Prudential plc

Welcome everybody to our conference call for the 2021 full year results. I'm delighted to be joined today by several members of our leadership team, including Mark Fitzpatrick, our group CFO and COO, as well as Nick Nicandro, our CEO of Asia and Africa, and James Turner, who is group chief risk officer. You'll have noticed that we've moved our start time for the results day to be at lunchtime in Hong Kong, and we're delighted that we're joined by a number of Asian-based research analysts who've just started to coverage the group. Welcome to all of you. I'll make some short-term remarks, and then we'll go directly to Q&A. And I appreciate the several numbers the companies are reporting today, so we'll try and keep this to time for your convenience. Let's start with the external environment. We're obviously all very conscious of the current acute global political issues. Combine this with the ongoing challenges of COVID-19 and its effects, the resulting environment remains highly uncertain. The pandemic has had an ongoing impact on our customers. communities we serve, colleagues, and we continue to support our key stakeholders. Right now, there's a record high number of COVID cases in many Asian markets. Sadly, last year, we lost 52 of our staff and agents to COVID over the year, and our thoughts and prayers are with their families, friends, and colleagues. We've taken and will continue to take further steps to support the emotional, mental, and financial well-being of our people. To be clear, our people have not only risen to the challenges of COVID, but I think they've delivered to incredibly high standards across our footprint. We've also responded for our customers. We've developed and tailored our product ranges, in particular in health and protection, to enable these products to be suitable for a wider range of income gaps, such as our bite-sized insurance products, and including specific coverage for COVID at very low or discounted rates. As far as strategic priorities, 2021, we completed – our strategic repositioning to focus entirely on the long-term opportunities for us in Asia and Africa. This of course follows the demerger of Jackson in Q3 and the equity raise in Hong Kong in Q4. Looking ahead, we're very excited in particular by the four large markets of China, India, Indonesia, and Thailand. In all of them, there's significant structural demand drivers and opportunities to strengthen our growing positions further. As far as 2021 results, Let's run through them briefly. We delivered high quality, resilient growth in 2021. I think that's despite the challenges posed by the pandemic. We increased our AP sales by 8%, delivered double digit growth in nine of our 14 insurance markets. Outside of Hong Kong, we grew AP sales by 16%. Again, that's driven by our business in mainland China, India, Malaysia, Philippines, Singapore, and Thailand. We reported 13% growth in new business profits, over $2.5 billion. with our margins improving on better business mix. China is now our largest market for sales, and I'm really pleased with the way the rest of the businesses are developing across Asia and Africa. Our business, as you all know, is based on regular recurring premium income, a focus on health and protection, and high levels of consumer retention, all of which support resilient compounding growth as you see in today's results. Our adjusted operating profit for the continuing business was up 16% to $3.2 billion. And again, we believe that's in line with the market's expectations. At the same time, our asset manager, eSprings, IFRS operating profit was up 10% with funds under management reaching $258.5 billion. Our embedded value grew to $47.4 billion, again, leading to a 7% rise in embedded value per share. And we continue to invest for the long term in new products, additional distribution capabilities, to further build out our presence as a leading agency and bank assurance player, and to access new pools of customers. We also announced a second interim ordinary dividend of 11.86 cents per share, creating a total dividend of 17.23 cents per share for the full year. As I'm sure you're aware, last month we announced I'll be retiring from my role at the end of March. Given the refocused nature of the business, the board is conducting a search for a new CEO to be based in Asia, looking at both internal and external candidates. Mark will become interim group CEO at the end of March, and he'll assist the incoming CEO in completing the transition process as required, and then he'll be stepping down from the board. We've also announced two internal promotions of James Taylor taking over as CFO and Avnish taking over as CRO. Both of them experienced highly valued internal candidates and both of them already based in Hong Kong. As far as an outlook, we entered 2022 with a strong balance sheet and capital position. The timing of the opening of Hong Kong border remains uncertain and we believe COVID will continue to have an impact. Clearly, there are tragic events going on in Ukraine which could have wider implications for the global economic and market conditions as well as potentially geopolitical relations. However, we think Our heavily diversified, multi-channel approach focused on quality business and operating efficiency is the right strategy for dealing with volatility in any operating conditions, including these. And we're confident that our investment in new business, distribution, product enhancements will continue to meet the long-term needs of the customers and build value for our shareholders over the long term. So let me stop there and let's go to Q&A. And we will open the mics up, Jordan, if you will, now to take some questions.

Of course, as a reminder, if you'd like to register a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two and please ensure you're unmuted when speaking. For those on the webcast, you can submit a question by the questions tab in the top right. Our first question comes from Edwin Liu with CLSA. Edwin, please go ahead.

Hi, good morning. Thanks for the opportunity to ask questions. My name is Edwin from CLSA in Hong Kong. Congratulations on the decent results in a challenging environment. If I may ask two questions. Firstly, on Mainland China, CPL has been able to outperform the industry in terms of gross premium or ATE. Could you share a little bit more on how you could achieve that and what is the outlook for this year? And secondly, on Hong Kong, as you pivot to the domestic segment, given there's no MCV, what exactly have you done more specifically on agency and bank assurance channel, respectively? So that would be two questions from my side, one on mainland China and one on Hong Kong. Thank you.