PRUDENTIAL PLC BUSINESS PERFORMANCE UPDATE
Prudential plc (‘Prudential’) provides a business performance update for the first quarter ended 31 March 2023.
Performance highlights on a constant1 (and actual) exchange rate basis
· APE sales2 were up 35 per cent (29 per cent) to $1,559 million driven by increasing cross border traffic from the Chinese Mainland and higher domestic demand in Hong Kong alongside growth in many of our other business units
· New business profit3 was up 30 per cent (26 per cent) to $743 million. Excluding economic impacts4 new business profit rose 43 per cent (39 per cent)
Financial update
“The strength of our distribution capabilities and the diversification of the business across country, product and channel contributed to our performance in the first quarter. 10 out of the 13 life insurance markets in Asia, as well as Africa, achieved double-digit growth1 in new business profit. A key theme of our growth has been the success of new products as we continue to focus on meeting the diverse needs of our customers.
“APE sales grew significantly when compared with the same period in 2022. Following the removal of the bulk of Covid-19-related restrictions, our agency channel has seen continued momentum with APE sales increasing every quarter since Q2 2022. APE sales through the bancassurance channel reduced (by 4 per cent1) following double-digit growth in the prior year. Total new business profit for the Group grew by 30 per cent1 with new business margin broadly stable at 48 per cent.
“Hong Kong APE sales to both domestic customers and Chinese Mainland visitors grew strongly, with sales to Chinese Mainland visitors restarting following the reopening of the border with Hong Kong. New business profit in Hong Kong increased by 106 per cent1 to $293 million on APE sales of $455 million, up 299 per cent1. As highlighted in our full year 2022 results announcement in March 2023, Hong Kong’s new business profit margin in the first quarter of 2023 of 64 per cent reflects a higher proportion of savings products in our sales mix than in the prior period. This effect was partially offset by the impact of lower interest rates at the end of the first quarter compared with the end of 2022.
“CITIC Prudential Life’s agency APE sales increased compared with the same period in the prior year1. As expected, APE sales through the bancassurance channel were lower with management placing greater focus on product mix. Total new business profit grew despite an overall fall in APE sales.
“In our businesses based in South-east Asia5, APE sales growth drove increases in new business profit in Indonesia and our Growth markets segment, while both APE sales and new business profit moderated in Singapore and Malaysia reflecting changes in product and channel mix. Our South-east Asia businesses represented 32 per cent of the total new business profit generated in the quarter. Indonesia showed a continuation of the performance seen in the fourth quarter of last year with growth in both agency and bancassurance production1. The Growth markets segment performed well especially in Thailand and in the Philippines. ICICI Prudential Life has continued to deliver growth in the first quarter, with double-digit broad-based growth in APE sales and new business profit. It also announced that it had met its objective of doubling its 2019 new business profit by 2023.
“Eastspring’s funds under management increased to $228.6 billion at the end of the first quarter of 2023 from $221.4 billion6 at the end of 2022, with positive inflows from both the internal life businesses and retail third parties, and a net positive contribution from market and other movements in the period. We have however seen further redemptions by M&G plc of $1.7 billion in the period and anticipate a significant proportion of their remaining funds will exit in 2023.
Outlook
“Business momentum, particularly in Hong Kong, has continued to date in the second quarter and we maintain our prudent approach to asset allocation and credit risk. We remain confident that we have the financial resilience, capital strength and capabilities to meet the growing health, protection and savings needs of our customers in Asia and Africa. By doing so, we believe we will deliver on our purpose to help people get the most out of life and also build value for all our stakeholders over the long term.”