests, as a percentage of opening IFRS shareholders’ funds. 43 2016 FULL YEAR RESULTS
Group Long-term track record IFRS operating profit 1,2 , £m New business profit 1,2 , £m Free surplus generation 1,2,3 , £m 4.0x 5.0x 5.5x 3,088 4,256 3,588 3,969 CAGR CAGR 2,609 3,043 CAGR +15% +17% 3,154 +19% 2,586 2,937 2,104 2,454 2,057 2,504 2,064 1,776 1,986 2,000 1,671 1,506 1,811 1,415 1,450 1,438 1,077 1,1811,232 1,109 916 798 808 656 623 703 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 Comparatives have been stated on an actual exchange rate basis 2 Comparatives are adjusted for new and amended accounting standards and excludes Japan and Taiwan agency. Comparatives have also been restated to exclude the contribution from the held for sale Korea Life. 3 2012 includes £51m gain from sale in China Life of Taiwan 44 2016 FULL YEAR RESULTS
Group Summary Clear strategy focused on significant structural growth opportunities Leadership positions and capabilities underpin peer / market outperformance Resilient operating model with clear value discipline Significant headroom from leveraging scale, efficiencies and skills Well positioned to deliver profitable growth 45 2016 FULL YEAR RESULTS
Prudential plc 2016 Full Year Results 14 March 2017 46 2016 FULL YEAR RESULTS
Appendix 2016 Full Year Results 47 2016 FULL YEAR RESULTS
48 Clear strategy 2016 FULL YEAR RESULTS Group
Group Premium franchises US UK Asia Premier retirement income Well recognised brands with strong track Leading pan regional franchise record player In Asia since 1923 168 years of providing financial Founded in 1961 security 15m life customers 4m life customers 6m life customers Top 3 position in 9 out of 12 life markets 1 Over £24bn PruFund funds Leading 2 Asian asset manager 16% market share under management 4 with +20 years operating history Variable Annuities 3 £118bn funds under £265bn funds under $215bn of statutory admitted management 4 management 4 assets 4 1. 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 availability of data). 2. Based on assets sourced from the region. Excluding Japan, Australia and New Zealand as at September 2016. Source Asia Asset Management September 2016 (Ranked according to participating regional players only). 3. Source: LIMRA 3Q 2016. 4. As at 31 December 2016. 49 2016 FULL YEAR RESULTS
Group Disciplined capital allocation New business profit 2,3 , £m New business strain 1,3 , £m 3,088 268 +282% 2,609 318 790 2,104 2,057 +18% 259 1,776 237 809 903 1,506 241 767 129 1,415 718 694 706 195 638 624 623 598 65 266 583 1,109 568 UK 539 293 298 29 65 103 45 530 65 166 2,030 267 808 54 495 298 187 300 281 1,482 UK 432 202 197 326 US 289 1,151 1,114 US 190 967 476 781 386 654 331 296 283 272 511 259 Asia 421 Asia 209 185 2008 2009 2010 2011 2012 2013 2014 2015 2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 Free surplus invested in new business. 2 On a post tax basis. 3 Comparatives back to 2008 have been restated to exclude the contribution from the held for sale Korea Life insurance business. FY2014 comparatives have been restated to exclude the contribution from the sold PruHealth and PruProtect businesses. FY2008 to FY2013 comparatives include the results of PruHealth and PruProtect. Excludes Japan Life and Taiwan agency. As reported (RER) 50 2016 FULL YEAR RESULTS
Group Effective response to challenges IFRS operating profit 1,2 , £m 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Solvency II • Brexit •Rising oil and •Sub-prime •Liquidity crisis • Start of global • Greece and • Concern over • US debt ceiling • Concern over • Asia FX finalisation commodity prices mortgage credit recession Ireland bailouts China hard- China & EM depreciation • US Elections •Sub-prime • Europe re-enters crises begins landing growth • Asia / China •Military coup in market concerns • European • Regulatory recession • Expectation of a • US Department slowdown fears Thailand •China and sovereign debt change in India • Focus on • QE tapering rise in US interest of Labor •Lehman • FAIR review in Europe growth crisis begins exposure to rates • US$ •Powerful Brothers Singapore • RDR goes live in • NAIC proposals concerns deepening strengthening & earthquake kills collapse • All time low the UK • UK annuity • Regulatory • China SAFE Eurozone debt commodity price thousands in •Savers begin interest rates changes •Asset risk change in the UK • Designation of controls crisis decline Java, Indonesia withdrawing concerns • Focus on accelerates GSIIs announced • Indonesia savings from • UK elections / Solvency II elections Northern Rock pensions implications • Military coup in freedoms •BNP Paribas first • US industry VA Thailand major bank to • Greece losses emerge acknowledge the negotiations risk of exposure • Europe QE to sub-prime • US rate rise mortgage 4,256 markets 4,500 599 3,969 550 3,154 3,500 2,937 450 2,504 2,500 2,000 1,811 350 1,438 1,232 1,500 1,181 1,077 250 500 251 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -500 150 Total AUM 3, £bn 1 Adjusted for new and amended accounting standards and excludes Japan Life 2 Comparatives have been stated on an actual exchange rate basis and exclude the contribution from the held for sale Korea Life 3 Total AUM based on Total Funds Under Management at FY2008- FY2016 51 2016 FULL YEAR RESULTS
Group High quality and growing earnings Sources of IFRS operating income 1,2,3,4 , £m 7,504 6,932 6,278 1,171 5,883 1,153 5,011 1,129 1,071 1,991 4,418 1,671 3,979 1,061 1,393 1,329 1,049 3,108 77% 1,629 2,801 1,000 998 1,682 722 1,635 750 1,587 574 537 1,362 431 294 1,252 1,140 2,175 1,888 914 932 58% 1,610 1,384 1,072 864 683 400 455 2008 2009 2010 2011 2012 2013 2014 2015 2016 Insurance margin Life Fee income Asset Mgt Fee income Spread income Other 1 Comparatives adjusted for new and amended accounting standards. 2 Comparatives have been stated on an actual exchange rate basis. 3 Excludes Japan Life and Taiwan agency. All comparatives have been restated to exclude the contribution from the held for sale Korea Life insurance business. FY2014 comparatives have been restated to exclude the contribution from the sold PruHealth and PruProtect businesses. FY2008 to FY2013 comparatives include the results of PruHealth and PruProtect. 4 2016 and 2015 excludes Longevity reinsurance and other management actions to improve solvency FY16 £332m (FY15: £400m), and £175m provision in 2016 for review of past annuity sales. 52 2016 FULL YEAR RESULTS
Group Free surplus generation Free surplus and dividend, £m 3.9x Net free surplus Reinvestment rate 20% Reinvestment 903 rate 19% Reinvestment 718 Reinvestment rate 18% rate 20% Reinvestment 583 Reinvestment rate 22% 623 rate 21% Reinvestment rate 27% Reinvestment 598 539 4,491 rate 31% 624 3,761 Reinvestment 3,588 638 Reinvestment rate 49% 3,169 3,077 3,043 517 rate 33% 2,662 2,586 2,525 2,454 445 767 449 2,295 463 256 2,088 2,064 1,986 413 1,671 374 376 1,565 1,450 1,365 281 381 1,011 974 916 895 305 798 237 781 655 642 449 344 286 243 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Surplus generation 1 Investment in new business 1 Net free surplus Dividend paid net of scrip Central outgoings 2 Special Dividend 1 Excludes Japan Life and Taiwan agency. All comparative surplus generation and investment in new business figures have been adjusted to exclude the contribution from the held-for-sale Korea life, central outgoings have not ben restated to exclude Korea Life. FY2014 comparatives have been restated to exclude the contribution from the sold PruHealth and PruProtect businesses. FY2007 to FY2013 comparatives include the results of PruHealth and PruProtect. As reported (RER). 2 Central outgoings includes Asia RHO costs. 53 2016 FULL YEAR RESULTS
Group Delivering cash Dividend, pence per share 48.78 Special dividend 10.00 43.50 38.78 36.93 33.57 29.19 30.57 25.19 23.85 26.47 25.74 19.85 23.84 18.90 18.00 17.14 20.79 Total dividend 16.32 17.24 17.24 13.56 Final / second 12.91 12.30 11.72 11.02 interim dividend 12.93 12.31 11.19 9.73 7.95 8.40 6.61 5.99 6.29 5.70 Interim dividend 5.30 5.42 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 +5.0% +5.0% +5.0% +5.0% +20.2% +5.6% +15.9% +15.0% +10.0% +5.0% +12.2% 54 2016 FULL YEAR RESULTS
Group Well positioned to deliver across cycles IFRS earnings split by currency 1,2,3 , IFRS income by revenue source, In-force IFRS operating profit 4,5 , £bn FY16 % % 2010-2016 CAGR 15% 4.2 Other 17% Other USD linked 21% Insurance Spread margin 16% income Life 3.6 77% USD 48% Life Fee Asset Mgt income Fee income Asset 7% GBP 14% 0.6 management 2016 2016 1. USD linked includes Hong Kong and Vietnam where currencies are pegged to the USD, and Malaysia and Singapore where currencies are managed against a basket of currencies including the USD 2. Includes long-term, asset management business and other businesses 3. For operating profit UK sterling includes amounts in respect of central operations as well as UK insurance operations and M&G 4. Operating profit comprises the following: Asia life as disclosed in note 1(b) of the ‘additional financial information’, after deducting development expenses. Jackson IFRS operating profit after adding back acquisition costs expensed (and not deferred) in the period of £195m. UK operating profit excluding both the new business profit of £41m arising on bulk and individual annuities sales in 2016, £332m from management actions in 2016 and excluding the £175m provision for the review of past annuity sales. Asset management operating profit for M&G, PruCap, Eastspring and US broker-dealer and asset management 5. As reported (RER) 55 2016 FULL YEAR RESULTS
Group Cash remittances to Group Business unit net remittances, £m 1,718 1,625 1,482 335 M&G & PruCap 357 1,341 342 147 Other UK 1,200 30 292 1,105 301 300 UK 297 935 325 280 355 202 688 313 420 US 470 297 415 175 515 294 420 249 167 322 434 80 516 199 Asia 467 1 400 400 341 39 233 206 144 40 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 1 Includes £42 million of proceeds from the sale of Japan Life. 56 2016 FULL YEAR RESULTS
Group Growing value at consistent returns Shareholders’ equity (EEV), £bn 39.0 32.4 29.2 24.9 22.4 19.6 18.2 15.3 15.0 14.6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Return on Embedded Value 1 , 15% 14% 15% 18% 16% 16% 19% 16% 17% 17% % 1 Return on embedded value is based on EEV post-tax operating profit, as a percentage of opening EEV basis shareholders’ equity. 57 2016 FULL YEAR RESULTS
Asia Long term opportunity GDP per capita in 2010, against the US GDP per capita,1990 US$ 1 35,000 Hong Kong Singapore • Pan Asian leader: #1 by NBP 2 30,000 • Top 3 in 9 /12 Asian countries 3 25,000 Taiwan • Market leading platform 20,000 − Over 500,000 agents 15,000 − Access to over 10,000 bank branches Malaysia − 14.6 million customers 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 US GDP per capita 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. 2 NBP = New Business Profit; Prudential estimates based on information disclosed in company reports. Amongst pan Asian international (private) insurers. 3 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 availability of data). 58 2016 FULL YEAR RESULTS
Asia Favourable dynamics Population 2 (m) Market 2016 GDP GDP penetration 3 (%) ($bn) 2 growth 2 259 Indonesia (1995) 1 1.3% 901 4.9% 104 1.4% 311 6.4% ASEAN and Hong Kong Philippines (1996) 69 3.7% 408 3.2% Thailand (1995) 93 0.8% 203 6.1% Vietnam (1999) 7 13.3% 314 1.4% Hong Kong (1964) 32 3.4% 309 4.3% Malaysia (1924) 6 5.6% 298 1.7% Singapore (1931) 1,310 2.7% 2,231 7.6% India (2000) JV’s 1,379 2.0% 11,918 6.6% China (2000) 24 15.7% 528 1.0% Mature Taiwan (1999) Markets 16 - 19 7.0% Cambodia (2013) Nascent Markets 7 - 14 7.5% Laos (2015) Myanmar 4 ( 2013 ) 52 - 68 8.1% 1 Year in bracket denotes start of operation. 2 Source: IMF data, October 2016. 3 Source: Swiss Re. Market penetration based on life insurance premiums as a percentage of GDP in 2015 (estimated). 4 Myanmar rep office only. 59 59 2016 FULL YEAR RESULTS
Asia Products meet customer needs and create shareholder value Health and Protection – Out of pocket medical expenses 1 Annual premium for a customer aged 50 (indexed) 143 123 19 117 114 100 73 Saving 100 81 27 Spend Without Basic Government Prudential Prudential Co. A Co. B Co. C Co. D insurance insurance Protection Product 1 Expenses for a male aged 50 for heart diseases and heart surgery treatment. 60 2016 FULL YEAR RESULTS
Asia Affordable products underpin consumer demand Prudential product premium 1 Developed markets health insurance spend 2 Healthcare spend as % of average annual income 2 100% = average annual income 12% 11% 11% Linked 10% 46 premium Premiums paid = 9% of average annual 5.0% income H&P 54 premium Premiums as a proportion of average annual % of premium used Prudential US France Germany UK Example income to purchase benefit 1 Average Prudential customer spend on insurance products. 2 Source: OECD, UN population stats, Prudential estimates. Premium spend includes healthcare expenditure by private and public sources except for the US. Healthcare spend data adjusted for working age population and unemployment rates. 61 2016 FULL YEAR RESULTS
Asia Growing demand for healthcare Household consumption by category 1 , % 100% = $1.3tn 6 Personal items 14 Recreation 3 Education 12 Transportation Communications 3 5 Clothing 7 Healthcare 5 Household products 100% = $0.5tn 15 Housing 5 14 Discretionary 2 10 2 9 6 Semi-Necessities 6 13 31 Food Necessities 34 1990 2010 1 Euromonitor, McKinsey, Prudential estimates. 62 2016 FULL YEAR RESULTS
Asia Wealth and financial assets ownership Breakdown of personal financial assets Life 12% 24% Non-Life 9% 39% Asset Mgt 9% 18% 24% 20% Bank Deposits 70% 21% 38% 16% Per capita income level Up to $2,000 to $15,000+ $2,000 $15,000 Source: Oliver Wyman analysis; Prudential analysis. 63 2016 FULL YEAR RESULTS
Asia Life APE by market Asia APE by market, £m (Constant Exchange Rate) 40% 1,912 1,368 1% (25)% 8% 371 31% 351 347 21% 279 3% 26% 244 225 (14)% 11% 199 75% 175 152 150 145 146 116 103 92 89 70 63 14 8 Hong Kong Singapore Indonesia Malaysia China 50% India 26% Taiwan Vietnam Philippines Thailand Cambodia 3 2 nd 2 nd 1 st 1 st 5 th 2 1 st 13 th 2 nd 9 th 3 rd 1 st 1 Ranking 2015 2016 2016 v 2015 X% XX 1 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). 2 Total JV / foreign players only 3 Ranking among private players, share among all players on Fiscal year basis 64 2016 FULL YEAR RESULTS
Asia High quality, defensive growth Regular and Single Premium APE 1 , £m c 90% Regular premium 3,359 MSCI Asia ex Japan 2 2,518 1,918 1,829 1,654 1,420 1,302 1,013 841 648 206 120 515 106 151 494 103 360 91 79 281 340 137 114 103 139 148 183 206 194 240 23 11 77 27 63 46 45 56 68 81 75 6 9 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Single Premium APE Regular Premium 1. Comparatives have been stated on a reported exchange rate. Comparatives from 2006-2016 exclude the contribution from the held for sale Korea life 2. Source: Datastream. 65 2016 FULL YEAR RESULTS
Asia Life APE sales by product - percent Asia APE by product, % 2% 3% 4% 3% 3% 3% 4% 4% 4% 5% 5% 5% 6% 6% 6% 7% 8% 8% 7% 8% 17% 18% 19% 22% 26% 29% 29% 26% 33% 33% 35% 33% 33% 37% 38% 38% 19% 43% 18% 50% 19% 57% 56% 26% 27% 27% 26% 29% 31% 30% 32% 30% 32% 27% 30% 29% 26% 24% 62% 61% 58% 24% 24% 49% 43% 42% 42% 39% 32% 31% 29% 30% 28% 27% 25% 25% 24% 20% 15% 15% 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 Linked Health Par Other 66 2016 FULL YEAR RESULTS
Asia Life Flows and persistency Asia Life gross flows (ex-India) 1,2,3 , £bn Asia Life gross flows 1,2,3 , £bn 4.2 4.7 3.9 3.8 3.8 4.2 4.2 4.1 12.6% 3.4 3.7 13.8% 3.4 2.9 2.9 2.3 9.9% 8.9% 8.6% 8.5% 9.4% 8.5% 7.1% 7.6% 7.2% 7.7% 9.0% 9.2% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Surrenders/withdrawals as % of opening liabilities 3 1 Defined as movements in shareholder-backed policyholder liabilities arising from premiums (after deducting insurance & other margins). 2 Excludes Japan and Taiwan agency. 3 All comparatives have been restated to exclude the contribution from the held for sale Korea Life. 67 2016 FULL YEAR RESULTS
Asia Eastspring Funds under management 2 , £bn 2012 – 2016 Growth 118 2.0x 2.8x 14 89 #1 Retail Fund Manager 77 11 September 2016 1 1.9x 58 8 60 58 5 42 5 39 £ 118bn 33 31 Funds under management 46 2.1x 36 30 22 22 2012 2013 2014 2015 2016 Third party Asia life UK Life/ JNL 1 Based on assets sourced from the region. Excluding Japan, Australia and New Zealand as at Sept 2016. Source Asia Asset Management Sept 2016 (Ranked according to participating regional players only) 2 As reported (RER) 68 2016 FULL YEAR RESULTS
US The Baby Boomer Retirement Wave is Picking up Steam • Over 40 million people will reach retirement age in the next decade • Private defined benefit plans are disappearing and government plans are underfunded • Social Security was never intended to be the primary retirement plan and its long-term status is in question • Life expectancy at age 65 has increased significantly • Due to low interest rates, investors are forced to seek out equity markets in order to earn adequate returns • Individual investors struggle to capture market returns and are exposed to volatile equity markets Source: U.S. Census Bureau, Population Division. 2014 estimate of population. Generations as defined by Pew Research Center, 2014 69 2016 FULL YEAR RESULTS
US Opportunities Measured by Advisors US Retail Financial Advisors: 308,937 Licensed to Sell Annuities: 260,765 Industry Market Sizing Jackson Producers With Annuities on the Books: 230,779 Jackson Selling Agreements: 237,883 Wrote an Annuity Last Year: 212,901 Jackson Appointed Advisors: 139,312 Active Annuity Producer: 101,723 2015 Jackson Producers: 50,274 2015 Top Producers 1 : 13,613 Source: Morningstar, Cerulli Associates, in partnership with the Investment Management Consultants Association, WealthManagement.com, the Financial Planning Association, and OnWallStreetAnalyst Note: Advisors who are licensed to sell variable annuities must hold both an insurance license and either a Series 6 or Series 7 license as defined by Cerulli. 1 Top Producers defined as more than $500,000 variable annuity sales in 2015. 70 2016 FULL YEAR RESULTS
US More than $16 trillion in assets across existing channels Advisor Distributed Assets (in $billions) 5.1% Wirehouses 5.0% National and regional B/D 10.5% RIA 6.6% Independent B/D 11.7% Independent / RIA Hybrid 8.5% Retail bank B/D 4.3% Insurance B/D $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Total Assets Variable Annuity Assets Source: Cerulli Associates, The State of US Retail and Institutional Asset Management 2016 Bubbles represent 5-year growth CAGR as of December 31, 2015 71 2016 FULL YEAR RESULTS
US FY 2016 retail sales and deposits Retail sales and deposits, $m FY 2015 = $26,008m FY 2016 = $18,664m 1,470 728 689 753 8 700 2,785 4,805 15,491 2,007 12,422 2,814 Fixed Annuities Variable Annuities – with living benefits Variable Annuities – w/o living benefits, non EA Elite Access Fixed Index Annuities Separately managed accounts 72 2016 FULL YEAR RESULTS
US VA volumes VA volumes by quarter, sales US$bn ‘Features War’ 2009 2010 2011 2012 2013 2014 2015 2016 6.6 6.4 6.4 2007 2008 6.0 5.7 5.7 5.7 1.4 1.1 5.5 1.4 5.3 5.3 5.2 5.2 0.4 1.3 5.0 0.2 1.1 1.3 4.7 1.1 4.4 4.6 4.6 1.0 4.4 1.0 1.1 4.3 4.3 4.3 4.3 4.2 4.2 0.8 3.8 0.7 1.3 3.7 3.7 0.7 0.7 0.7 0.7 3.3 3.1 2.9 2.4 2.4 2.3 2.3 2.1 1.8 1.8 1.5 1.4 1.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 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 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st 1 st 3 rd 3 rd 3 rd 3 rd 2 nd 2 nd 1 st 1 st xx Ranking 2 Elite Access 1 Estimated. 2 Morningstar Annuity Research Center. 73 2016 FULL YEAR RESULTS
US Variable annuity distribution Variable annuity sales by distribution channel, US$bn 23.1 17.2 15.1 11.5 4.0 3.0 4.0 2.7 2015 2016 IBD RBD/Wirehouse Bank IBD: Independent Broker/Dealer, RBD: Regional Broker Dealer. 74 2016 FULL YEAR RESULTS
US Cash remittances Cash remittances, $m $3,808m 710 680 550 530 470 400 280 125 63 2008 2009 2010 2011 1 2012 2013 2014 2015 2016 RBC Ratio 438% 417% 483% 429% 423% 450% 456% 481% 485% 1 Net remittances from Jackson include $197m in 2011 representing release of excess surplus to the Group. 75 2016 FULL YEAR RESULTS
US DAC impact on IFRS profit Impact on results of DAC amortisation, £m 2015 3 2016 • Core amortisation will drive DAC charge in the absence of significant market movements Gross profits 1 2,231 2,510 • Core amortisation includes modest impacts from New business strain 2 (205) (195) assumption unlockings (approx. £15m) • The deceleration of amortisation is driven by 2 causes: DAC Amortisation • Removing 2013 returns decelerated the - Core (514) (527) amortisation by £71m - (Acceleration) / deceleration (2) 93 • 2016 returns decelerated amortisation by £22m Operating result 1,510 1,881 Core as % of Gross profits 23% 21% 1 Gross profits equals IFRS operating profit pre acquisition costs and pre DAC, excluding REALIC. 2 Represents acquisition costs no longer deferrable following the adoption of altered US GAAP principles for deferred acquisition costs. 3 As reported (RER) 76 2016 FULL YEAR RESULTS
US Asset growth Growth in statutory admitted assets, US$bn 215.2 199.1 189.4 170.9 142.8 148.8 134.2 127.5 107.6 108.8 97.5 80.1 81.0 76.7 70.9 69.3 58.8 62.8 48.9 55.6 33.3 50.9 30.0 20.9 22.3 46.6 14.7 43.0 40.2 10.4 7.1 4.4 5.1 5.6 66.4 64.9 62.7 62.1 61.9 50.0 48.8 48.1 47.1 46.7 47.7 48.6 45.2 43.8 42.2 37.9 34.6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General account Separate account 77 2016 FULL YEAR RESULTS
US Reserves Return Assumptions IFRS Mean Return vs S&P Historical 1 All accounting bases assume 20-year equity market returns 10 well below the mean returns posted by the S&P 500 9 8 IFRS return assumptions are especially punitive. There has never been a 20-year period for the S&P with as weak a 7 Value of $1 Investment return profile as what is used in the mean IFRS scenario. 6 5 4 S&P (mean) 3 EEV (mean) 2 Statutory (CTE 90) IFRS 1 0 Time 0 5yrs 10yrs 15yrs 20yrs Duration 1 As shown at the Group’s November 2016 Investor Day, except IFRS and EEV, which has been updated to as at 31 December 2016 78 2016 FULL YEAR RESULTS
US IFRS impact ‘below-the-line’ FY2016 VA hedge results, net of related DAC , £m 0 (500) (1,000) (1,500) (1,709) (2,000) (1,923) (133) (122) 469 (2,500) Equity hedge VA reserve Interest rate Non-operating IFRS net instruments changes hedges fee income, hedge result net of claims 79 2016 FULL YEAR RESULTS
US Moving reserves to ‘fair value’ Guarantee Benefit Liability Supplemental Disclosure 1 , net of DAC , £m 2,500 688 2,000 1,500 1,412 Liabilities 1,000 500 0 82 Assets (195) (2,377) (500) As recorded 2 Change in Volatility Adjustment to full Hypothetical fair rates 3 adjustment 5 fees 4 value with full fees 1 A positive number indicates liability while a negative number indicates an asset. 2 GMWB and GMDB IFRS basis. 3 For GMDB and GMWD liabilities only. Excludes adjustment for volatility, which is shown separately. Includes application of market based (31.12.16) earned rates based on the greater of the swap and treasury curves (2.4% representative 10-year rate) and AA corporate bond discount rates (3.9% representative 10-year rate) in place of long-term rate of 7.4% for IFRS (8.4% discount rates used for pre-2013 issues). 4 Value of fees over and above those in reserve calculations. 5 For GMDB and lifetime GMWB liabilities only. Application of market based (31.12.16) volatility curve (21.6% representative 5-year rate) instead of long-term 15% level rate for IFRS. 80 2016 FULL YEAR RESULTS
US GMWB policyholder behaviour sensitivities GMWB policyholder behaviour sensitivities, FY 2016 US$bn 7 • Policyholder behaviour experience is continuously monitored and a comprehensive study 6 is conducted on an annual basis. • For IFRS and Statutory accounting purposes, assumptions are set at the conservative end 5 of the plausible range (i.e. best estimate with an explicit margin for conservatism). For example; 4 • Lapse - Lifetime GMWB ultimate lapse assumptions at significantly ITM levels are assumed to be 35% of the base lapse assumption • Utilisation - For-Life GMWB utilisation assumptions at attained ages 65+ are 50- 3 85% (with special provisions for benefits with incentives to delay withdrawals) 2 • To measure the sensitivity to these assumptions, IFRS Equity and Statutory Total Adjusted Capital (TAC) were computed under severe shocks to these already conservative 1 assumptions. The shocks were as follows: • Lapse - lapse rates for ITM policies were reduced to half the assumed levels. For example, ultimate lapse rates on significantly ITM Lifetime GMWB policies were 0 reduced from 35% to 17.5% of the base lapse level, resulting in ultimate lapse Total Adjusted Capital IFRS SH equity rates of less than 1.5% for utilising policyholders • Utilisation - utilisation rates beyond the bonus period, if applicable, were increased Total Lapse sensitivity impact by 10% (i.e. 110% of the best estimate assumption). Utilisation sensitivity impact 81 2016 FULL YEAR RESULTS
US Capital, hedging and policyholder behavior Total Adjusted Capital • Hedging programme continues to effectively mitigate US$bn risks 5.1 31 December 2015 • Earned guarantee fees of 130 bps per annum (c$1.8bn in FY 2016). Expected guarantee fees of $2.0bn for Operating profit 1.2 2017 (0.6) Dividend • Equity allocations remain below our 84% pricing (0.7) Reserves net of hedging and other effects assumption 0.3 Contingent financing of specific US statutory reserves • Total adjusted capital excludes gains on interest rate swaps: $413m net of tax at 31 Dec 2016 (31 Dec 2015: 5.3 31 December 2016 gain of $356m) 82 2016 FULL YEAR RESULTS
US GMWB unhedged cash flow Unhedged GMWB Cash Flow Exposure, 31 December 2016 Includes guarantee fees only $millions S&P @ 12/31 = 2,239 Base, 5% Gross Return 2,000 Uses prudent best estimate assumptions (AG43, C3P2) Guarantee Fees 1,800 PV Future Guarantee Fees 10,286 Benefits 1,600 PV Benefits (2,358) 5% gross return is well below historical average market return 1,400 PV Fees Less Benefits 7,928 1,200 Ignores guarantee fees collected to date as well as reserves 1,000 800 PV of future GMWB fees exceeds PV of benefits over a wide range of market shocks 600 400 200 Negative cash flow is far into future even in bad scenarios 0 1 6 11 16 21 26 31 36 41 46 No material strain on liquidity in any given year Year $millions $millions -100 bps Rate Shock Down 40% S&P Shock (S&P = 1,343) Base, 5% Gross Return Base, 5% Gross Return 2,000 2,000 Guarantee Fees Guarantee Fees 1,800 PV Future Guarantee Fees 10,969 1,800 PV Future Guarantee Fees 11,485 Benefits Benefits 1,600 1,600 PV Benefits (3,094) PV Benefits (13,563) 1,400 1,400 PV Fees Less Benefits 7,876 PV Fees Less Benefits (2,078) 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 1 6 11 16 21 26 31 36 41 46 1 6 11 16 21 26 31 36 41 46 Year Year 83 2016 FULL YEAR RESULTS
US GMWB unhedged cash flow Unhedged GMWB Cash Flow Exposure, 31 December 2015 $millions S&P @ 12/31 = 2,044 Includes guarantee fees only Base, 5% Gross Return 2,000 Guarantee Fees Uses prudent best estimate assumptions (AG43, C3P2) 1,800 PV Future Guarantee Fees 9,842 Benefits 1,600 PV Benefits (2,298) 5% gross return is well below historical average market return 1,400 1,200 PV Fees Less Benefits 7,544 Ignores guarantee fees collected to date as well as reserves 1,000 800 PV of future GMWB fees exceeds PV of benefits over a wide range of market shocks 600 400 200 Negative cash flow is far into future even in bad scenarios 0 1 6 11 16 21 26 31 36 41 46 No material strain on liquidity in any given year Year $millions $millions -100 bps Rate Shock Down 40% S&P Shock (S&P = 1,226) Base, 5% Gross Return Base, 5% Gross Return 2,000 2,000 Guarantee Fees Guarantee Fees PV Future Guarantee Fees 10,523 1,800 PV Future Guarantee Fees 10,467 1,800 Benefits Benefits 1,600 1,600 PV Benefits (3,034) PV Benefits (12,497) 1,400 1,400 PV Fees Less Benefits 7,489 PV Fees Less Benefits (2,031) 1,200 1,200 1,000 1,000 800 800 600 600 400 400 200 200 0 0 1 6 11 16 21 26 31 36 41 46 1 6 11 16 21 26 31 36 41 46 Year Year 84 2016 FULL YEAR RESULTS
UK Life Growth across wrappers and new propositions Individual Pensions , (APE, £m) Retail Growth, (APE, £m) Bonds, (APE, £m) +31% +139% +301% = 384 962 333 294 289 658 401 150 72 2014 2015 2016 + 2014 2015 2016 2014 2015 2016 Drawdown , (APE, £m) PruFund ISA , (APE, £m) Legacy, (APE, £m) +371% +70% -54% 433 367 171 151 198 165 124 262 216 102 198 73 35 2014 2015 2016 2014 2015 2016 2014 2015 2016 Bulks Other legacy 85 2016 FULL YEAR RESULTS
UK Life Improved asset gathering capability UK life flows £bn YoY Change Premiums 9.0 £ 118bn With-profits +13% 6.1 31 December 2016 invested assets 3.7 2.7 2.3 2.2 2.0 1.5 1.2 1.2 1.0 0.5 (0.8) (0.9) (1.2) (1.9) (3.0) (3.1) (3.2) (3.3) Shareholder +5% Claims £ 64bn (6.1) backed (6.5) (6.6) (7.2) invested assets 31 December 2016 2013 2014 2015 2016 Retail Growth products 1 Legacy products 2 Annuities 3 1 Includes investment bonds, individual pensions, drawdown and PruFund ISA 2 Includes corporate pensions and other 3 Includes retail and bulk annuities 86 2016 FULL YEAR RESULTS
UK Life PruFund Range PruFund Investment Performance 1 Growth in PruFund AuM (£bn) 100% PruFund Growth +75% 80% 60% 24.7 +39% 40% ABI Sector comparator 16.5 20% 11.6 0% 9.1 7.5 5.4 -20% 4.1 2.5 0.1 0.3 0.9 2006 2008 2010 2012 2014 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AuM 1. ABI Mixed Investment 20%-60% Shares TR; performance from 29 December 2006 to 30 December 2016 87 2016 FULL YEAR RESULTS
M&G Diversified across principal asset classes M&G Group assets under management by client type and asset class (%), 31 December 2016 1 1% 1% 1% 1% 3% 5% 6% 9% 11% 21% 2% 4% 5% 12% 31% 1% 3% Retail AUM Wholesale AUM Internal AUM £64.2bn £72.6bn £128.1bn 73% 52% 58% Equities Fixed Income Real Estate Multi-asset Infrastructure Real estate mortgages/debt Private equity Other debt/private finance lending Structures products Other alternative investments Cash 1 Asset class splits exclude assets from Prudential Investment Managers South Africa business. 88 2016 FULL YEAR RESULTS
Asset Management M&G – retail FUM Retail funds under management , £bn 16% 16% 21% 19% 26% 35% 43% 39% 42% 43.5 42.5 40.4 37.3 37.3 36.0 33.5 31.8 26.9 26.1 23.7 23.5 16.0 14.5 9.0 8.2 5.0 3.1 2008 2009 2010 2011 2012 2013 2014 2015 2016 UK / Other Europe Europe FUM as % of Retail FUM X% 89 2016 FULL YEAR RESULTS
M&G Operating profit M&G IFRS operating profit, £m 1.8 x 488 442 441 425 371 357 284 238 2009 2010 2011 2012 2013 2014 2015 2016 90 2016 FULL YEAR RESULTS
IFRS operating profit – sources of earnings Life insurance - Asia Source FY 2015 +/- FY 2016 (CER) £m except reserves £bn Total operating profit 1 1,303 15% 1,503 = Total Life income DAC adjustments Total Life expenses - + 3,125 11% (1,930) (10)% 108 37% 3,472 (2,117) 148 Spread Technical and other With-profits Fee income income margin 164 17% 192 50 (4)% 170 2% 2,662 11% 48 174 2,959 Spread Margin on 143 1 144 AMF (bps) 114 (3) 1,821 5% Expected returns 111 1,919 (bps) revenues Average Average Insurance 11.5 16% 13.3 14.9 5% 841 24% 79 25% 99 15.6 1,040 reserves reserves margin 1 2015 comparatives have been restated to exclude the contribution from the held Korea Life. 91 2016 FULL YEAR RESULTS
IFRS operating profit – sources of earnings Life insurance - US Source FY 2015 +/- FY 2016 (CER) Total operating profit £m except reserves £bn 1,908 8% 2,052 = Total Life income Total Life expenses DAC amortisation - + 3,655 - (1,993) 8% 246 (1)% 3,644 (1,836) 244 Spread Technical and other Fee income Expected returns income margin 845 (5)% 1,886 3% 898 (1)% 26 (54)% 802 1,942 888 12 Spread 241 (24) AMF (bps) 192 (2) 217 190 (bps) Average Average 35.0 6% 98.4 4% 37.0 102.0 reserves reserves 92 2016 FULL YEAR RESULTS
IFRS operating profit - sources of earnings Life insurance - UK Source +/- FY2015 FY2016 Total operating profit £m except reserves £bn 1,167 (32)% 799 = Total Life income Total Life expenses 1 Management actions/ other 2 - - 1,014 (13)% (247) 2% 400 (61)% 885 (243) 157 Spread Technical and other Expected returns Fee income With-profits income margin 127 (13)% 258 (31)% 298 (9)% 269 - 177 62 (5)% 270 110 59 269 Spread Margin on 82 (28) AMF (bps) 28 (1) 54 27 179 16% 207 (bps) revenues Average Average Insurance 31.5 4% 22.4 (3)% 32.7 119 (47)% 21.8 63 reserves reserves margin 1 Includes DAC adjustment of -£2m (FY15: -£2m) 2 Includes amounts relating to UK management actions relating to longevity reinsurance of £197m (2015: £231m) and other optimisation actions of £135m (2015: £169m) and provision of £(175)m (2015: £nil) 93 2016 FULL YEAR RESULTS
IFRS operating profit – sources of earnings Asset management Source Asset Management operating FY2015 profit 1 +/- FY2016 (CER) £m except average assets £bn 570 (1)% 566 Eastspring M&G Investments 442 (4)% 128 10% 425 141 Other income 2 Total expenses Total income 2 Total expenses Underlying income 939 (2)% 36 28% (533) (2)% 342 5% (214) (2)% 923 46 (544) 360 (219) Average fees 4 Average fees 4 37 - Cost / income ratio 3 34 (2) Cost / income ratio 3 37 32 (bps) (bps) Average assets (£bn) 252.5 (1)% 57% 2ppt Average assets (£bn) 100.0 9% 58% (2)ppt 250.4 59% 109.0 56% 1 Excludes PruCap and US asset management business. 2 Includes performance- related fees and share of associates results. 3 Cost/income ratio excludes performance-related fees, carried interest and profit from associate, and for Eastspring, taxes on JV operating profit. 4 Average fees exclude performance-related fees (PRF) and M&G’s share pf operating profit from PPMSA. 94 2016 FULL YEAR RESULTS
IFRS operating profit sources of income Life insurance - Asia Asia IFRS operating income 1,2 , £m Growth % FY 2016 vs. FY 2015 (CER) +25% 1,553 -4% 6% 1,304 3% +17% 13% 6% +2% 4% 11% 13% 13% +24% 67% 64% 2015 CER 2016 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. 2 2015 comparatives restated to exclude the held for sale Korea Life. 95 2016 FULL YEAR RESULTS
IFRS operating profit sources of income Life insurance - US US IFRS operating income 1 , £m Growth % FY 2016 vs. FY 2015 (CER) 3,644 -54% 3,655 0% 1% -5% 22% 23% +3% 53% 52% -1% 24% 25% 2015 CER 2016 Insurance margin Fee income Expected return on shareholder assets Spread income 1 Excludes acquisition, administration expenses and DAC amortisation. 96 2016 FULL YEAR RESULTS
IFRS operating profit sources of income Life insurance - UK UK IFRS operating income 1,2 , £m Growth % 835 FY 2016 vs. FY 2015 15% 678 -13% 16% 32% +0% 40% 31% -31% 26% -5% 8% 9% -47% 14% 9% 2015 2016 Insurance margin 3 Fee income Spread income With-profits Expected return on shareholder assets 1 Excludes margin on revenues, acquisition and administration expenses and DAC amortisation.. 2 Excludes earnings from longevity reinsurance and other management actions of £332m (2015: £400m) and the provision for review of past annuity sales £175m. 97 2016 FULL YEAR RESULTS
EEV operating profit (post-tax) Operating return on EEV of 17% EEV operating profit by business unit , £m (CER) New business profit , £m (CER 2,3 ) Group 3,088 +11% 2,774 FY15 (CER) vs FY15 2 FY16 2,774 +226 Volume +17 Economics +20% Asia Life 3,074 Other 4 +71 FY16 3,088 (3)% US Life 1,971 FY15 CER FY16 (25)% UK Life 643 In-force profit , £m (CER 2 ) Asset Management 1 (2)% 508 Group +1% +4% FY16 FY15 6,196 2,600 2,567 1,894 1,826 Unwind (13)% Other (699) 457 559 Experience 249 182 Assumption +3% Total 5,497 changes 2,600 2,567 FY15 CER FY16 1 Includes post-tax operating profit from M&G, PruCap, Eastspring, Curian and US broker-dealers, and UK general insurance commission. 2 FY15 restated on constant exchange rate basis, increasing Asia new business profit by £178 million, US new business profit by £104 million, Asia in-force profit by £97 million and US in-force profit by £128 million. 2015 comparatives have also been restated to exclude the held for sale Korea Life business. 3 2015 restated to exclude contribution from bulk annuities. 4 Other includes operating assumption changes, channel mix, geographic mix, product mix and pricing actions. 98 2016 FULL YEAR RESULTS
EEV operating profit Life operating variances - Group Group Life operating variances 1,2 , £m Experience variances and assumption changes % opening EEV 3 0.6% 1.2% 3.1% 1.0% 1.6% 1.9% 2.4% 3.4% 2.7% 2.3% 2.2% 1,894 1,685 1,469 1,416 1,086 1,074 1,037 1,016 791 847 740 744 706 655 657 461 410 342 242 140 131 56 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Unwind Experience variances and assumption changes 1 Excludes Japan Life and Taiwan agency. The comparative results have been adjusted to exclude the held for sale Korea life. FY2014 comparatives have been restated to exclude the contribution from the sold PruHealth and PruProtect businesses. FY2006 to FY2013 comparatives include the results of PruHealth and PruProtect. 2 2016 - 2014 Experience variances and assumption changes are shown pre development costs. 2006 - 2013 are shown post development costs. 3 Opening EEV of Life operations, excluding goodwill. Note: Unwind & Experience variances / assumption changes are on a post tax basis. 99 2016 FULL YEAR RESULTS
EEV operating profit In-force performance Asia in-force 1 , £1,044m US in-force, £1,181m UK in-force, £375m 479 378 173 102 149 119 57 5 (29) Spread Other exp. variances/ op. assumption (70) Persistency & Mortality / Morbidity changes withdrawals and Other items Total variances / other FY15 FY16 1 The 2015 comparative results have been adjusted from those previously published for the reclassification of the results attributable to the held-for-sale Korea life business. 100 2016 FULL YEAR RESULTS
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