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Introducing PruProtect

FOR ADVISERS. Introducing PruProtect. Protection that goes further. PRUPM11013 UBD XX Sept 2013. Sections. Who is PruProtect Trends impacting protection Facts, stats and quotes Personal products Business products Vitality and Vitality Plus Growing your business. Who is PruProtect.

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Introducing PruProtect

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  1. FOR ADVISERS Introducing PruProtect Protection that goes further PRUPM11013 UBD XX Sept 2013

  2. Sections • Who is PruProtect • Trends impacting protection • Facts, stats and quotes • Personal products • Business products • Vitality and Vitality Plus • Growing your business

  3. Who is PruProtect

  4. Who is PruProtect Make people healthier andenhanceandprotecttheir lives

  5. About PruProtect • PruProtect is a joint venture between Prudential and leading South African insurer, Discovery • By combining Prudential’s trusted reputation and Discovery’s history of creative insurance solutions, we’ve developed a new type of Serious Illness Cover • PruProtect builds on the success of PruHealth in the PMI market

  6. Largest protection provider in SA Innovative products Service excellence Combined strengths Financial strength AA Highly respected brand Approx 7 million customers in the UK Protection and wellness is our core business Prudential Assurance Company has a Standard & Poor's rating of AA, March 2013

  7. PruProtect Claims experience - 2012 • 97.4% of Life Cover Claims paid out • 92.9% of Serious Illness benefits paid out • 94.1% of Income Protection benefit paid out • Income Protection was the highest claims paid ratio across other providers with similar products Source: PruProtect analysis of Claims experience from January 2012 to December 2012

  8. Discovery Life’s 2012 claims experience 99% claims paid vs declined claims • More than £19m were paid out in Serious Illness benefits • Over £60m Life Cover benefits were paid out • More than £104m has been paid out to claimants or their estates • The Global Education Protector currently covers the education costs of 3,378 children under Group Risk Source: Discovery Life Claims experience from January 2012 to December 2012

  9. Discovery Life’s 2012 claims experience Why 1% of received claims were invalid 60% Non-disclosure 24% Policy terms or conditions not met 10% Misrepresentation 99% paid 6% Suicide within two years See our claims sales aid for more details Source: Discovery Life Claims experience from January 2012 to December 2012

  10. Discovery growth: scale and relevance Discovery Group membership growth 2012 Over 6 million members worldwide Members + 3.75 million +1.6 million + 2.5 million + 100,000 + 600,000 2010 Standard Life acquisition 2013 June 93 Discover Health Launch 1997 Vitality Discovery 2001 Discovery Life 2004 PruHealth 2010 Discovery Invest PruProtect The Vitality Group Source: Discovery (2013)

  11. Continued Growth in the In-force Portfolio – No. of Policies PruProtect Growth in In-force number of policies 10.3% IFA Market share

  12. Continued Growth in the In-force Portfolio – Annual Premium Equivalent PruProtect Growth in APE 10.3% IFA Market share

  13. PruProtect’s model – continuing to push the boundaries Dynamic pricing Premium efficiencies Wellness underpin Current market Upfront efficiency Narrow once-off Broad definitions, multiple claims Value of benefits

  14. Our product evolution SIC Booster Vitality Optimiser 1st Franchise TAM’s Launch Family Income Cover Education Cover Business Protection Relevant Life Policy Accelerator Whole of Life Vitality Plus Health Cover June 2010 Essentials Plan Nov 2009 PruProtect Sept 2007 IP & SIC enhancements Apr 2009 Premium Saver & Premium Discounts Nov 2011 SIC & servicing enhancements Oct 2010 Vitality enhancements Jan 2012 Vitality with literewards Nov 2008

  15. High advice sales Needs based solutions Rich customer benefit Lower lapses An integrated approach across the protection spectrum Intermediary benefits • Severity-based benefits • Whole body coverage • Multiple claims capability • Improved consumer outcomes • Health partners and rewards Customer benefits • Comprehensive cover • Continuous protection • Simple and fair • Wellness underpin Our philosophy Continual and relevant innovation

  16. Pricing We offer a range of premium options to suit your clients’ financial situation • Have a look at our more affordable Essentials Plan • Vitality Optimiser – combining all the rewards of Vitality with an upfront discount on our award winning cover • Your clients can even earn reductions on their premiums by engaging in our Vitality programme

  17. Our financial strength and stability

  18. Group history • The Prudential Health Holdings Limited group of companies was set up as a joint venture between Prudential Assurance Company and Discovery (a South African insurer). • The joint venture comprises two businesses (1) a health business PruHealth, and (2) a protection business, PruProtect. • Originally this was a 50% / 50% joint venture. • In August 2010, Discovery purchased Standard Life Healthcare for £138m and placed this into the joint venture. At the same time the shareholding changed to Discovery 75% and Prudential 25%.

  19. Legal entity structure Discovery (SA) Prudential • The PHHL Group has two health companies, PHIL, which underwrites the ex-Standard Life Healthcare entity, and PHL, which underwrites the original JV PruHealth business. • PruProtect business is underwritten by PAC. • PHSL is the services company that employs all staff and holds all contractual arrangements and provides the distribution and administration services for both PruHealth and PruProtect. 100% 100% DOHL PAC 75% 25% PHHL 100% 100% PHIL PHSL 100% PHL Key Note: All entities in the structure, other than Discovery, are UK registered. Discovery Discovery Holdings Limited Prudential Prudential Plc DOHL Discovery Offshore Holdings Limited PAC Prudential Assurance Company Limited PHHL Prudential Health Holdings Limited PHIL Prudential Health Insurance Limited (formerly Standard Life Healthcare Ltd) PHL Prudential Health Limited PHSL Prudential Health Services Limited

  20. Group and shareholder performance Prudential and Discovery display both scale and success in their markets overtime. Prudential Assurance Company (year to 31 December 2012) • Net Assets: £4,740m • Turnover: £14,116m • Profit/(Loss): £376m Discovery Group (year to 30 June 2013) • Net Assets: £914m (15.22 Rand/GBP closing rate) • Turnover: £1,778m (13.98 Rand/GBP average rate) • Profit/ (Loss): £152m (13.98 Rand/GBP average rate) Prudential Health Holdings Group (12 months to 30 June 2013) • Net Assets: £207m • Turnover: £339m • Loss before tax: £(11.0m) (stated after one off expense)

  21. Financial strength ratings* • PruProtect business is written through Prudential Assurance Company Limited (PAC) in the Prudential Group. As a result, it benefits from the scale, diversity and solvency of PAC. • The major rating agencies have given the following ratings to PAC: Correct as of May 2013

  22. Reinsurance • PruProtect’s Life and Serious Illness Cover products are reinsured by Hannover Life Re UK. They have an AA- (very Strong) financial strength rating from S&P and an A+ (Superior) from A.M. Best. • Gen Re reinsures PruProtect’s Income Protect products. Gen Re is a subsidiary of the Berkshire Hathaway Group and has been rated as AA+ by S&P. • Swiss Re reinsures the PruProtect over 50s products. Swiss Re is rated AA- by S&P. • All three of our reinsurance providers are in the world’s top five largest reinsurance groups. • From outset and on a continuing basis, our providers have participated in our business on financing and quota share bases. • This approach allows PruProtect to enhance its in-house risk expertise with continuing insight from some of the world’s leading risk professionals. • Our arrangements also demonstrate the confidence that these market-leading insurance organisations continue to hold in PruProtect’s products and pricing structures.

  23. Further financial assurance In addition to the financial strength illustrated by PruProtect, there are two further ways in which customers interests are safeguarded. The Financial Conduct Authority (FCA) • The FCA requires insurance companies to complete an Individual Capital Assessment (ICA) every year. The ICA is a worst case scenario test of extreme events which produces a capital reserve figure.  PruProtect is required to hold assets/reserves that amount to this figure i.e. to provide an additional margin of protection against significant adverse events   The Financial Service Compensation Scheme (FSCS) • The FSCS is the compensation fund of last resort for customers of authorised financial services firms. In the event that an insurer becomes insolvent or ceases trading FSCS can pay compensation to the customers of the insolvent insurer. • Insurance companies are required to pay into the FSCS for purposes of compensating customers in extreme circumstances, who have suffered financial loss following a company going insolvent.  All insurance companies pay into this scheme and it would cover up to 90% of a customer's claim amount.

  24. Awards and recognition Peter Chadborn, principle at IFA CBK, said: PruProtect has continued to innovate and challenge old thinking in the market. The industry needs such companies who are not afraid of breaking the mould in order to introduce new ideas. Vivien Hearn of Barfield Financial Advisers, said The PruProtect Policy is the best thing that has come to the market in the last 20 years. 2009 - 2013 2008 - 2013 2007-2013

  25. If you’d like to know more, please speak to your Business Consultant or take a look at pruprotect.co.uk/adviser Thank you

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