A1257278508WnDOZ

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Business and Financial Overview
Mark Tucker
Chief Executive
Garth Jones
Managing Director, Finance, Actuarial IT
15th Nov, 2000
2
Content

• Key messages
• PCAs mandate
• PCAs profitable growth strategy
• PCA Today
• PCA The future

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3
Key Messages
1
Significant, material profitable growth
opportunities in Asia
2
PCA has now succeeded in breaking through the
formidable entry barriers PCA has a pan-regional
presence and platform PCA has a clear strategy
business model for life and retail financial
services and a track record of delivery
3
4
PCA is very well positioned and resourced to
takeadvantage of the regions exciting growth
potential
2
4
Groups 1994 Mandate To PCA

Quantum change in pace, size and return from the
Asian region on a scale which in time will make a
significant positive impact on the Groups
results

3
Business and Financial Overview
5
PCAs Strategy For Growth Four Dimensions

• Geography
• Expand into Asian markets with largest,
  profitable pools of target customers

• Distribution
• Improve still further effectiveness of current
  channels
• Expand options
• access more customers
• maximise stickiness productivity
  through cross-selling

• Products
• Continue to meet customer needs for core life
  insurance savings products
• Offer broader range of RFS products to deepen
  customer relationship

Target Customers
Professional/ Mass-affluent segment
4
6
Understanding Our Customers

• In depth local research
• UK heritage history
• Prudence

Trust Credibility
A competitive advantage
5
7
Customer Growth 1994-2000
2000
1,500,000
1,000
1994
150,000
Life 100
6
8
Geography 1994
7
Business and Financial Overview
9
Geography 2000
8
Business and Financial Overview
10
Products Distribution 1994
Geography
Mal
Sin
HK
Products Life -Traditional - Unit
Linked General Distribution Agency

9
11
Products Distribution 2000
Geography
Mal
Sin
HK
Thai
Indo
Phil
India
Japan
Taiwan
Vietnam
China
Products Life -Traditional -Unit
linked Mutual Funds General Distribution Agency
Bank Broker Direct

1994 2000
10
12
.. now A Regional Life Insurance Leader
Number of markets among top 5

• AIG

PCA 2000
3-5
PCA 1994

• Manulife

• Sun Life of Canada
• New York Life
• CMG
• Great Eastern Life

1-2

• AXA
• ING Aetna

• Cathay Life

• Aegon
• Allianz
• Zurich/Eagle Star
• Prudential US

• RSA
• CGNU

None
3-6
7-8
9
1-2
Market presence/licences
11
13
Summary Key Drivers Of Growth

• Favourable regional economic growth
  wealth distribution trends
• Success in getting licences
• Successful JV partnering with respected local
  financial brands
• Building competitive advantage focusing on
  quality, productivity and economic value of
  dominant agency distribution channel

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Summary Key Drivers Of Growth

• Excellence in regional brand promotion
• Systematic processes rolled out regionally
• Consistent application of a delegated Think
  regional, Act local management approach

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PCA Today Overview

• A trusted brand across Asia
• Overcoming barriers to entry - unlocking
  opportunities for profitable growth
• Establishing joint-ventures and alliances to
  accelerate profitable growth
• A vision and operational management structure
  designed for the future with people who can
  deliver
• A financial track record that demonstrates all of
  the above

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A Trusted Brand Across Asia
15
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Overcoming Barriers To Entry

• Limited number of licences available
• Early market presence and history critical
• Understanding operating and regulatory
  environment
• People constraints experience and expertise

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Establishing JV Partners Selection Criteria

• Financially sound
• Strong ethical approach to business
• Well trusted brand with good reputation in market
• Appreciation of financial services sector and its
  challenges
• Prudential ownership/shared ownership of the
  customer

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Strong Existing JVs/Alliances With Major
Financial Institutions
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PCAs Vision
Today
1994
To be Asias 1 life retail financial solutions
provider

Quantum change in pace, size and return from the
Asian region on a scale which in time will make a
significant positive impact on the Groups
results
1 in customer focus 1 in attracting the best
people

Maximising shareholder value
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PCAs Operating Structure

• Investment Management
• Hong Kong
• Singapore
• Japan

• Mutual Funds
• India
• Taiwan

Life

• Established Markets - Hong Kong,
  Singapore, Malaysia
• Emerging Markets - Thailand, Indonesia,
  Philippines, Vietnam, India
• China Taiwan

• Level of market development
• Scale of operations
• Depth of management resources

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PCAs Management Team
Mark E Tucker Chief Executive
Mina HsuBrand Communications
Garth JonesFinance, Actuarial IT
Peter BoothHuman Resources
Mike BishopAlternative Distribution
Hugh DaviesAsia Desk
Gary BennettBusiness Development
Investment Mgt
Mutual Funds
Life
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PCAs Operating And Management Structures
Leverage expertise resources across borders
Capitalising On Regional Synergies
Spread corporate values

Develop critical areas of excellence
Make Prudential a household name
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PCAs People Fundamental To Our Success

• Recruitment of core competency talent
• PRUflexiben
• PRUuniversity
• MBA fast-track programme developing management
  resource pipeline

The financial services employer of choice
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PCA Financial Overview
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PC Asia Financial Performance
Strong, Diverse and Sustainable
1
Very strong growth all round in sales and
achieved profits The diversity of geography,
product and type of business That significant and
material shareholder value has already been
delivered
2
3
25
27
New Business Strong Life Regular Premium Growth
Rebounding from Crisis earlier than expected
120 on9 mths 99
m
150
17
100
-34
34
50
0
1996
1997
1998
1999
9 mths 2000
Established
Emerging
Taiwan China
26
28
New Business Strong Life Single Premium Growth
Single Premiums also recovered rapidly from
Crisis
m
62 on9 mths 99
250
200
150
157
100
333
-81
50
0
1996
1997
1998
1999
9 mths 2000
Established
Emerging
Taiwan China
27
29
New Business Life APE
CAGR 9 mths 1996 - 9 mths 2000 of 20
m
160 140 120 100 80 60 40 20 0
1996
1997
1998
1999
9 mths 2000
Full Year
9 mths
28
30
New Business Life APE
New Business Geographic Mix 9 mths 2000
Taiwan 29
Emerging 10
Established 61
29
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Life Operations New Business Achieved Profits
CAGR 6 mths 1996 - 6 mths 2000 of 35
m
90 80 70 60 50 40 30 20 10 0
1996
1997
1998
1999
6 mths 2000
6 mths
Full Year
30
32
Life Operations NBAP Product Mix 6 mths 2000
Non Par 30
Linked 40
Non-Linked 30
New business achieved profit on APE 60
31
33

Life Operations Building Core Agency
Distribution
Numbers of agents 000s
25
20
15
10
5
0
Dec 96
Dec 97
Dec 98
Dec 99
Sep 00
32
34
Agency Productivity Persistency

• Prudentials agency force more productive than
  market
• Malaysia 200
• Singapore 28
• Hong Kong 28
• Prudentials persistency also higher than market

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35
Mutual Funds India Net Sales
1 in Private Sector
313m net sales for 9 mths 2000 up 46 over 9
mths 1999
m
350
300
250
200
150
100
50
0
1998
1999
9 mths 2000
Full year
9 mths
34
36
PCA Total Funds Under Management
bn
12

• Asian Investment Management businesses all
  reporting to PCA from 1999
• Acquisition of Prudential Taiwan SITE adds a
  further 1.1bn

10
8
6
4
2
0
Dec 96
Dec 97
Dec 98
Dec 99
Jun 00
PCA Life
UK Life Fund
Pensions
Mutual Funds
35
37
PCA Total Funds Under Management - June 2000
Pensions 2
PCA Life 30
UK Life Fund 62
Mutual Funds 6
Total FUM 10.4bn excluding Prudential Taiwan
SITE
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Operating Achieved Profits
CAGR 6 mths 1996 - 6 mths 2000 of 35
m
120
100
80
60
40
20
0
1996
1997
1998
1999
6 mths 2000
Full Year
6 mths
37
39
MSB Profits
m
16 14 12 10 8 6 4 2 0
1996
1997
1998
1999
6 mths 2000
Full Year
6 mths
38
40
PCA Value Added To Shareholder Funds
m
ROE 28
60
50
40
30
20
10
0
1999 1 Jan - 30 Jun
2000 1 Jan - 30 Jun
Expected Return
Value Added
39
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PCA Contribution to Group Results
New Business Achieved Profits

• 18 of new business achieved profits 6 mths 2000
  - up from 15 in
  1999
• 250m APE sales 9 mths 2000 19 of group-wide
  total - up from 11 in 1999

UK Europe 40
US 42
Asia18
40
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PC Asia Financial Performance
Strong, Diverse and Sustainable
1
Very strong growth all round in sales and
achieved profits The diversity of geography,
product and type of business That significant and
material shareholder value has already been
delivered. and we are confident it will continue
2
3
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PCA The Future
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PCA 2000-2005 Profitable Growth Objectives

• Regional alignment with savings market
  opportunities
• Promote long-term savings through life insurance
  and value adding product enhancements
• Complement life offering with expanded product
  range and retail financial services customer
  proposition
• Multiple distribution
• Scale applied to capture operating economies

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Challenges - External

• Political instability
• Economic shocks
• Regulatory environment
• Competition

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Challenges - Internal

• Attracting, retaining and developing the best
  people
• Managing in multilingual/ multicultural
  environment
• Integrating acquisitions
• Maintaining excellent relationships with JV
  partners
• Keeping our unique PCA culture as we grow

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47
Products Distribution PCA 2000
Geography
Mal
Sin
HK
Thai
Indo
Phil
India
Japan
Taiwan
Vietnam
China
Products Life -Traditional -Unit
linked Mutual Funds General Distribution Agency
Bank Broker Direct

1994 2000
46
48
PCA Sources Of Competitive Advantage

• Proven formula for transforming acquired and
  start-up businesses
• Prudential Groups financial strength where
  security of many large regional players in doubt
• Success breeds success PCAs track record -
  real advantage in deal-making and partner
  selection

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PCA Sources Of Competitive Advantage

• Understanding of customer retail savings needs
• Ownership of key customer relationships
• Life agency network and management model
• Ownership of successful bancassurance
  distribution model
• Profit consciousness inculcated at all levels of
  the business

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Summary
1
Significant, material profitable growth
opportunities in Asia
2
PCA has now succeeded in breaking through the
formidable entry barriers PCA has a pan-regional
presence and platform PCA has a clear strategy
business model for life and retail financial
services and a track record of delivery
3
4
PCA is very well positioned and resourced to
takeadvantage of the regions exciting growth
potential
49