PRU(PUK) - 2023 Q4 - Annual Report

Financial Performance - New business profit increased by 45% CER to $3.1 billion in 2023[14] - Operating free surplus generated from in-force insurance and asset management business reached$2.7 billion, up 1% CER[14] - Adjusted operating profit grew by 8% CER to $2.9 billion[14] - IFRS profit after tax was$1.7 billion, a significant improvement from a loss of $(1.0) billion in 2022[14] - New business profit grew by 45$3.125 billion in 2023, exceeding the 37% increase in APE sales[96] - Group adjusted IFRS operating profit for 2023 was $2,893 million, an 8$1,712 million compared to a loss of $(1,005) million in 2022[110] - Business profit increased to$3.1 billion in 2023 from $2.1 billion in 2022[175] - EEV new business profit rose by 43$3,125 million in 2023 compared to $2,184 million in 2022[180][181] - Operating free surplus generation from in-force insurance and asset management business was$2,740 million in 2023, broadly flat compared to $2,760 million in 2022[184][186] - Adjusted operating profit grew by 6$2,893 million in 2023 from $2,722 million in 2022[190][191] - The company's total IFRS profit after tax improved to$1,712 million in 2023 from a loss of $(1,005) million in 2022[192] Market Position and Growth Opportunities - Prudential serves over 18 million customers across 24 markets in Asia and Africa[18] - Prudential holds top 3 positions in 10 Asian life markets and top 5 positions in 6 African life markets[25] - Greater China market presents significant growth opportunities with a population of 1.4 billion and a health and protection gap of$805 billion[64] - ASEAN markets have a combined population of over 600 million, with top three positions in eight out of nine markets[66][70] - India represents a compelling opportunity with a population of over 1.4 billion and 50% out-of-pocket health expenses[67] - Africa markets have a combined population of over 400 million with underserved insurance needs and high-growth potential[68] - Hong Kong benefits from Chinese Mainland visitors and domestic growth, with presence in all 11 cities of the Greater Bay Area[70] - Taiwan is the fifth-largest life insurance market in Asia Pacific, with Prudential as the top foreign player[64][70] - The company holds top three positions in 10 out of 14 Asian life markets and top five in six out of eight African markets[95] - The company holds top-three positions in 10 out of 14 Asian life markets and top-five positions in 6 out of 8 African life markets, with a large agency force and leading position in Asia bancassurance[165] Strategic Goals and Targets - The company aims for a 15-20% compound annual growth rate in new business profit between 2022 and 2027[16] - The company targets a 15-20% compound annual growth rate in new business profit from 2022 to 2027[102] - Operating free surplus from in-force insurance and asset management business was $2.74 billion in 2023, with a target to exceed$4.4 billion by 2027[104] - The company aims to grow new business profit at a CAGR of 15 to 20% between 2022 and 2027, driven by increased agency, bancassurance, and health new business profits, and double-digit CAGR growth in operating free surplus generation[174] - The company is on track with its 2027 objectives for new business profit and operating free surplus generation from in-force insurance and asset management business[200] Dividend and Shareholder Value - Second interim dividend of 14.21 cents per share, with total annual dividend reaching 20.47 cents per share, a 7-9% growth expected for 2024[38] - The 2023 total dividend increased by 9% to 20.47 cents per share, with a second interim dividend of 14.21 cents per share[112] Capital and Surplus - The company has a strong capital position with a 295% GWS shareholder coverage ratio over GPCR[26] - The Group's shareholder surplus was $16.1 billion at the end of 2023, with a cover ratio of 295$45.3 billion in 2023 from $42.2 billion in 2022[187][188] - Adjusted shareholders' equity increased to$37.3 billion in 2023, up 6% from $35.2 billion in 2022[194][196] Health and Protection Business - Health new business profit grew by 20$330 million in 2023, with a target to more than double from 2022 levels by 2027[82][102] - The Group's health business contributed $330 million to new business profit in 2023, a 20$2.096 billion, driven by a 67% growth in APE sales and a 37% increase in health and protection products[106] - Bancassurance channel aims to increase new business profit by 1.5 to 2 times from 2022 levels by 2027, targeting a penetration rate increase from 8% in 2022 to 9-11% by 2027[79] - Agency channel aims to more than double new business profit per agent, targeting a 2.5 to 3 times increase from 2022 levels by 2027[78] - Bancassurance new business profit fell 8% to $793 million in 2023, primarily due to challenging market conditions in China and Vietnam, but increased by 23$2,800[120] - Bancassurance APE sales of health and protection products increased by 26% in 2023, representing over half of the policies sold through the channel[127] Investment and Asset Management - Prudential's Eastspring funds under management or advice totaled $129.2 billion in Singapore[21] - Eastspring, the investment arm, manages over$237 billion in assets across 11 markets[95] - Eastspring's funds under management and advice increased by 7% to $237.1 billion, driven by positive market movements and inflows from external clients and life business[109] - The company plans to enhance wealth and investment capabilities by leveraging Eastspring and its investment office, with a focus on product innovation and distribution support for top agents[147][148] - Eastspring manages over US$237 billion of assets and holds top-10 positions in six of its 11 markets, with plans to expand its product range and add a thousand additional advisors to its Prudential Financial Advisers (PFA) distribution force[168][154] Technology and Innovation - The number of monthly technology incidents decreased by 60%, and recovery times improved by 40% in 2023 due to investments in infrastructure and monitoring[139] - The company has finalized a new technology operating model, integrating technology talent across the business into a single team, with plans to deploy similar teams for other business areas by the end of 2024[140] - The company is accelerating the development of advanced, segment-specific health insurance products, including risk-based pricing and value-added services, with AI-enabled digitalization of underwriting and claims processes[140] - Advanced platforms have been developed to store key operational data, enabling the deployment of advanced analytics and AI, with a test run reducing product enquiry times from over four minutes to less than 30 seconds[141] - AI technology has been utilized to shorten underwriting of non-standard cases from three days to one and a half hours, and claims payment turnaround has been reduced from 1.29 days in 2022 to 0.45 days in 2023[142] - The company aims to deliver at least two high-value analytics and AI use cases per strategic pillar in 2024, with an AI lab being set up to foster innovation and attract external talent[141] Sustainability and ESG - New decarbonisation target to reduce carbon intensity of investment portfolio by 55% by 2030[42] - The company aims to achieve a 55% reduction in Weighted Average Carbon Intensity by 2030 compared to the 2019 baseline[175] Customer Retention and Engagement - The company has a retention ratio of 86%, with a focus on personalised targeting, segmentation by life stage, and tech-enabled journeys to grow its share of wallet with existing customers[163] Regional Performance - Hong Kong accounted for 45% of new business profits, with both new business profit and APE sales growing over three times compared to the prior year[108] - EEV new business profit increased by 45% on a constant exchange rate basis, driven by double-digit growth in 12 markets, particularly Hong Kong[183]