Prudential Plc Q2 FY2021 earnings call

• Purpose: To help people get the most out of life by making healthcare affordable, protecting wealth, and growing assets, with a goal to serve 50 million customers by 2025.
• Asia-focused strategy: Expected to support long-term shareholder returns, aiming for substantial growth in new business profit faster than markets’ GDP and long-term double-digit growth in embedded value per share. Committed to being net carbon neutral by 2050 through three ways: profitable growth in key markets, digitizing products/services at scale, and humanizing the company and advice channels.
• Resilient performance: Delivered double-digit growth in new business profits, embedded value, IFRS operating profit, and operating free surplus in the 2021 half year despite COVID-19 challenges.
• Distribution: Broadened multi-channel distribution, with strong performances in agency and bancassurance channels. Enhanced agent quality and productivity in agency, and expanded bancassurance presence in markets like Thailand and Vietnam.
• China presence: Deepened presence by accessing largest provinces, growing multi-partner bancassurance distribution, and building agency capability, with strong new business growth in bancassurance and competitive agency margins.
• Digital initiatives: Established Pulse ecosystem with 30 million downloads since 2019, generating $158 million of APE in the first half, representing around 10% of total sales in available markets.
• Demerger of Jackson: Proposed demerger to complete strategic transformation to focus exclusively on higher growth and higher risk-adjusted return businesses in Asia and Africa, expected to complete in September 2021.

Prudential PLC's segments showed strong financial performances. In China, it has a footprint covering over 80% of the wealth and life premiums written in the country and saw strong new business growth. India is a major market with Prudential being a major investor in top 3 life insurance and asset management players in the region. Indonesia is the number one insurer in the world’s fourth most populous nation with the largest economy in ASEAN and number one in the fast-growing Sharia segment. Thailand is delivering rapid growth supported by the enhanced TTB bancassurance deal. Eastspring has $254 billion of funds under management, with strong life flows and a top 10 position in 7 out of 11 markets. Financial metrics included double-digit growth in new business profits, embedded value, IFRS operating profit, and operating free surplus. Revenue contributions vary by segment with each playing a key role in the overall performance.

• Proposed demerger of Jackson: Expected to complete in September 2021, with Jackson ready for independence and listing after preparations. The demerger will complete the strategic transformation to focus on Asia and Africa.
• Potential equity raise: Intended to enhance financial flexibility and allow redemption of existing high-coupon debt. Expect debt refinancing after demerger completion subject to market conditions.
• Long-term growth: On track for long-term double-digit growth in embedded value per share, though near-term affected by COVID-related operating environment and border closures.

• COVID-related disruption: Continuing economic and social challenges due to COVID-19 leading to volatile sales patterns, low vaccination rates in some markets resulting in higher mortality and increased COVID-related claims.
• Volatile operating environment: Varying impacts across markets due to COVID, with comparatives getting more challenging as the year progresses and some markets like Indonesia, Malaysia, etc., being more affected.
• Dependence on market recovery: Dependence on economic recovery in key markets for business growth and maintaining growth trajectories.