Prudential Plc · LSE:PRU

Prudential — Investor Day (November 2017)

60 slides from Prudential's investor day presentation, Nov 16, 2017

  1. Slide 1: John Foley

    aS $9 John Foley UK

  2. Slide 2: M&G Prudential: simple, modern savings and investments business

    M&G Prudential Creating a simple, modern savings and investments business Market Context 1,2,3 +£0.9tn by 2023 Other4 Retail £1.2tn 337 Private Equity4 +£0.9tn Commercial property4 UK AUM £ billion AUM Customer-centric Year-on-year £ 7tn +£1.6tn by 2023 growth of 8% 2015-16 Institutional £4.6tn Simp

  3. Slide 3: M&G Prudential Business Mix

    M&G Prudential Business Mix Diversified across five customer groups, all contributing significantly AUM (9M 17) Customers Investment 180k direct  Top 5 in UK retail funds2 £ 35bn customers  Active management offering with strong performance funds  Distributed through wholesale channels UK custome

  4. Slide 4: M&G Prudential Assets Under Management

    M&G Prudential Assets Under Management Strong AUM growth across customer groups Growth £311bn £312bn £337bn (9M16-9M17) 40 European customers1 47% 29 27 33 UK customers: Savings & 25 23 Retirement Solutions 43% 73 74 79 Institutions 6% 35 35 35 UK customers: Investment funds 0% 149 153 150 UK custom

  5. Slide 5: Rationale for M&G Prudential

    Rationale for M&G Prudential Compelling logic for combining our businesses Market leader A clear market leader in UK consumer savings Growth & profit Collaboration Capabilities aligned to attractive Better collaboration across business structural growth opportunities segments Complementary & diversi

  6. Slide 6: M&G Prudential Objectives

    M&G Prudential Objectives Targeting value for customers and shareholders MERGER & CUSTOMERS DISTRIBUTION INVESTMENTS TRANSFORMATION Meeting needs through Expanding access to Delivering strong Simpler, more digital, insight, proposition customers and clients outcomes through customer-centric, and exp

  7. Slide 7: M&G Prudential Customer Groups

    M&G Prudential Customer Groups Working together for positive customer outcomes, growth and cash Top 5 UK retail asset manager1 Growth Investment funds + with scale in FI and solutions Providing scale in key based on strong performance asset classes UK customers Savings & Underlying multi-asset capab

  8. Slide 8: M&G Prudential Leadership Team

    M&G Prudential Leadership Team New team combines the breadth of skills, experience and drive to deliver John Foley Chief Executive Clare Bousfield Anne Richards Miguel Ortiz Grant Speirs CEO, Savings & CEO, M&G Chief Operating Chief Financial Retirement Solutions Investments Officer Officer Deputy C

  9. Slide 9: Agenda

    Agenda 1 Overview John Foley 2 M&G Prudential: Customers and Distribution Clare Bousfield 3 M&G Prudential: Investments Anne Richards 4 M&G Prudential: Merger and Transformation Miguel Ortiz 5 M&G Prudential: Financials Grant Speirs 6 Conclusion John Foley

  10. Slide 10: Annuities Update

    Annuities Update Investment strategy to drive profitability, and capital optimisation Investment strategy Net annuity liabilities Capital optimisation (HY 2017) With-profits  Long-term view using (participating)  Reinsurance Shareholder strategic asset allocation backed  Asset trading  Active as

  11. Slide 11: Clare Bousfield

    aS $9 Clare Bousfield UK

  12. Slide 12: M&G Prudential Objectives

    M&G Prudential Objectives Targeting value for customers and shareholders MERGER & CUSTOMERS DISTRIBUTION INVESTMENTS TRANSFORMATION Meeting needs through Expanding access to Delivering strong Simpler, more digital, insight, proposition customers and clients outcomes through customer-centric, and exp

  13. Slide 13: Structural Drivers of Continued Market Growth

    Structural Drivers of Continued Market Growth Growing need for long-term investment solutions and retirement support Demographics Macroeconomics  Ageing and growing  Search for yield population of retirees  Volatile markets UK customers  People living longer  Transfer of risk to  Above GDP gro

  14. Slide 14: M&G Prudential Gross Flows

    M&G Prudential Gross Flows Structural opportunity translates into strong traction across all customer groups Gross flows (£bn) UK customers  18% market share in life and pensions retail investments in H1 14.5 171 14.3 10.4  M&G gross sales up 45% 9M 17 vs 9M 16 FY 2016 9M 2016 9M 2017 European  I

  15. Slide 15: M&G Prudential Growth Strategies

    M&G Prudential Growth Strategies Leverage combined strengths to drive growth in UK, European and global markets UK European Institutions customers customers Support retirement Broaden reach and Differentiated and flexible opportunity proposition capabilities Invest in intermediated and Respond to gr

  16. Slide 16: UK Customers: Combined Customer Base

    UK Customers: Combined Customer Base 7m existing customers at the heart of our UK strategy Prudential Prudential M&G Direct Savings & Retirement Traditional Product Customers Solutions Customers Customers £27k 1.1 66 £81k 1.6 59 £43k 1.3 64 Average Products per Average Average Products per Average A

  17. Slide 17: UK Customers: Delivering for our Customers

    UK Customers: Delivering for our Customers Delivering good outcomes for our customers, new and existing Customer-focused Decision Value for Attitude to Transparency Vulnerability approach Support Money Risk Differentiated investment  solutions  Unparalleled diversification  Strong performance Pru

  18. Slide 18: UK Customers: Channel Mix

    UK Customers: Channel Mix Accessing our customers through a range of channels, all with potential for growth Direct: Direct: PFP Non-advised 6% Advisers via Individual 3% Intermediated platforms, wealth funds within 58% Wholesale managers and adviser Wholesale banks portfolios 33% UK customers Worki

  19. Slide 19: UK Customers: M&G Prudential Brand Strength

    UK Customers: M&G Prudential Brand Strength Starting with two distinctive, trusted and complementary brands UK consumers’ views of M&G and Prudential1 (proportion of those who “strongly agree” or “ tend to agree” with statement) Strong investment brand in Strong retirement brand, with Leading the UK

  20. Slide 20: UK Customers: Direct to Customer Channel

    UK Customers: Direct to Customer Channel Providing advice and guidance, using digital technology to transform experience Prudential Financial Planning Digital development growth AUA (£bn) and Partner numbers GoPru PFP Lead Management App 320  One of a number of apps / innovations 288 251 developed

  21. Slide 21: UK Customers: Intermediary Opportunity

    UK Customers: Intermediary Opportunity Merger work driving opportunities in our distribution relationships 9M 2017 Total UK intermediary Intermediary flows from 7,400 IFA firms analysed gross flows at individual account level1 IFA Type (Flow £) LOW MED HIGH Nat/Network 45% Investments 22% LOW £4.8bn

  22. Slide 22: European Customers: Deepening Distribution

    European Customers: Deepening Distribution Growing presence in growth investment markets European AUM (9M 17)  An established presence across major <£0.1bn European markets following 15 years of £1.7bn £4.4bn Total2 growth £39.5bn  Italy is our largest market with £15bn AUM distributed through ove

  23. Slide 23: Institutions: Growing the Client Base

    Institutions: Growing the Client Base Working with a range of UK and global institutions Institutional client 3rd party institutional AUM  Alternatives have delivered (£bn) breakdown by client type at 30 Sep 2017 strong revenue growth in closed ended funds (e.g. 3% 79 3% private debt and real estat

  24. Slide 24: Summary: Customers and Distribution

    Summary: Customers and Distribution A strong platform for growth Growing market demand A strong distribution footprint  Institutional: search for yield and transfer of  >7 million retail customers risk to individuals  130+ platform placements  UK consumers: continue to capture retirement  Nearl

  25. Slide 25: Anne Richards

    aS $9 Anne Richards UK

  26. Slide 26: M&G Prudential Objectives

    M&G Prudential Objectives Targeting value for customers and shareholders MERGER & CUSTOMERS DISTRIBUTION INVESTMENTS TRANSFORMATION Meeting needs through Expanding access to Delivering strong Simpler, more digital, insight, proposition customers and clients outcomes through customer-centric, and exp

  27. Slide 27: M&G Prudential Investment Model

    M&G Prudential Investment Model Delivering for clients through active management Capability Performance Proposition  Broad range of strategies and  Active management  Flagship proposition highlights asset classes  Meeting customer objectives  Creating and seeding new  Bespoke solutions  Ident

  28. Slide 28: M&G Prudential Investment Model

    M&G Prudential Investment Model Delivering for clients through active management Capability Performance Proposition  Broad range of strategies and  Active management  Flagship proposition highlights asset classes  Meeting customer objectives  Creating and seeding new  Bespoke solutions  Ident

  29. Slide 29: Breadth of M&G Prudential investment capabilities

    M&G Prudential Mix by Asset Class Breadth of M&G Prudential investment capabilities M&G Prudential AUM by asset class (%) Combining our wider range of investment capabilities to Multi-asset provide multi-asset solutions 30% Fixed A leading European bond manager with one of the income largest credit

  30. Slide 30: Breadth of M&G Prudential investment capabilities

    M&G Prudential Mix by Asset Class Breadth of M&G Prudential investment capabilities M&G Prudential AUM by asset class, multi-asset M&G Prudential fixed income AUM by lookthrough (%) sub-asset class (%) Multi-asset 17% Fixed income 3% 6% 13% 8% Equities 2% 9% 6% 24% Real estate 56% Alternatives 40% 1

  31. Slide 31: UK domiciled funds

    UK domiciled funds Strong investment performance over all time periods M&G OEIC investment performance, net of fees, • M&G manage the largest range of UK weighted by: number of funds (%) domiciled retail funds with £75bn of assets under management * 42% First quartile • Currently, M&G Prudential’s U

  32. Slide 32: UK domiciled funds

    UK domiciled funds Strong investment performance over all time periods M&G OEIC investment performance, net of fees, • M&G manage the largest range of UK weighted by: assets under management (%) domiciled retail funds with £75bn of assets under management * First quartile 52% • Currently, M&G Pruden

  33. Slide 33: Strong Institutional Investment Performance

    Strong Institutional Investment Performance • Institutional portfolios come with a M&G institutional peer Flagship institutional strategy investment range of objectives and criteria for comparison by quartile on performance returns (%) externally managed AUM success - Benchmark/target relative 5% Fi

  34. Slide 34: Flagship proposition highlight: M&G Optimal Income Fund

    Flagship proposition highlight: 1. M&G Optimal Income Fund M&G Optimal Income Fund relative return net of fees  Delivering a combination of income and capital vs. UK and European benchmarks (%) growth to customers seeking yield while having the opportunity to grow their capital across a variety of

  35. Slide 35: M&G Optimal Income Fund

    M&G Optimal Income Fund A flexible fixed income fund with the ability to outperform throughout the economic cycle A ‘go-anywhere’ fixed income fund Flexible and dynamic A flexible and strategic fixed income fund taking active duration, yield curve, credit and equity positions Performance Aims to out

  36. Slide 36: Flagship proposition highlight: PruFund Growth

    Flagship proposition highlight: 2. PruFund Growth Investment performance update PruFund Growth Life Fund investment performance  Part of a suite of six funds within the relative to benchmark 7.2 +35% PruFund range +28%  Aims to grow customers’ investments while utilising the inherited estate to de

  37. Slide 37: With-Profits Fund: A Competitive Advantage

    With-Profits Fund: A Competitive Advantage Unique asset delivering long-term performance PruFund sales, 9M 2017 Well diversified fund With-profits fund investment £8.4bn performance to YE 20161 With-profits life fund strategic International 0.6 1.0 asset allocation 2017 ISAs % New business Bonds 1.7

  38. Slide 38: Investment Proposition Development

    Investment Proposition Development Meeting evolving customer needs PROPOSITION DEVELOPMENT PROCESS IDEA DEVELOPMENT CONSTRUCTION SEEDING • Leveraging our investment capabilities and balance sheet to develop a range of innovative products and propositions for our customers • M&G High Yield ESG Bond •

  39. Slide 39: Recent product development: Infrastructure Greenfield

    Recent product development: Infrastructure Greenfield: Long-term opportunity for yield IDEA DEVELOPMENT CONSTRUCTION SEEDING Portfolio of infrastructure assets • Balance sheet Long term support provided to launch the fund Customer need Inflation- Stable • Subsequent linked success in capital raising

  40. Slide 40: Seeding new products

    Seeding new products Strategic use of M&G and Prudential balance sheets capital to seed funds Seeding portfolio (£m) Absolute Return Bond Global Target Return +144% EM Income Opportunities 16% High Yield ESG Bond 22% Global Listed Infrastructure 58 EM Hard Currency Bond 10% 5% 2017: Global Rate High

  41. Slide 41: Summary: Investments

    Summary: Investments Leveraging a broad range of capabilities to deliver solutions to our customers Capability Performance  Strong performance across  Long term, sustainable, active asset classes and products management Proposition Commitment Absolute Return Bond Global Target Return EM Income Opp

  42. Slide 42: APPENDIX: Institutional performance chart disclosure

    APPENDIX: Institutional performance chart disclosure M&G institutional peer comparison by quartile on externally managed AUM (Gross of Fee Mandated Target) This chart represents £28.6bn of AUM out of a total institutional AUM of £79bn. 1) Performance is aggregated and weighted by assets managed remo

  43. Slide 43: Miguel Ortiz

    aS $9 Miguel Ortiz UK

  44. Slide 44: M&G Prudential Objectives

    M&G Prudential Objectives Targeting value for customers and shareholders MERGER & CUSTOMERS DISTRIBUTION INVESTMENTS TRANSFORMATION Meeting needs through Expanding access to Delivering strong Simpler, more digital, insight, proposition customers and clients outcomes through customer-centric, and exp

  45. Slide 45: Why We Are Transforming

    Why We Are Transforming Environmental factors create need and opportunity Investing to grow the breadth and reach Becoming an externally-focused of our capital-light solutions for business, that puts the consumers, intermediaries customer at the centre and institutions of everything we do Capital Cu

  46. Slide 46: Merger & Transformation Programme

    Merger & Transformation Programme Programme structured to deliver quick results Merger & Transformation Merger Sprints Transformation Workstreams Distribution & Proposition Investment Management UK Retail Savings In-Force Modernisation Investment Operating Operations & IT Support Functions European

  47. Slide 47: Merger & Transformation Timeline

    Merger & Transformation Timeline 3-4 years transforming our business 2017 2018 2019 2020 2021 2022 Merger planning & execution Merger revenue synergies Business Culture as European Funds Platform usual (BAU) Regulatory UK Savings Finance Transformation Investment operating model In-Force Modernisati

  48. Slide 48: Merger & Transformation

    Merger & Transformation Targeting revenue growth and expense reduction of £145m pa as stated at HY 2017 Re-engineering to be a cost leader and Summary composition of expense create a scalable platform for growth base reduction  £145m pa reduction in shareholder expense base to be achieved in FY 202

  49. Slide 49: Transformation: UK Retail Savings

    Transformation: UK Retail Savings Building a digital front end for new and existing customers Transforming customer experience Transformation Workstreams Advisors PFP Direct Workplace UK Retail In-Force Savings Modernisation European Funds Investment 1.7 m 0.1 m 0.2m 4.6 m 0.6m Advised PFP Direct Di

  50. Slide 50: Transformation: In-Force Modernisation

    Transformation: In-Force Modernisation Rationalisation and digital enablement of legacy policy admin platforms Digital experience Transformation Workstreams customer/advisor UK Retail In-Force Savings Modernisation Digital enablement (customer and advisor hub, API layer and platform integration laye

  51. Slide 51: Transformation: European Funds Platform

    Transformation: European Funds Platform M&G Prudential’s response to Brexit creates a stronger platform for European growth Executing Brexit Response Dec Launch of M&G Transformation Workstreams (Lux) Investment Tranche Funds (1) SICAV mergers UK Retail In-Force Savings Modernisation European Funds

  52. Slide 52: Transformation: Investment Operating Model

    Transformation: Investment Operating Model Data lake and Aladdin platform provide scalable core of operating model Risk Analytics M&G Pru Transformation Workstreams Trading & Operations Portfolio ALADDIN UK Retail In-Force tools Management Savings Modernisation Data Lake European Funds Investment Pl

  53. Slide 53: Transformation: Culture

    Transformation: Culture Embedding the right culture is core to successful execution  Established the case for change for Transformation Workstreams Why? two successful organisations  Merger a catalyst for wider change UK Retail In-Force Savings Modernisation European Funds Investment  Mix of old,

  54. Slide 54: Grant Speirs

    aS $9 Grant Speirs UK

  55. Slide 55: M&G Prudential Objectives

    M&G Prudential Objectives Targeting value for customers and shareholders MERGER & CUSTOMERS DISTRIBUTION INVESTMENTS TRANSFORMATION Meeting needs through Expanding access to Delivering strong Simpler, more digital, insight, proposition customers and clients outcomes through customer-centric, and exp

  56. Slide 56: IFRS Operating Profit and Cash Remittances

    IFRS Operating Profit and Cash Remittances Diversified earnings in combined business IFRS operating profit: Cash remittances to Group: Complementary M&G Prudential M&G Prudential (2016 - H1 2017, £m)1 (2012 – H1 2017, £m) profiles Total IFRS £1,253m £717m £745m Other2 260  Short payback  Longer pa

  57. Slide 57: Fund Flows and AUM

    Fund Flows and AUM Strong growth across the business Fund flows and AUM:  Strong 9M 2017 trading across the business M&G Prudential (2016 – 9M 2017, £bn1)  M&G positive net flows of £9.9bn vs (£8.0bn) 2016 9M 16 9M 17 in 9M 2016 Gross 32.8 22.2 41.4 flows  Particularly strong performances from Op

  58. Slide 58: John Foley

    aS $9 John Foley UK

  59. Slide 59: Conclusion

    Conclusion Uniquely positioned for growth in capital-  light business – strong brands, scale, and investment capabilities Combination is about building a business  that can better meet customer needs Driving asset growth through a diversified  set of wrappers, offerings and channels Investing fro

  60. Slide 60: John Foley, Anne Richards, Clare Bousfield, Grant Speirs & Miguel Ortiz

    John Foley, Anne Richards, Clare Bousfield, Grant Speirs & Miguel Ortiz

Prudential — Investor Day (November 2017) on 6ix