Your client's money is in prudent hands

Transcription

1 Your client's money is in prudent hands Prudential offers a position of strength and resilience to help safeguard the financial wellbeing of our customers. Prudential is committed to helping safeguard and promote the financial well-being of our customers, with a focus on saving for retirement and providing security in retirement. This commitment has never been more appropriate than in today s challenging economic climate, which has further highlighted the need for customers and their advisers to consider the financial strength and stability of the organisations that they've chosen to look after their finances Half-year results for Group Despite challenging market conditions we've delivered a strong performance across the Prudential Group. up 17% IFRS* operating profit of 1,521 million, up 17 per cent up 24% EEV** new business profit of 1,015 million, up 24 per cent *International Financial Reporting Standards (IFRS) **European Embedded Value (ƒ)

2 Providing financial strength, stability and support in today s economic climate. Prudential UK & Europe We've delivered another good set of financial results in the first half of 2014, against a changing distribution landscape. Total APE** sales of 433 million Total new business profit of 145 million Life IFRS* operating profit of 374 million Strong Performance Prudential UK & Europe delivered IFRS life operating profit of 374 million, up 10% on the first half of 2013 and post-tax new business profit of 145 million, up 45%. This was primarily as a result of increased sales of investment bonds and higher levels of bulk annuity activity. Cash remitted to the Group increased to 246 million, compared with 226 million in the first half of These are strong financial results for Prudential UK & Europe. They show that we re adapting well to the market disruption and that we re continuing to deliver against our strategy." Jackie Hunt Chief Executive August 2014 *International Financial Reporting Standards (IFRS) **Annual Premium Equivalent (APE) 2

3 Financial Strength Financial Strength has never been more appropriate than in today s challenging economic climate. Here we evidence our position of strength and resilience. > Prudential Assurance Company Limited (PAC) is rated AA (stable outlook) for financial strength by Standard & Poors, as at August This is one of the highest ratings currently given to any UK life assurance company. > The Prudential Assurance Company Limited (PAC) With-Profits Fund is one of the largest and financially strongest With-Profits funds in the UK. Our fund size and strength allows us to invest in a very wide range of asset types and individual companies. Company Standard & Poor s Moody s Prudential Assurance Co. Ltd AA (Stable) Aa2 (Negative) AEGON (Scottish Equitable plc.) A+ (Stable) A3 (Stable) Aviva L&P UK Ltd A+ (Stable) A1 (Negative) Axa Insurance UK plc. A+ (Stable) Aa3 (Stable) Canada Life Assurance Co. AA (Stable) Aa3 (Stable) Friends Life Ltd A- (Stable) A3 (Stable) Legal & General Assurance Society Ltd AA- (Stable) Aa3 (Negative) Liverpool Victoria Friendly Society Ltd BBB+ (Positive) Not Rated MetLife Europe Ltd A+ (Stable) A3 (Stable) 1 Royal London Mutual Ins. Society Ltd A (Stable) A2 (Stable) Scottish Widows plc. A (Negative) A2 (Stable) Skandia Life Assurance Co. Ltd Not Rated A2 (Stable) Standard Life Assurance Ltd A+ (Stable) A1 (Stable) Zurich Insurance Co. Ltd AA- (Stable) Aa3 (Stable) Source: S&P website and Moody's website as at August Refers to MetLife Inc. 3

4 Prudential's Portfolio Management Group Ltd (PMG) PMG manage a range of funds for Prudential and Prudential International. Whilst their job is to focus on providing asset allocation expertise, in practice their remit is far wider. Who are PMG? > The in-house investment strategists and manager of managers for the Prudential Group in the UK. > They are independent of the various underlying asset management businesses within the Prudential Group. > A team of over 30 economists, investment strategists, analysts and mathematicians who are specialists in different areas of the investment world. > PMG control 150 billion of Prudential's investments as at December > The Prudential group has over 500 investment professionals around the world, investing in excess of 443 billion as at December > They manage our AA rated Prudential With-Profits Fund which is one of the largest and financially strongest With-Profits funds in the UK and has funds under management of 72.2bn as at 31 December You can get more information on PMG in the document Prudential s Portfolio Management Group (INVP11431). Multi-asset funds have been available and popular with both adviser and their clients for years. In the modern market, with changing regulatory guidance and the Retail Distribution Review, multi-asset funds offer the chance to outsource time consuming and costly asset allocation and stock selection work that may simply not be cost efficient for you to carry out for all your clients. This can then allow you to focus on the areas of business where most value can be added such as understanding and supporting the needs of existing and new clients. PMG believe in the importance of asset allocation and the key role that multi-asset funds could provide as an investment solution for many investors. Indeed, academic research has suggested that as much as 90% of investors return could be attributable to asset allocation rather than other factors, such as stock selection or timing. PMG also believe that asset allocation is a specialist skill which should, to avoid conflicts of interest, exist separately from the other investment activities in any fund. PMG approach PMG manage our multi-asset funds by adopting a team based approach to reach a consensus house view. They then aim to implement that view as consistently as possible whilst working within the specific requirements that are applicable to different funds for example, appropriate solvency management or staying within agreed risk parameters. What PMG multi-asset funds can provide? Diversification Asset allocation expertise Governance Risk managed solutions Asset-liability management Additional product features What benefits these can offer you and your clients? The benefit of spreading risk through a range of assets can be a fundamental investment starting point for many. As a global company we offer expertise in investing in assets around the world. Our specialist and dedicated asset allocation knowledge can offer the solution for you to outsource this time consuming and resource heavy work. A key focus for the regulator. Having the time to review and understand each part of the investment management process, on a regular and comprehensive basis for funds that invest globally, can be very difficult. We offer funds that include governance controls from either internal, or independent third party, experts. Working within risk targets, for example with our range of Dynamic Portfolios, and then aiming to maximise potential return within those parameters, means a fund manager does not chase performance and provides funds that stay true to their original risk profile. Funds, such as With-Profits, come with controls and independent reviews in respect of their financial strength and how liabilities are managed. The fund manager can then work within these parameters, whilst the investor knows these are being monitored for them. Not all clients are the same, and a range of choices (such as smoothing mechanisms, guarantees and other product features) gives more choice in meeting different clients needs. 4

5 Prudential International Prudential International benefits from the financial and investment strength provided by the Prudential Group and provides financial solutions to customers who want to combine the benefits of investing in an offshore environment with the reassurance of a name they can trust. Solvency matters. Here s how we stack up: 38.5 million million Required solvency margin of capital: 150% Actual available as a percentage of required: 350% Source: Prudential International, 31 December 2013 Our Dublin base a further safeguard Dublin is a location with a strict legal and regulatory environment. The company is subject to European Law, having to comply with all European directives and regulations and to meet European solvency margins. As part of the Prudential Group, we have additional group standards to comply with over and above Irish requirements. In respect of the capital position of the company, the solvency regime in Ireland requires an insurance company to maintain a solvency margin of at least 150%. We ve consistently maintained a level over and above this 150% requirement in the last five years. As an EU domiciled insurance company we comply with the requirements of EU law which is transposed into Irish law. In addition, the Central Bank of Ireland has implemented a corporate governance code for insurance companies which enhances the arrangements that an insurance company must have in place. We operate a robust arrangement in respect of corporate governance to meet this requirement. These are stringent regulations and should provide comfort in the professional nature of Dublin-based insurers despite the current economic challenges Ireland is facing. For more information please refer to the AILO** investor protection guide, A guide to offshore bonds and policyholder protection for professional advisers and A summary of the life insurance policyholder protection measures in Guernsey, the Isle of Man, Ireland, Luxembourg and UK for professional advisers. These can be found at What sets Prudential International apart? We believe Prudential International's close links with Prudential Assurance Company (PAC) Ltd, sets them apart from the rest. Prudential International offer With-Profits exposure through their Prudential Assurance Company (PAC) With-Profits Funds. Investments into Prudential International's PAC With-Profits Funds are fully reassured into the Defined Charge Participating Sub-Fund within the long term fund of the Prudential Assurance Company Limited. This With-Profits proposition is backed by the multi-asset expertise of Prudential s Portfolio Management Group (PMG). Financial Services Compensation Scheme (FSCS) Policyholders taking out an offshore bond in the UK from an FCA authorised Irish life company are believed to be covered by the UK Financial Services Compensation Scheme, (provided that the policyholder was habitually UK resident when the bond was taken out and this occurred on or after the 1 December 2001). More information about the FSCS can be found on page 8. **Prudential International is a member of the Association of International Life Offices (AILO). This is trade organisation of international life assurance companies which aims to encourage professionalism and high standards amongst its members through the provision of market, regulatory and tax information and liaison with regulators and local trade associations. 5

6 The Man from the Pru advertising campaign is launched Prudential celebrates 150 years of financial service. Prudential was founded in 1848 in Hatton Garden, London Prudential Corporation Asia was formed to develop existing (Malaysia and Singapore) and new businesses in Asia Prudential plc is listed on the New York Stock Exchange Acquisition of Jackson National Life in the US. In the same year, Prudence was re-launched as a modern brand image for the Corporation Prudential acquires M&G, pioneer of unit trusts in the UK and a leading provider of investment products

7 Understanding and responding to our customers' needs is at the heart of our business. It's something we've been doing since We focus on meeting our customers savings, income and protection needs and a disciplined approach to investing in the most profitable growth opportunities Prudential UK is a leading life and pensions provider to approximately 7 million UK customers Prudential are proud sponsors of Prudential RideLondon, the UK s largest cycling festival. This festival is celebration of health, sport and community which showcases our home city to the world and raises millions of pounds for charity. Prudential is listed on stock exchanges in Hong Kong and Singapore OFFSHORE BOND (PORTFOLIO) 2014 ONSHORE BOND 2014 OFFSHORE BOND (INVESTMENT) SCOTTISH LIFE 7

8 The Financial Services Compensation Scheme (FSCS) Prudential Assurance Company Limited and other UK authorised and regulated firms in the Prudential Group are covered by the Financial Services Compensation Scheme. This provides a level of comfort in the event that Prudential is unable to meet its financial obligations. The Financial Services Compensation Scheme (FSCS) is a safety net for customers of authorised financial services firms. The FSCS is the UK's compensation fund of last resort for customers. It's an independent body, set up under the Financial Services & Markets Act 2000 (FSMA). It may pay compensation if a firm is unable, or likely to be unable, to pay claims made against it. Claims usually arise because the firm has stopped trading or has been declared in default. Are there limits to the compensation payable by the FSCS? Yes. The FSCS operates different levels of compensation. The scope and amount of cover available depends on the type of policy or product involved and the funds selected. > For long-term insurance (e.g. pensions, annuities and life assurance including investment bonds and endowments): 90% of the claim with no upper limit for the claim amount. > For investments (ISAs, Unit Trusts) 50,000 per person, per firm in default. 100% of the first 50,000 then 0% above 50,000. > For home Finance (e.g. Mortgage advice and arranging) 50,000 per person, per firm in default. 100% of the first 50,000 then 0% above 50,000. > For deposits 85,000 per person, per firm in default. It's important to note that the FSCS will not apply for any Prudential International Bonds sold outside the UK. How is the value of an annuity policy calculated? Ultimately, the value of an annuity policy would be determined by the Court on a basis to be decided by the Court at that time.the court might reasonably be expected to consider the present discounted value of future annuity payments and the cost of buying a replacement policy. Where else can I find information? The Terms & Conditions for your policy or investment may have more information on limits in the scope of FSCS cover for your policy. More information is available from the FSCS at: Financial Services Compensation Scheme 10th Floor, Beaufort House 15 St Botolph Street London EC3A 7QU Telephone: or Website: GENM /2014