Prudential plc

Good afternoon and good morning. It's Patrick Bow speaking. Welcome to Prudential's 2024 Results Analyst and Investor Call. Before I turn the call over to Anil, our CEO, and Ben, our CFO, a couple of housekeeping points. A recording of the call will be available from Tuesday next week. As usual, our full results package is available on our website. Anil and Ben will start the call with some opening remarks before we then go to Q&A. As you will understand, we're under restrictions as to what we can say about the evaluation of the potential listing of ICICI Prudential Asset Management Company. So please bear with us until we can update you with more information. Please note that we're also holding an additional meeting for sell-side analysts next week. This will be an ideal opportunity to raise further technical questions you may have, for example, on TV. Today, we also have the leadership team responsible for our businesses with us, namely Angel, Dennis, Solmaz, and Bill. So we would encourage you to focus on business questions for this call. With that, let me pass over to Anil, our CEO, to start us off. Anil.

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone. Thank you for joining us today. I'm delighted to present our full year 2024 results and provide an update, as promised, 18 months into the execution of our current strategy. 2024 was a year of good progress. New business profit grew 11% in line with our 2024 guidance to $3.1 billion. We generated $2.6 billion of gross operating fee surplus generation as expected. And adjusted operating profit after tax was up 8% per share. We are laser focused and driving consistent growth by writing quality new business more effectively managing our enforceable and improving our variances. We have continued our focus of building and transforming Prudential to realize its full potential. Our strategy is being executed swiftly and effectively with an unwavering commitment to driving long-term sustainable value for all our stakeholders. Since announcing our strategy in 2023, we have substantially reset our focus on the three pillars of customer, distribution, and health. We have been building and modernizing our capabilities through targeted investments, including digitizing and harmonizing our core operations and infrastructure. We are focused on building momentum in our agency channel across our markets by prioritizing quality recruitment and through improving agent activation and tech-enabled productivity. We are already seeing benefits with 4,000 more agents activated in the second half of 2024. In health, we are making significant progress, and I'm pleased to announce today our plan to establish a joint venture in India with the HCL Group Promoters family office vehicle, Vama Sundari Investments. Pending receipt of the requisite regulatory approvals, we will build a standalone Indian health insurance business on an organic basis. The outlays are expected to be modest and fully included in our existing capital management plans. Together with this partner, we will seek to address the growing healthcare needs of the Indian consumer. Our investments in capability are transforming our ways of working across all aspects of our business, and I'm pleased with the results that they are delivering. We believe during 2025 and into 2026, we will further evolve our capabilities to a level that will position us strongly for accelerated growth. The long-term growth trends inherent in our Asian and African markets are reasserting themselves, creating significant opportunities for us as an integrated life and asset manager. There is continued and growing demand for long-term savings and protection products across all our markets, while customer needs for wealth management and retirement planning are evolving, particularly in our higher income Asian markets. We are very disciplined in our capital allocation decisions, and through applying our capital management framework, we are delivering accelerated returns to our shareholders. We are demonstrating this in several ways. First, We have increased dividends per share, which is up 13%. Secondly, we launched a $2 billion share buyback program in June last year, which represented 8% of our outstanding stock. We have now brought forward the expected completion date of our program to end of 2025, well ahead of our original mid-2026 schedule. We are confident that 2025 is going to be the inflection point for growth in our free surplus. Our pro forma free surplus ratio is just above the upper end of the guided range. We intend to update you on our capital management plans at our half yearly results in August. Value creation and total shareholder returns are key imperatives for the management team and an ongoing area of focus for us. Thirdly, in February this year, we announced that we were evaluating a potential listing of our Indian asset management company involving the partial divestment of its shares, subject to market conditions, requisite approvals, and other considerations. It is intended that following the completion of such a divestment, the net proceeds would be returned to our shareholders. We are relentlessly executing our strategy, seizing structural growth opportunities across our markets, and investing to accelerate our value creation. We have made significant progress so far, and I am excited about how much more we can achieve. I will pass you to Ben now, our CFO, to cover the financial highlights.

Ben. Thank you, Anil, and hello, everyone. I wanted to briefly highlight just three things. Firstly, we have today provided guidance for 2025. We expect to deliver growth in new business profit, operating earnings per share, gross operating free surplus generation, and dividends per share in excess of 10% this year. Since 2022, we've grown NBP 21% compound on a TEV basis. Our stock of future earnings, the contractual service margin, has grown at the upper end of our guidance at 9%. eSpring's profit growth has been double-digit with accelerating net flows, and we're focused on controlling central costs, giving confidence that growth in operating profit per share will be in excess of 10%. That stacking of successive cohorts of quality new business and our ongoing actions to improve cash generation and reduce operating variances have led to an inflection in our operating free surplus generation. You can see in my slides that the release from the life-inforce block, the largest component of this metric, is expected to be up 13% in 2025, accelerating growth in free cash flows. Our dividend policy is unchanged, so growth in dividend will follow growth in net operating free surplus generation. And of course, we plan to continue with a script dividend option on the Hong Kong line as before. Secondly, we have confidence in our gross operating free surplus generation accelerating towards our 2027 objective. The building blocks to this are set out in my presentation. They also demonstrate that by simply repeating 2024 levels of business for the next three years and returning to neutral variances, allowing for the completion of the investment in capabilities programme, we would deliver just under 4 billion in 2027. Clearly, however, we expect to add to that number through growth in new business and assets under management, and improving cash flows returning to positive operating variances by focusing on cost containment and disciplined repricing. And I think the actions taken in 2024 demonstrate our ability to attain the 2027 objective. Finally, as promised, we shift to the traditional embedded value basis for embedded value reporting from our 1Q business update. Today, we provided you with extensive TEV disclosures to help you with this. TEV margins in 2025 are expected to be broadly stable on 2024. But over time, we see scope for progress, supporting further improvements in return on operating embedded values. Just to remind you, there is no change to our NBP growth rate objective to 2027, nor our gross OFSG objective of at least 4.4 billion. With that, I'll pass back to you, Patrick, to open the Q&A.