研究报告全文：16Dec2022CMBInternationalGlobalMarketsEquityResearchCompanyInitiationPrudentialPLC2378HKBUYInitiationAsia-focusleadingplayerborder-reopeningTargetPriceHK14300tailwindsin2023UpDownside354AsaleadingglobalplayerinthelifeinsuranceandwealthmanagementindustryCurrentPriceHK1056PrudentialPLCPrure-positioneditsbusinessfocusexclusivelytotheemergingmarketsinAsiaandAfricasubsequenttothedemergersfromEuropeanandUSChinaFinancialsSectoroperationsin2019and2021Withextensivegeographicfootprintsupportedbymulti-channeldistributionsPruispoisedforcapturingsustainablelong-termGigiChenCFAgrowthspurredbyincreasingprotectionandwealthmanagementdemandsfrom85239163739theaffluentAsianpopulationThelong-awaitedHK-MainlandborderreopeninggigichencmbicomhkandrecoveryintheSouthEastAsianSEAmarketsserveassentimentboostersfortheinsurersnewbusinessgrowthmomentumtopickupasenteringinto2023NikaMA85239000805Long-awaitedHK-MainlandborderreopeningbringingrecoveryofHKnikamacmbicomhkbizPruoperateswithextensiveexposuretoHongKongmarketevidencedbya58contributionofnewbusinessprofitNBPgeneratedfromPrudentialStockDataHKin2019vsonly37gainedbyAIAHKduringtheequivalentperiodGivenMktCapHKmn290328easedrestrictionsfrombothmainlandChinaandHKgovernmentscomingintoAvg3mthstoHKmn838effectweexpectPruwillbenefitmorefromtheupcomingHK-Mainlandborder52wHighLowHK144006875reopeningcomparedtopeersThepent-updemandsofMainlandChinaTotalIssuedSharesmn2749SourceBloombergVisitorsMCVswillboostnewbusinessgrowthinHongKongoncetheborderreopensShareholdingStructureExpectedrecoveryinSEAmarketsin2H22-2023WithprogressiveBlackRock856reopeningschemesimplementedintheSouthEastAsianSEAcountriesieVanguard80SourceBloombergSingaporeIndonesiaMalaysiasince2Q22weexpecttoseereboundinnewbusinessmomentumacrosstheseregionsin2H22-1H23proppedbysurgingSharePerformanceprotectiondemandsandalowbasegivenstringentCOVIDrestrictionscurbingAbsoluteRelativeagentmovementandbusinessactivitiesthroughouttheyearin2H21-1H221-mth184473-mth173157InclusionsinHSCIandSZ-HKStockConnectincrementingfundflows6-mth127212AfterthedemergerfromMGin2019andsubsequentspin-offfromJacksonSourceBloombergin2021PrubecameanAsia-focusedlifeinsurerandassetmanagereversinceInSeptember2022Pruwasincludedasoneoftheconstituentstocks12-mthPricePerformanceofHangSengChinaIndexHSCIandaddedtotheSZ-HKStockConnectHK2378HKHSIrebased2000Suchinclusionsinthewidelytradedindicesattractinvestmentfundflows18001600ValuationWeadoptthePEVvaluationbasedonGordonGrowthModelto1400pegthetargetpriceforPrudentialatHK1430sharereflecting11xFY23E12001000PEVOurkeyassumptionsinclude1expectedmarketreturnat102risk-800600freerateat33companybetaas094costofequityCOEat935400long-termgrowthrateat3and6asustainablereturnonEEVat1020000InitiateBUYDec-21Mar-22Jun-22Sep-22Dec-22SourceBloombergEarningsSummaryYE31DecFY20AFY21AFY22EFY23EFY24EAuditorKPMGLLPNetpremiumsearnedUSmn2187022373241772750230896YoYgrowth4972381137123NetprofitlossesUSmn21182042124920612658OperatingEPSUSD084097093108124YoYgrowth1695nana649290ConsensusoperatingEPSUSDna083089114130PEx167na299181141PBx1721212018Yield0708090808ROE1212091417SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk16Dec2022ContentsInvestmentThesis3Long-awaitedHK-MainlandborderreopeningbringingHKbizrecovery3ExpectedrecoveryintheSEAmarketsin2H22-20233InclusionsinHSCIandSZ-HKStockConnectincrementingfundflows5InsurtechsynergiesfrompartnershihpswithGoogle5FocusCharts6Aleadingplayeroflifeinsuranceandwealthmanagement9ExtensivegeographicfootprintrepositioningapureplayinAsiaAfrica9Multi-channeldistributionenhancedbystrongBancaanddigitalPulse10BroadeningproductmixshiftingtowardsHPamidCOVIDheadwinds12Top-performingpan-Asianassetmanagerincreationsynegiestolife13ResilientGWScapitalpositionsustainsshareholdervalueproposition15Distinctivegeographicfootprintnavigatingtoresilientperformance18FinancialForecast29IncomeStatement29BalanceSheet30EVStatement31Valuation32PEVvsRoEVapproachbasedonGordonGrowthModel32Valuationcomparisonwithmajorpeers33FinancialSummary34AppendixAProfileofBoardofDirectorsManagement35AppendixBRegionalmarketForexEquityIndexBondYields37PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE216Dec2022InvestmentThesisAsaleadingplayeroflifeinsuranceandassetmanagementbusinessreputableforglobalbrandawarenessPrudentialplchasexpandeditsfootprintto23marketsacrossthecontinentsofAsiaandAfricaAfterspinningoffitsMGbusinessandJacksonbusinessin2019and2021respectivelyPrusAPEannualpremiumequivalentsequivalenttoANPandNBPnewbusinessprofitequivalenttoVNBarepredominatedbyAsiamarketsconsistingofapprox97APEfrom13operatingmarketsinAsiaThediversifiedgeographiccoveragesecurestheinsurersnewbusinessgrowthamidmacroeconomicuncertaintiesbypartiallyoffsettinglossesinsomemarketswithgainsachievedinothersLong-awaitedHK-MainlandborderreopeningbringingHKbizrecoveryInthelargestmarketoftheGroupintermsofNBPPruHKfacedsignificantpressureoverthepastthreeyearsamidCOVIDrestrictionsandborderlockdownsIn2019beforetheCOVIDpandemic61ofPruHKsNBPcamefromMainlandChinaVisitorsMCVsTheborderlockdownstartingfromFeb2020quicklycutdowntheMCVsAPEcontributiontoclosetozeroandledtoasharpdeclineofHKNBPin2020HoweverPrumanagedtoreservethecapacityofMCVsalesoverthepastthreeyearsastheinsurerdirectedthepreviouslyMCV-focusedagentstowardslocalbusinessratherthansimplycuttingthemoffInDec2022themainlandChinesegovernmenthasstartedtoeaseitszero-CovidpoliciesacrosscitiespivotingawayfromthelockdownsandcentralizedquarantineOn13Dec2022HKgovernmentofficiallyremovedtheAmberCoderestrictionsallowingallinboundtravelerstoscrapthepreviouslymandatoryusedcontact-trackingappAsthemainlandandHKgovernmentsarebotheasingstringentCOVID-relatedmovementrestrictionsweexpecttheresumptioninquarantine-freetravelscrossborderbetweenHongKongandmainlandChinatobehighlypossiblein1Q23ComparedtoAIAPrudentialplcoperateswithmuchmoreexposuretoHKdomesticmarketsevidencedbya58contributionofNBPgeneratedfromPrudentialHKin2019vsonly37ofvalueofnewbusinessVNBresultedfromAIAHKintheequivalentyearWebelievePrudentialwillbenefitmorefromtheforthcomingborderre-openingschedulesandcross-marketpent-updemandsarelikelytoboosttheinsurersnewbusinessmomentuminHKsincethestartof2023ExpectedrecoveryintheSEAmarketsin2H22-2023In2H21PruskeymarketsinSouthEastAsiaregionieIndonesiaSingaporeMalaysiaetcaresufferedfromOmicronoutbreaksandsomeofthesecountriesfacedlockdownmeasureswhichleadtoaslowdowninnewbusinesssalesIn1H22thepandemicsituationsinSouthEastAsiagraduallyeasedandthegovernmentsliftedrestrictionmeasuresasshowninthefollowingtableIn2H22and2023webelievethelowbaseeffectwillkickinandtheNBPgrowthinSouthEastAsiamarketswillpickupPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE316Dec2022Figure1TimelineofCOVIDrestrictionsinSingaporeFY20-1H22SourceCMBIGMFigure2TimelineofCOVIDrestrictionsinMalaysiaFY20-1H22SourceCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE416Dec2022Figure3TimelineofCOVIDrestrictionsinIndonesiaFY20-1H22SourceCMBIGMInclusionsinHSCIandSZ-HKStockConnectincrementingfundflowsPrudentialplchasbeendualprimarylistedinHKEXandLondonStockExchangeLSEsince2010AsthelifeinsurerdemergedMGplcUKandEUinsurancebusinessandMGInvestmentin2019andspunoffJacksonFinancialIncUSinsurancebusinessin2021PrudentialplcbecameanAsia-focusedlifeinsurerandassetmanagerHencethestockisqualifiedforinclusionofAsiaindexesInAug2022HangSengIndexesCompanyannouncedthatPrudentialplcwouldbeincludedasaconstituentstockofHSCIstartingfrom5SeptemberSimultaneouslythestockwasincludedintheShenzhen-HKstockconnectWebelievetheinclusionswillattractmoreinvestmentsandfundflowsintothelistedinsurerInsurtechsynergiesfrompartnershihpswithGoogleOn10October2022PrudentialplcannouncedthatithasformedastrategicpartnershipwithGoogleCouldfurtherdeepeningthecooperationbetweenthetwocompanieswhichstartedin2019PrudentialplctargetstoleverageGooglescloudinfrastructureAIanddataanalyticapplicationstoenhancePrusintegrateddigitalplatformPulseWeexpectthepartnershipwillfurtherstrengthenPrussalesandservicecapacityofhealthandwealthmanagementbusinessPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE516Dec2022FocusChartsFigure4PrudentialAsiaNBPNBPYoY1H16-1H22Figure5PrudentialAsiaNBPbreakdownbycountrySourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure6PrudentialAsiaAPEYoY1H16-1H22Figure7PrudentialAsiaAPEbreakdownbycountrySourceCompanydataCMBIGMSourceCompanydataCMBIGFigure8PrudentialAsiaNBPmarginAPEbasisFigure9PrudentialAsiaMonAPEYoY1M21-7M22SourceCompanydataCMBIGMSourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE616Dec2022Figure10PrudentialAsiaEEVOPATOPATYoYFigure11PrudentialAsiaIFRSOPATOPATYoYSourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure12PrudentialAsiaNPATNPATYoYFigure13PrudentialAsiaInvestmentPortfolioin1H22SourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure14PRUAsiaNBPGrowthonAERCERFigure15PRUAsiaexclHKNBPGrowthAERCERSourceCompanydataCMBIGMSourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE716Dec2022Figure16PrudentialAsiaEEVEEVYoYFigure17PrudentialAsiaEEVEquityYoYSourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure18PrudentialEEVbreakdownbycountryFigure19GroupcapitalpositioninFY21and1H22SourceCompanydataCMBIGMSourceCompanydataCMBIGMNoteLCSMstandsforLocalCapitalSummationMethodunderthegroup-widesupervisionGWSframeworksetbyHKIAFigure20PrudentialFreeSurplusFreeSurplusYoYFigure21PrudentialAPEmarketshareinSEASourceCompanydataCMBIGMSourceCompanydataCMBIGMNMGNoteDatainFY21SEAmarketsrefertoThailandIndonesiaMalaysiathePhilippinesSingaporeandVietnamPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE816Dec2022AleadingplayeroflifeinsuranceandwealthmanagementFoundedin1848Prudentialplc2378HKPRULNisamultinationalinsurancecompanydualheadquarteredinbothHongKongandLondonUKRankingasthetopthreein11outofits13operatingAsianlifemarketstheinsurerprovidesawideassortmentoflifehealthinsuranceandinvestmentproductsandservicestocustomersthroughitsmulti-channelintegrateddistributionmodelincluding530000agentsand170bancassurancepartnersexpandingacrossover27600bankbranchesby1H22ItsassetmanagementdivisionEastspringhadanaggregateofUS2223bnassetsundermanagementasof1H22SubsequentlyafterthedemergerofEuropeanoperationsinOctober2019andthefollowingUSoperationsinSeptember2021theinsurernowshiftsitsprimaryfocustotheseculargrowthmarketsinAsiaandAfricaInAsiaitsbusinessspansacrossMainlandChinaHongKongIndonesiaMalaysiaSingaporeIndiaTaiwanVietnamLaosthePhilippinesCambodiaThailandandMyanmarinwhichthemarketsexposedwithlowinsurancepenetrationrateyethighpent-updemandsfromincreasingsizeofaffluentpopulationthatwillcontributetosustainablelong-termvaluegrowthfortheGroupAsidefromAsiatheinsureroperatesineightmarketsinAfricaaswellExtensivegeographicfootprintrepositioningapureplayinAsiaAfricaPrudentialplchasestablisheditspresenceinHongKongforover57yearsSinceitslistingontheMainBoardoftheHongKongStockExchangein2010theGrouprecordedsustainablevaluegrowthinrespectofbothvalueofnewbusinessNBPalsoknownasNewBusinessProfitsasreportedandannualizedpremiumsequivalentAPEalsoknownasAnnualizedNewPremiumsorANPasusedbyotherpeersonalike-for-likebasisthroughoutthepre-pandemicyearsFollowingthedemergerofEuropeanoperationsinOctober2019andsubsequentlytheUSdivisionJacksonFinancialIncJacksoninSeptember2021theGrouphasshifteditsprimarybusinessfocusexclusivelytothehigh-growthmarketsinAsiaandAfricawherewealthaccumulationescalatedamongincreasingsizeofaffluentpopulationandyetlifeproductsarestillrelativelyunderpenetratedAcrossAsiatheGroupslargestlifeandprotectionoperationsspanacrossMainlandChinaHongKongIndonesiaMalaysiaSingaporeandOtherGrowthmarketscoveringintotal193mnlifecustomersby30June2022AmongwhichChineseMainlandbusinessistappedviaajointventuremanagedwithCITICandoperatedasCITICPrudentialLifeCPLAsshowninFigure22PrusGreaterChina46andASEANmarkets45togethercontributed91APEsalesin1H22displayingthediversifiedeffectsofanAsiapure-playDuringyearsofdevelopmentPrudentialAsiasAPErose135YoYtoUS4194mndrivingupaNBPincreaseof148YoYtoUS2526mninFY21showingastronggrowthrecoverysincethepandemicoutbreakInthefirsthalfof2022infaceofchallengesfromchangingmacroenvironmentsatthebackdropofgeopoliticalheadwindsandresurgingCOVIDrestrictionstheGroupresultedinsluggishNBPgrowthanddescendingnewbusinessmarginacrossgeographicmarketsexceptforSingaporeDespitedownsideriskexposurestheGroupremainedresilientontheAPEbasisgivenitsAsia-centricoperatingstrategytargetingonthelong-termgrowthopportunitiesacrosslifeandassetmanagementsegmentsinthesemarketsandmanagedtoachieveAPEgrowthin8outof13AsialifemarketsaswellasinitsAfricabusinessby30June2022SuchresilienceisindivisiblefromtheGroupsdiversifiedgeographicexposuretowhichtheAPEsalesperformancevaryingbyoperatingresultsofproductanddistributionmixcanbebalancedacrossregionsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE916Dec2022BeyondthisasequenceofstrategicactionsregardingthecompanyssharesandtopmanagementdecisionsimplyingtheGroupsshiftingfocusonAsianmarketinvestorsincludediequityraisingofUS24bninSeptember2021linkiiinclusionasHangSengCompositeIndexHSCIconstituentsince5September2022linkincreasingstockliquidityandenablingthecompanytobeconsideredfortheShenzhen-HongKongConnectprogramfortradingbyMainlandChineseinvestorsTofurthertapintoChinabusinessandincreaseAsianinvestorbasetheGroupbaseditstopmanagementinAsiainclthenewGroupCEOAnilWadhwaniwhowilljoinon25February2023andwillbebasedinHongKonglinkFigure22PrudentialAsiaannualAPEYoYFY13-FY22EFigure23PrudentialAsiamonthlyAPEYoY1M21-7M22SourceCompanydataCMBIGMNoteFY22EbasedonCMBIGMSourceCompanydataCMBIGMNoteincludingbusinessinAfricaestimatesincludingbusinessinAfricaFigure24IFRSoperatingprofitYoYbymarkets1H22Figure25PrudentialAsiaAPEbyoperatingregions1H22SourceCompanydataCMBIGMNoteincludingbusinessinAfricaSourceCompanydataCMBIGMNoteiGreaterChinainclbusinessinMainlandChinaCPLHongKongandTaiwaniiSoutheastAsiainclbusinessinnineASEANmarketsasIndonesiaMalaysiaSingaporeCambodiaLaosMyanmarthePhilippinesThailandandVietnamiiiMainlandChinanewbusinesssalesincI50PrusinterestsinCPLivIndianewbusinesssalesincl22PrusinterestsintheassociateMulti-channeldistributionenhancedbystrongBancaanddigitalPulsePrudentialadoptsamulti-channelandintegrateddistributionmodeltoquicklyadaptandflexiblyrespondtomarketsinordertomatchwitheachrespectivelocalcustomersneedsByendJune2022theGroupsdistributionnetworkinvolvesagencyforceofapproxPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1016Dec2022530000agentsand170bankpartnersgivingaccessto27600bankoutletsprimarilytargetinginAsiaAmongwhichPrudentialsmainlandChinaJVdeliveredstrongbancassurancesalesin1H22resultingina28year-over-yeargrowthonAPEsalesGivenCPLscompetitivestrengthsonChinabancassurancetheentitydeveloped11newbancapartnershipswithinoneyearthatboostedin-coveragebankbranchesby50to6100byendJune2022TheresultofsuchashiftinchannelmixtowardsbancassuranceintheGroupsmainlandChinabusinesscreatedincrementalmarketsfornewbusinesssalesinvolatilemarketcontextsAsidefromtraditionalchannelsofagencyandbancassurancepartnershipstheGrouplauncheditsdigital-enabledtoolPulsetoaccelerateinnovationandeventuallytranslatingintoimprovedoperationalefficiencyTheapp-basedtoolenablesmobileapplicationsandleadgenerationthathelpboostagencysalesbyprovidingcustomersmoreaccessibleserviceon-handsBy30June2022Pulsehasaccumulated48mnleadswithagenerationofAPEsalesinUS158mnaccountingforone-quarteroftotalagencyAPEinthefirsthalfoftheyearLookingforwardonPulsetheGroupsaspirationistofunctionitasacomplementaryappforsourcingandmanagingnewbusinesswhilstenhancingcustomerexperienceandmeanwhileonexpectationsforfutureoperationalefficiencyasitsdigitalmodelevolvesFigure26PrudentialAPEsalesbydistributionmix1H22Figure27PrudentialNBPYoYbydistributionmixOther11Agency36Bancassurance53SourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure28PrudentialsaccesstobankoutletsFY20-1H22Figure29PrudentialsdigitalPulseleadgenerationSourceCompanydataCMBIGMSourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1116Dec2022BroadeningproductmixshiftingtowardsHPamidCOVIDheadwindsAsamultinationallifeinsurerre-positioningtocaptureAsia-centricopportunitiesPrudentialoffersawideassortmentoflifeandhealthandinvestment-linkedproductsinmatchwiththehealthwealthretirementneedsamongaffluentcustomersintheserapidlygrowingmarketsTosimplyputbytypestheGroupsproductofferingscanbecategorizedintofourgroupsinclparticipatingcontractsnon-participatingsavingshealthandprotectionandinvestment-linkedsavingsasshowninFigure27apresenceofeachrelativelywell-balancedshareat282724and21respectivelyoftotalAPEby1H22IneachgeographicregiontheGroupaswelldevelopsitsproprietaryofferingscateringtothefast-changingyetdeeplyrootedover-long-termcustomerdemandsForinstanceinIndonesiaShariabusinessisdevelopedtoalignwiththeinsuranceneedsoflocalMuslimpopulationandinMalaysiaTakafulproductsprovidedfurtherbroadenthedeliveryofIslamicsolutionsApartfromtraditionalinsurancecontractsnewandinnovativeproductslaunchedeveryyeardiversifytheGroupsproductportfoliosByend2021over200newandrevampedproductswerereleasedamongwhich90werenewD2CproductsempoweredbydigitalcapabilitiesInthefirsthalfof202290newproductswerelaunchedwith19D2C-enabledRathergeographicallyinnovativeinDecember2021CPLlaunchedanewcriticalillnessproducttargetingdomesticdemandsintheGreaterBayAreaGBAinChinawhichservedasthefirstpivotafterlocalregulatorychangestocriticalillnessplansandthathasachievedprogressiveresultsaccountingfor12ofCPLstotalcriticalsalesinthefirsthalfof2022Althoughwiderangesofproductshavebeendevelopedgivencontinuousinnovationsaproductmixshiftstowardslower-ticket-sizeHealthProtectionandsavingsproductsfromconventionalhigh-yieldnon-participatingiecriticalillnesspoliciesbecomingacommontrendsincethepandemicascustomersacrossmarketsseekingprotectionsyetgettingmoresensitivetohigherpaymentsamidstinflationaryuncertaintiesInHongKongdomesticHPproductsaccountedfor75totalNBPin2021andcontinuedtocontributetonewbusinesssalesin1H22InIndonesiaandMalaysiaHPpoliciesaccountedforhighproportionsoftotalNBPatalevelof78and68respectivelyin1H22UndersuchcircumstancesongoingshiftstowardshighreturnHPandsavingsproductsarenowinplaceandweexpectthemtocontinuedrivingtheGroupsvaluepropositioninthelifesectorRegardingTakafulandShariabusinesstheGroupmaintainsitsleadingpositioninbothmarketsgiventop-rankingmarketsharesat30inMalaysiaTakafuland29inIndonesiaShariaInMalaysiaanewHPproductBSNSakinahwaslaunchedin1H22targetingtodiversifysalesinbancadistributionandbyendJune2022theproductreinforcedTakafulHPnewpremiumssalesnamelyAPEto67YoYversus64atthebeginningofyearPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1216Dec2022Top-performingpan-AsianassetmanagerincreationsynegiestolifeRankingasatop-10assetmanagerin6outof11operatingmarketsacrossAsiatheGroupsassetmanagementdivisionEastspringInvestmentsnotablyEastspringprovidesabroadrangeofproductsandservicescateringtotheinvestmentneedsofbothAsiansaversandglobalinvestorsgeneratingconsiderablesynergiestotheGroupscorebusinessfocusingonlifeandhealthinsuranceandprotectionsconcurrentlyFoundedin1994theassetmanagerleveragesitsexpertiseinequityfixedincomemulti-assetquantitativeandalternativestrategiesstrikingforbest-in-classmanagementforbothofitsinstitutionalandretailclientsBycollaboratingwiththeGroupsinsurancebusinessEastspringsinvestmentexperienceunderpinsthelong-termstructuralgrowthanddevelopmentofinsuranceproductswhilstservingtheneedsofexternalthird-partyclientsThenetinflowsofcapitalfromtheGroupsinsurancearmsenhancetheassetmanagersinvestmentcapabilitiesinstrengtheningexistingbusinesswithhigherrisk-adjustedreturnsGuidedbyaforementionedsynergiestheassetmanagerachievedUS2585bnfundundermanagementby31December2021implying43year-on-yeargrowthfrom2020despiteavolatilemacroenvironmentThefundundermanagementbyendJune2022wasUS222bnarelativedrawdowncomparedtothesameperiodinprioryeargivenrisingglobaluncertaintiesinthefirsthalfof2022BycompositionhowevertotalfundsundermanagementcanbesortedintoiexternalfundsincludingtheproportionmanagedonbehalfofMGplcandiiinternalfundsprimarilyheldbytheGroupscontinuinginsurancebusinessesAsshowninFigure30thetrendofexternalfundsundermanagementincludingtheportionmanagedonbehalfofMGplcdecreasedoveryearssince2019whichgeneratedcapitaloutflowsyetpartiallyoffsetbytheyear-over-yearincreasesofinternalfundsourcesTheoutflowscanbeattributabletocertainprofittakingandassetrebalancinginequitymarketsgivenstrongmarketvolatilityandfundredemptionsbyMGplcequivalenttonetoutflowsofUS40bnin2021andUS09bnbyestimationin2022respectivelyDespitethemovementsofFUMtheassetmanagermaintainsinvestmentscalabilityandflexibilityinmanaginganoverallgrowingsizeofmulti-classofassetsgloballyDespitefundscalabilityEastspringoutperformsintermsofprofitabilityoveryearsaswellasmeasuredbyyear-on-yeargrowthsinadjustedoperatingprofitFigure31andIFRSprofitaftertaxFigure32Resultantdeclinein1H22wasinlinewiththedescendingoutcomesinfundsundermanagementduringthesameperiodcorrespondencetochallengingmarketconditionsDrivenbyhugedevelopmentpotentialtheassetmanagerpaysgreatattentiontotapintounderlyingdemandsinIndiaandMainlandChinafocusingonthegroupofretailprimarilythehigh-net-worthHNWindividualintheregionsByendJune2022EastspringhasestablishedashareinfundsundermanagementofUS309bninIndiaandUS124bninMainlandChinarespectivelyInMainlandChinamorespecificallytheGroupslifejoint-ventureCPLestablisheditsassetmanagementcompanyPrudential-CITICAssetManagementCocommittedtothegrowingdemandsforsavingsandretirementplanningbytakingfulladvantagesofthelocalpartnersbancassuranceandbrokeragechannelstrengthsThismulti-layeredlocalstructurealsocreatessynergiesfornewassetsandprofitsgrowthfortheGroupsassetmanagementbusinessasawholePLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1316Dec2022Figure30EastspringfundundermanagementYoYFigure31EastspringFUMsexternalinternalsourcesSourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure32EastspringadjustedoperatingprofitYoYFigure33EastspringIFRSprofitaftertaxYoYSourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure34EastspringFUMcontributionsbymarketsFY21Figure35EastspringFUMsharesofIndiaandChinaFY21SourceCompanydataCMBIGMSourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1416Dec2022ResilientGWScapitalpositionsustainsshareholdervaluepropositionSustainabledividendpershareandtotaldividendsgrowthamidstructuralchangesUponcompletionofstrategicre-positioningin2021theGroupdevelopsitslocallyrootedcapacitiesinthesecularAsianandAfricangrowthmarketstogeneratenewbusinessdynamicsthatcandelivertheGroupsshareholdersdistinctivevalue-addedpropositionsoveralong-termprospectIn1H22theGroupsshareholdersbenefitedfromadividendincashwithUS574centspershareversusUS537centspershareandUS1723centspersharepaidin1H21andend2021respectivelyrepresentingapprox7year-on-yearincreaseindividenddistributionsAsidefromcapitalreservedforbusinessreinvestmentsanincreasingdividendallocationreflectsthegroupsprioritiesingeneratingandreturningmorevaluesbacktoitsshareholdersofwhichtheamountisdeterminedbasedontheGroupsoperatingcapitalgenerationnetofrecurringcentralcostsandrestructuringcostsFigure36Groupdividendspersharesemi-annualbasisFigure37TotalGroupdividendspaidsemi-annualbasisSourceCompanydataCMBIGMSourceCompanydataCMBIGMStrongGWScapitalpositiondrivenbyrobustnetoperatingfreesurplusgenerationEvidencedbyalike-for-likeincreaseindividendspaidtheGroupsresilientcapitalpositionisindivisibleoftheGroupsinternalcashgenerationfromcontinuingoperationsinlifeandassetmanagementbusinessesacrossjurisdictionsandmorespecificallythecapitalgenerationinexcessofminimumcapitalappliedbylocalregulatoryauthoritiesGuidedbytheGroup-wideSupervisionGWSFrameworkissuedbyHongKongInsuranceAuthorityHKIAtheGroupdeterminesitsregulatoryminimumandprescribedcapitalrequirementsfollowingtwoessentialsetoutrulesnamelyitheGroupstotaleligiblecapitalresourcesarenolessthantheGroupPrescribedCapitalRequirementsGPCRandiiGWStier-1groupcapitalresourcesarenolessthantheGroupMinimumCapitalRequirementsGMCRSimplyputfollowingthetrendtomovetorisk-basedcapitalregimesRBCprogressivelyonwardstheGWSgroupcapitaladequacyrequirementsenhanceagroup-levelcapitalmanagementinparticularformultinationalswithcategorizedcapitalstandardlinesversusmerelyasinglemeasureofGroupminimumcapitalrequirementGMCRinpriorperiodsAdditionallylocalregulatorycapitalregimesstrikeimpactsontheGroupsGWScapitalbasiswithchangesappliedtolocalsubsidiariesjointventuresandassociatessuchliketheC-ROSSPhaseIItakingeffectinMainlandChinasince1Q22andanearlyadoptionapprovalreceivedfromHKIAfornewRBCregimestobeexecutedinHongKongthisAprilNotwithstandingmorerigidcapitalrequirementstheGroupsstrongGWScapitalpositionreliesontheyear-on-yeargrowthofnetGroupoperatingfreesurplusgeneratedfromPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1516Dec2022continuingoperationsafterrecurringcentralcostsandrestructuringexpensesDespiteadeclineingrowthin2020thenetoperatingfreesurplusgenerationmaintainedstronggrowthexceeding20onalike-for-likebasisinrecentyearsindicatingtheGroupsstronginternalcashgenerationthatsupportsboththesolvencyandcapitalsurplusgenerationtobefurtherappliedtowritingnewbusinessesordividendpayoutsBesidesfreesurplusgenerationfromcontinuingoperationsinlifeandassetmanagementbusinesstheGroupstwocoreoperatingsegmentsrecordedsustainablegrowthofabove10whilstaminordropin2020duetotheoutbreakofCOVID-19pandemicFigure38NetGroupoperatingfreesurplusgenerationFigure39FreesurplusgenerationfromlifeandAMoperationsSourceCompanydataCMBIGMNotefiguresbefore2020exclSourceCompanydataCMBIGMNoteTheabovefreesurplusoperatingfreesurplusgeneratedfromtheUSoperationsgenerationinclonlytheportionfromcontinuingoperationsinlifeandAMbusinessesandmaynotbeequivalenttotheGroupstotalamountGiventheprescribedcapitalrequirementGPCRnewlyappliedin1H22theGWScapitalsurplusandcorrespondingcoverageratioswereadjusteduponchangeswithreportingincomparablefiguresasof2021and1H22On31December2021theGroupsGWScapitalsurplusoverGPCRamountedtoUS214bnandthecorrespondingGWScoverageratiopresentedbycomparingtotaleligiblegroupcapitalresourcestoGPCRachieved204Inthefirsthalfof2022itfurthertickedupto205drivenbyUS17bndebtredemptionin1M22OnaGMCRbasistheincreasesinGWSshareholdersurplusandcorrespondingcoverageratiowereevenmoreevidentwherethecapitalsurplusoverGMCRincreasedbyUS93bnduetoimpactsofHongKongRBCandC-ROSSIIandtheGMCR-basedcoverageratioforshareholdersincreasedfrom408to545postregulatorychangesLookingforwardtheregulatoryentityHKIAwillprimarilyfocusontheGWScapitalpositiononGPCRratherthanGMCRbasisasamoreindicativemeasureundertheHKRBCregimePLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1616Dec2022Figure40GPCR-basedGroupcapitalpositioninFY211H22Figure41GMCR-basedGroupcapitalpositioninFY211H22SourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure42Group-basedGWScapitalsurplusFigure43Shareholder-basedGWScapitalsurplusSourceCompanydataCMBIGMSourceCompanydataCMBIGMNoteshareholder-basedcapitalexcltheportionofparticipatingfundsdistributabletopolicyholdersFigure44Group-basedGWScoverageratioFigure45Shareholder-basedGWScoverageratioSourceCompanydataCMBIGMNote150istheregulatorySourceCompanydataCMBIGMNoteshareholder-basedcapitalminimumrequirementforGMCRcoverageratioexcltheportionofparticipatingfundsdistributabletopolicyholders150istheregulatoryminimumforGMCRcoverageratioPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1716Dec2022DistinctivegeographicfootprintnavigatingtoresilientperformanceWithawidespreadpresenceofgeographicregionsacrossAsiaandAfricaPrudentialhaswellpositioneditslifeinsuranceandassetmanagementbusinessestotakeadvantageofopportunitiesinlowinsurancepenetrationamongstrisingcustomerawarenessonsavingsandprotectionswithinthesemarketsForlifeinsurancebusinesstheinsurerpursuesrobustgrowthacrossMainlandChinaHongKongIndonesiaMalaysiaandSingaporerankingtop3inmarketshareacross11AsianlifemarketsAmongwhichthegreatestopportunitiestobetappedinnearfutureareinMainlandChinaIndiaIndonesiaandThailandForassetmanagementbusinessEastspringtheleadingAsia-basedassetmanagerownstotalAUMofUS222bndrivingvaluewithranksattop10in6outof11AsianlocationsApartfromthefiveleadingmarketstheinsurersGrowthMarketsandOthersegmentincludeIndiaThailandVietnamthePhilippinesCambodiaLaosTaiwanMyanmarandeightcountriesinAfricaalljointlycontributingtotheresilientoutperformanceFigure46PrudentialAsiaNBP1H13-1H22Semi-annualFigure47PrudentialAsiaAPE1H13-1H22Semi-annualSourceCompanydataCMBIGMSourceCompanydataCMBIGMFigure48PrudentialAsiaNBPmarginSemi-annualFigure49PrulifeAPEmarketshareinSEASourceCompanydataCMBIGMSourceCompanydataCMBIGMHKIANoteDatainFY21definedasmarketnewbusinesssalesAPEcoveringbothindividualandgrouppremiumincomePLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1816Dec2022PrudentialMainlandChinaCITICPrudentialLifeCPLPrudentialsChineseMainlandbusinessoperatesthroughajointventureincorporatedwiththeCITICGroupaChinesestate-ownedconglomerateviatheentitynamedCITIC-PrudentialLifeInsuranceCompanyalsoknownasCPLinwhichPrudentialandCITICeachowns50ofinterestsThejointventureisprimarilyengagedinunderwritinginsuranceandinvestmentcontractswithkeytargetsonexpansionsofsalestoMainlandChinacustomersturningthemainlandmarketintooneofthemostrapidlygrowingandinfluentialmarketsoftheinsurerAsof30June2022CPLachieved13year-on-yeargrowthinannualizedpremiumsearnedmeasuredbyAnnualizedPremiumsEquivalentAPEtoUS507mnalbeitstringentCOVID-relatedrestrictionsandanupswinginmarketvolatilityInthefirsthalfof2022CPLhasexpandedto23branchescovering99citiesnationwidewithongoingachievementsstrickeninbothdistributionandproductmixcontributingtooverallmarketsharegrowthfrom071to077comparedtolastyearWithregardtodistributionchannelsCPLreportedrobustAPEgrowthinbancassurancewith28year-on-yearincreasepartiallyoffsettingayear-on-yeardeclineof11fromtheagencychannelDrivenbyastrategiclayoutasof30June2022CPLincreasedthenumberofcooperatedbankbranchesby50toanaggregateofabove6100byinvolvingadditional11partnershipsinsupportofsalesoflong-termsavingsproductsForproductmixdespiteheadwindsofregulatorychangesunfavorabletocriticalillnessproductprovisionsCPLfocusedonsalesofinnovativemedicalplansandlaunchedanewcriticalillnessplantailor-madetotheneedsofcustomersintheGreaterBayAreaGBADuetoresilientdemandsforhealthandprotectionpoliciestheseinnovativelower-ticket-sizesalescorrespondedwelltosupportgrowthinfaceoftheindustry-wideadversityoflifeNBPrecordeda4declineontheconstantexchangeratebasisresultingfromadverseshiftsinbothdistributionandproductmixThecombinedeffectsofmixtowardsbancassurancesalesratherthanagentandtheplungeincriticalillnessproductssalesbothcontributedtotheNBPmargindeclinefrom51to43Figure50PrudentialChinaJVNBPYoY1H13-1H22Figure51PrudentialChinaJVAPEYoY1H13-1H22SourceCompanydataCMBIGMSourceCompanydataCMBIGMPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1916Dec2022Figure52PrudentialChinaJVNBPmarginFigure53PrudentiallifeAPEmarketshareinChinaSourceCompanydataCMBIGMSourceCompanydataCMBIGMIAChinaNoteDatainFY20definedasmarketnewbusinesssalesAPEcoveringbothindividualandgrouppremiumincomeFigure54PrudentialNBPBreakdownbyCountryFigure55PrudentialAPEBreakdownbyCountrySourceCompanydataCMBIGMSourceCompanydataCMBIGMPrudentialHongKongFoundedwithahistoryofover57yearsPrudentialHongKonghaslongpositionedasaresilientplatformoveryearswhichshowedrobustperformancefromtimetotimeinbothomni-channelservicesandproductinnovationsConcerningtothefifthwaveofCOVIDresurgencethroughoutthefirstquartertomid-Apriltheinsurersoperationalresultsborenegativeimpactsamongstoveralldialingbackofsocietaleconomicactivitiesandofflinebusinessexposuredipping10inoverallAPEsalesandripplingtoa31declineinNBPasof30June2022onaconstantexchangeratebasisTocaterforneed-basedcustomerdemandsundertheCOVID-19theinsurershowsquickresponsebyshiftingproductmixtohealthandprotectionHPproductsandservingatotalof135mncustomerswithcontributionstoagencysalesincreaseofover40TheproductmixenhancementsalsobenefitagencyNBPmargingrowthby11pptsnotwithstandinga28-percentage-pointslideinNBPmargininthefirsthalfofyearAsidefromproductinnovationsPrudentialHongKongdemonstratesitsplatformresilienceamongomni-channelspredominantlyoutstandinginstrategicbancapartnershipsDespiteheadwindsexposedtoagencyactivitiestheinsurertransitionedtofocusonbancasalesandrankedtoponeintermsofstrategicbankpartnershipsamongstfiercecompetitionsinlocallifemarketsReputableforitslong-standingpartnershipswithStandardCharteredBanktheinsurermanagedtoachievea5increaseinbancassurancesalesovertheperiodof1H22Moreoverdigitalself-servicingtransactionsprosperedasaCOVID-derivativemountingto195thousandwithasolidcustomerretentionrateofabove98asof30June2022LookingforwardwiththereopeningpivottoberealizedtherecoveryPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE20