1 / 15

“CAN EMERGING MARKETS GENERATE SUPERIOR RETURNS?”

alika-tillman
Download Presentation

“CAN EMERGING MARKETS GENERATE SUPERIOR RETURNS?”

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. This presentation may contain certain "forward-looking statements" with respect to certain of Prudential's plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Prudential's control including among other things, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which Prudential and its affiliates operate. As a result, Prudential's actual future financial condition, performance and results may differ materially from the plans, goals, and expectations set forth in Prudential's forward-looking statements.

  2. “CAN EMERGING MARKETS GENERATE SUPERIOR RETURNS?” Goldman Sachs European Financials Conference, 11 June 2002 JONATHAN BLOOMER GROUP CHIEF EXECUTIVE PRUDENTIAL PLC

  3. PRUDENTIAL PLC: A STRATEGIC OVERVIEW • A leading international retail financial services player • Focus on medium and long term savings • A market leader in our chosen territories • UK • US • Asia • Diversified products and distribution channels • Scale and resources for future growth, internationally • Balancing short-term and long-term strategies to deliver value to our shareholders

  4. GROWTH FROM INTERNATIONAL DIVERSIFICATION New business sales FY2001 New business sales by region 1996- 2001 £m

  5. Population (millions) China 1,266 India 1,007 Indonesia 210 Japan 127 Vietnam 78 Philippines 81 Thailand 63 S. Korea 47 Malaysia 23 Taiwan 22 Hong Kong 7 Singapore 4 ASIA: POTENTIAL FOR SUSTAINED GROWTH The most densely-populated region in the world: China and India each have more than 3x US population Indonesia has higher population than France, UK and Germany combined Average GDP growth % 1971-2000 8.6 9% 8.1 8.0 8% 7.5 6.9 6.7 7% 6.4 5.9 6% 4.9 5% 4% 3.5 3.3 3% 2% 1% 0% Japan Malay Sing Taiwan China Thai HK Korea Phil India Indo Asia delivers consistently high GDP growth despite several economic crises in last 30 years Source: UBSW 30 Aug 01

  6. MARKET SIZE AND GROWTH: A GLOBAL PERSPECTIVE Asian Life and retail bank deposits are larger than UK and US and growing rapidly; Asian MF balances are relatively smaller but growing fast Life Premiums Mutual Funds FUM Retail Bank Deposits (2000, £bn) (2000, £bn) (2000, £bn) 6,000 350 5,000 5,000 300 2,500 250 4,000 2,000 Japan 200 Japan 3,000 1,500 150 2,000 1,000 100 1,000 500 50 ROA Japan ROA ROA 0 0 0 Asia UK US Asia UK US Asia UK US 1 Japan 11 ROA 7 4 20 Japan 14 ROA 17 25 1 Japan 10.5% 5 6 1990-99 Growth (%) 1997-00 Growth (%) 1995-99 Growth (%) Source: Swiss Re; Group Position Assessment; Federal Reserve

  7. LIFE INSURANCE MARKETS IN ASIA LIFE PENETRATION INCREASES AS ECONOMIES DEVELOP: US$10,000 IS INFLECTION POINT Life Penetration Market Growth Penetration, 19991 New Business Premiums, $m = $1bn in NB Premiums 12% Growth Japan 16,413 2% Korea 7,966 11% 10% S Korea 11% Taiwan 4,564 Japan China 22% 8% 851 India 1,375 20% 6% Hong Kong 850 9% Taiwan 540 Singapore 9% 4% Thailand 354 12% Hong Kong Malaysia 380 11% Singapore India Malaysia 2% Philippines 140 12% China Thailand Indonesia 214 15% Philippines Indonesia 0% Vietnam 78 22% Vietnam 1,000 10,000 100,000 Per Capita GDP2, US$ (log scale) 1. Source: Swiss Re; 2. Source: CIA

  8. 98% 98% 95% 88% 12% 2% 5% 2% Indonesia Japan Korea Thailand Domestic Foreign ASIA: OPPORTUNITIES FOR FOREIGN PROVIDERS RFS BALANCES IN DOMESTIC AND FOREIGN COMPANIES • Foreign players have had difficulties capturing market share • 97/98 economic crisis lowered some barriers • US and European companies see scale of opportunity in Asia • But significant hurdles are still in place Source: Morgan Stanley Research, Aug 01

  9. Products • Provide products that continue to meet customer needs • Offer broader range of needs-based, Retail Financial Services products: • life and pensions • mutual funds • general insurance • banking to cement and deepen customer relationship • Distribution • Improve efficiency and effectiveness of current distribution channels • Expand distribution options: • access more customers • give customers choice in accessing Prudential • maximise “stickiness” andproductivity of each relationship through cross-selling Target Customers Professional/mass affluent segment LONG-TERM VISION FOR DEVELOPMENT OF PRESENCE IN ASIA ACHIEVE SUSTAINABLE RFS LEADERSHIP WITH LEVELS OF CUSTOMER ACCESS, SHARE OF WALLET, PROFITABILITY, AND SCALE COMPARABLE TO LEADING RETAIL FINANCIAL SERVICES GROUPS • Geography • Expand into Asian markets with the largest and most profitable pools of target customers

  10. RELATIVE LIFE MARKET POSITION No of Markets in Top 5 • AIG 6-8 Prudential • Manulife • Allianz 4-5 • Great Eastern • NY Life • ING 2-3 • Cathay Life • Aegon • CGNU • Mass Mutual • US Prudential • RSA • Sun Life • Zurich • Axa 0-1 3-6 7-8 9+ 1-2 Market Presences/Licences Source: PCA analysis

  11. PRUDENTIAL’S STRATEGIC PRIORITIES: CAPITALISE ON THEOPPORTUNITIES • Build a scale presence in North Asia and Greater China • largest profit pools and target customer bases • Grow and strengthen tied agency forces • Continue to evolve towards multi-distribution model • building upon recent successes in bank/direct distribution • Build profitable and material regional Mutual Fund business • Migrate to lower-cost operating configuration with multi-country processing • Continue to develop structure and resource pool

  12. ASIA: FINANCIAL HIGHLIGHTS NEW BUSINESS ACHIEVED PROFIT SALES £m £m 255 +66% 434 +70% 153 256 +61% 90 124 56 83

  13. Summary (1994 to 2001) £m Acquisitions 533 Working capital 264 Repatriations (106) Net capital 691 CAPITAL FLOWS IN ASIA: UPDATE Net capital flows • Japan and Korea acquisitions • Increased investment in Indonesia and Taiwan 274 144 158 76 22 11 (1) 7

  14. CONCLUSION: BENEFITS CAN BE REAPED FROM SUCCESSFUL PARTICIPATION IN EMERGING MARKETS • Markets are attractive and will remain so for the foreseeable future • To succeed a participant needs: • strong and capable management team • strong track record of performance delivery • financial strength • profitable business model • ability to leverage pan-regional presence • continued focus on costs • clear view of future opportunities and challenges • Strategy and capabilities must be designed to deliver profitable growth

  15. PRUDENTIAL PLC

More Related