Business and Financial Overview Mark Tucker Chief Executive Managing Director, Finance, Actuarial & IT Garth Jones 15th Nov, 2000

Business and Financial Overview


Mark TuckerChief Executive

Managing Director, Finance, Actuarial & IT

Garth Jones

15th Nov, 2000


Content

Key messages

PCA’s mandate

PCA’s profitable growth strategy

PCA: Today

PCA: The future

1


PCA is very well positioned and resourced to takeadvantage of the region’s exciting growth potential

PCA has now succeeded in breaking through the formidable entry barriers

PCA has a pan-regional presence and platform

PCA has a clear strategy & business model for life and retail financial services and a track record of delivery

2

3

4

Key Messages

1 Significant, material & profitable growth opportunities in Asia

2


Quantum change in pace, size

and return from the Asian region

on a scale which in time will

make a significant & positive

impact on the Group’s results”

“

Group’s 1994 Mandate To PCA

3 Business and Financial Overview


PCA’s Strategy For Growth: Four Dimensions

Geography

Expand into Asian markets with largest, profitable pools of target customers

Distribution Improve still further

effectiveness of current channels

Expand optionsaccess more

customersmaximise

“stickiness” & productivity

throughcross-selling

Products Continue to meet

customer needs for core life insurance savings products

Offer broader range of RFS products to deepen customer relationship

Professional/Mass-affluent segment

Target Customers

4


Understanding Our Customers

In depth local research

UK heritage & history

Prudence

A competitive advantage

Trust

&

Credibility

5


Customer Growth: 1994-2000

1994

2000

6

150,000

Life 100%

1,500,000

Life 80%

Mutual Funds 20%

+1,000%


Geography: 1994


Singapore

Malaysia

Hong Kong


Geography: 2000


Thailand

LIFE INSURANCE

India (life)

India (AMC)

China

Singapore

Malaysia

Vietnam

Indonesia

Philippines

Taiwan

Hong KongHK, Singapore

Japan


Products & Distribution: 1994

ProductsLife -Traditional - Unit Linked

General

DistributionAgency

MalSinHK

9

Geography


Products & Distribution: 2000

ProductsLife -Traditional -Unit linked

Mutual Funds

General

DistributionAgency

Bank

Broker

Direct

MalSinHK Thai Indo Phil India JapanTaiwanVietnam China

1994 2000

Geography

10


….. now A Regional Life Insurance Leader

3-5

1-2

None

1-2 3-6 7-8Market presence/licences

Number of markets

among top 5

Aegon Allianz Zurich/Eagle Star Prudential US

9+

Sun Life of Canada New York Life CMG Great Eastern Life

Manulife

RSA CGNU

PCA1994

PCA2000

AXA ING Aetna

AIG

11

Cathay Life


Summary: Key Drivers Of Growth

Favourable regional economic growth & wealth distribution trends

Success in getting licences Successful JV partnering with respected

local financial brands Building competitive advantage focusing on

quality, productivity and economic value of dominant agency distribution channel

12


Summary: Key Drivers Of Growth

Excellence in regional brand promotion

Systematic processes rolled out regionally

Consistent application of a delegated “Think regional, Act local” management approach

13


PCA Today: Overview

A trusted brand across Asia Overcoming barriers to entry - unlocking

opportunities for profitable growth Establishing joint-ventures and alliances

to accelerate profitable growth A vision and operational & management

structure designed for the future with people who can deliver

A financial track record that demonstrates all of the above

14


A Trusted Brand Across Asia

15


Overcoming Barriers To Entry

Limited number of licences available

Early market presence and history critical

Understanding operating and regulatory environment

People constraints; experience and expertise

16


Establishing JV Partners: Selection Criteria

Financially sound

Strong ethical approach to business

Well trusted brand with good reputation in market

Appreciation of financial services sector and its challenges

Prudential ownership/shared ownership of the customer

17


Strong Existing JVs/Alliances With Major Financial Institutions

18


PCA’s Vision

Quantum change in

pace, size and return

from the Asian

region on a scale

which in time will

make a significant &

positive impact on

the Group’s results ”

“

#1 in customer focus

#1 in attracting the best people

To be Asia’s #1 life & retail financial

solutions provider

1994 Today

19

Maximising shareholder value


PCA’s Operating Structure

Level of market development Scale of operations Depth of management resources

Established Markets - Hong Kong, Singapore, Malaysia

Emerging Markets - Thailand, Indonesia,

Philippines, Vietnam, India

China & Taiwan

Mutual Funds

India

Taiwan

Investment Management

Hong Kong

Singapore

Japan

Life

20


PCA’s Management Team

21

Mina HsuBrand &

Communications

Garth JonesFinance, Actuarial & IT

Peter BoothHuman Resources

Hugh DaviesAsia Desk

Mike BishopAlternative Distribution

Gary BennettBusiness Development

Mark E Tucker Chief Executive

Investment Mgt

Life Mutual Funds

Dominic LeungTaiwan & China

Dan BardinEmerging Mkts

Tan Suee ChiehEstablished Mkts

Ajay SrinivasanMutual Funds

Toru UedaPPM Japan


PCA’s Operating And Management Structures

CapitalisingOn Regional

Synergies

Leverage expertise & resources across

borders

Spread corporate values

Develop critical areas of excellence

Make Prudential a household name

22


PCA’s People: Fundamental To Our Success

Recruitment of core competency talent

PRUflexiben

PRUuniversity

MBA fast-track programme developing management resource pipeline

The financial services employer of choice

23


PCA:Financial Overview


PC Asia Financial Performance Strong, Diverse and Sustainable

Very strong growth all round in sales and achieved profits

The diversity of geography, product and type of business

That significant and material shareholder value has already been delivered

1

2

3

25


New Business: Strong Life Regular Premium Growth

Rebounding from Crisis earlier than expected

£m

0

50

100

150

1996 1997 1998 1999 9 mths 2000

+17%

-34% +34%

+120% on9 mths 99

Established Emerging Taiwan & China

26


New Business: Strong Life Single Premium Growth

Single Premiums also recovered rapidly from Crisis

Established Emerging Taiwan & China

£m

0

50

100

150

1996 1997 1998 1999 9 mths 2000

+157%

-81%

+333%

+62% on9 mths 99

200

250

27


160

140

120

100

80

60

40

20

0

New Business: Life APE

1996 1997 1998 1999 9 mths 2000

£m

Full Year 9 mths

CAGR 9 mths 1996 - 9 mths 2000 of 20%

28


New Business: Life APE

New Business Geographic Mix 9 mths 2000

Taiwan29%

Established61%

Emerging10%

29


Life Operations: New Business Achieved Profits

Full Year 6 mths

CAGR 6 mths 1996 - 6 mths 2000 of 35%

1996 1997 1998 1999 6 mths 2000

£m

90

80

70

60

50

40

30

20

10

0

30


Life Operations: NBAP Product Mix 6 mths 2000

Linked 40%

Non-Linked30%

Non Par30%

New business achieved profit on APE 60%31


Life Operations: Building Core Agency DistributionNumbers of agents ‘000s

Dec 96

25

20

15

10

5

0Dec 97 Dec 98 Dec 99 Sep 00

32


Agency: Productivity & Persistency

Prudential’s agency force more productive than market

Malaysia +200%Singapore + 28%Hong Kong + 28%

Prudential’s persistency also higher than market

33


£313m net sales for 9 mths 2000 up 46% over 9 mths 1999

Mutual Funds India: Net Sales

1998

300

250

200

150

100

50

01999 9 mths 2000

Full year 9 mths

£m

#1 in Private Sector

350

34


PCA: Total Funds Under Management

Asian Investment Management businesses all reporting to PCA from 1999

Acquisition of Prudential Taiwan SITE adds a further £1.1bn

Dec96

12

PCA Life

Pensions

£bn

10

8

6

4

2

0

Mutual Funds

UK Life Fund

Dec97

Dec98

Dec99

Jun00

35


PCA: Total Funds Under Management - June 2000

UK Life Fund62%

Pensions2%

PCA Life30%

MutualFunds6%

Total FUM £10.4bn excluding Prudential Taiwan SITE

36


Operating Achieved ProfitsCAGR 6 mths 1996 - 6 mths 2000 of 35%

1996

£m120

100

80

60

40

20

01997 1998 1999 6 mths 2000

Full Year 6 mths

37


MSB Profits

16

14

12

10

8

6

4

2

0

£m

Full Year 6 mths

1996 1997 1998 1999 6 mths 2000

38


PCA: Value Added To Shareholder Funds

ROE: 28%

Expected Return Value Added

60

£m

19991 Jan - 30 Jun

20001 Jan - 30 Jun

50

40

30

20

10

0

39


18% of new business achieved profits 6 mths 2000 - up from 15% in 1999

£250m APE sales 9 mths 2000 19% of group-wide total - up from 11% in 1999

PCA Contribution to Group Results

Asia18%Asia18%

US42%US

42%

UK &Europe

40%

UK &Europe

40%

New Business Achieved Profits

40


PC Asia Financial Performance Strong, Diverse and Sustainable

Very strong growth all round in sales and achieved profits

The diversity of geography, product and type of business

That significant and material shareholder value has already been delivered…. and we are confident it will continue

1

2

3

41


PCA:The Future


PCA: 2000-2005 Profitable Growth Objectives

Regional alignment with savings market opportunities

Promote long-term savings through life insurance and value adding product enhancements

Complement life offering with expanded product range and retail financial services customer proposition

Multiple distribution Scale applied to capture operating economies

43


Challenges - External

Political instability

Economic shocks

Regulatory environment

Competition

44


Challenges - Internal

Attracting, retaining and developing the best people

Managing in multilingual/ multicultural environment

Integrating acquisitions Maintaining excellent relationships

with JV partners Keeping our unique PCA culture as

we grow

45


Products & Distribution PCA 2000

ProductsLife -Traditional -Unit linked

Mutual Funds

General

DistributionAgency

Bank

Broker

Direct

MalSinHK Thai Indo Phil India JapanTaiwanVietnam China

1994 2000

Geography

46


PCA: Sources Of Competitive Advantage

Proven formula for transforming acquired and start-up businesses

Prudential Group’s financial strength: where security of many large regional players in doubt

Success breeds success: PCA’s track record - real advantage in deal-making and partner selection

47


PCA: Sources Of Competitive Advantage Understanding of customer retail savings

needs

Ownership of key customer relationships

Life agency network and management model

Ownership of successful bancassurance distribution model

Profit consciousness inculcated at all levels of the business

48


PCA is very well positioned and resourced to takeadvantage of the region’s exciting growth potential

PCA has now succeeded in breaking through the formidable entry barriers

PCA has a pan-regional presence and platform

PCA has a clear strategy & business model for life and retail financial services and a track record of delivery

2

3

4

Summary

1 Significant, material & profitable growth opportunities in Asia

49

Documents

Business and Financial Overview Mark Tucker Chief Executive Managing Director, Finance, Actuarial & IT Garth Jones 15th Nov, 2000