SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the
month of August, 2023
PRUDENTIAL PUBLIC LIMITED COMPANY
(Translation
of registrant's name into English)
13/F, One International Finance Centre,
1 Harbour View Street, Central,
Hong Kong, China
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F X
Form 40-F
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
No X
If
"Yes" is marked, indicate below the file number assigned to the
registrant
in
connection with Rule 12g3-2(b): 82-
EEV Results
Highlights
|
Half year 2023
|
|
Half year 2022
|
|
Full year 2022
|
|
|
|
AER
|
|
CER
|
|
AER
|
|
$m
|
|
$m
|
% change
|
|
$m
|
% change
|
|
$m
|
New business profitnote
(i)
|
1,489
|
|
1,098
|
36%
|
|
1,069
|
39%
|
|
2,184
|
Annual premium equivalent (APE)note
(i)
|
3,027
|
|
2,213
|
37%
|
|
2,132
|
42%
|
|
4,393
|
New business margin (APE) (%)
|
49%
|
|
50%
|
(1)ppt
|
|
50%
|
(1)ppt
|
|
50%
|
Present value of new business premiums (PVNBP)
|
14,430
|
|
11,728
|
23%
|
|
11,435
|
26%
|
|
22,406
|
|
|
|
|
|
|
|
|
|
|
Operating free surplus generatednotes
(i)(ii)
|
1,024
|
|
1,224
|
(16)%
|
|
1,200
|
(15)%
|
|
2,193
|
|
|
|
|
|
|
|
|
|
|
EEV operating profitnotes
(i)(iii)
|
2,155
|
|
1,806
|
19%
|
|
1,761
|
22%
|
|
3,952
|
EEV operating profit, net of non-controlling interests
|
2,144
|
|
1,796
|
19%
|
|
1,751
|
22%
|
|
3,923
|
Operating return on average EEV shareholders' equity, net of
non-controlling interests (%)note
(iv)
|
10%
|
|
8%
|
|
|
|
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
Closing EEV shareholders' equity, net of non-controlling
interests
|
43,704
|
|
42,300
|
3%
|
|
41,907
|
4%
|
|
42,184
|
Closing EEV shareholders' equity, net of non-controlling interests
per share (in cents)
|
1,588¢
|
|
1,539¢
|
3%
|
|
1,524¢
|
4%
|
|
1,534
|
Notes
(i)
Results are presented before deducting the amounts attributable to
non-controlling interests. This presentation is applied
consistently throughout this document, unless stated
otherwise.
(ii)
Operating free surplus generated is for long-term and asset
management businesses only, before restructuring and IFRS 17
implementation costs, centrally incurred costs and
eliminations.
(iii)
Group EEV operating profit is stated after restructuring and IFRS
17 implementation costs, centrally incurred costs and
eliminations.
(iv)
Operating return on average EEV shareholders' equity is calculated
as EEV operating profit for the period as a percentage of average
EEV basis shareholders' equity. Half year profits are annualised by
multiplying by two.
European Embedded Value (EEV) basis results
Basis of Preparation
IFRS profit for insurance contracts largely reflects the level of
services provided for a given period. Unearned future profits
expected on those same insurance contracts are contained in a
separate liability called the contractual service margin. These
future profits have been derived on a risk neutral basis, namely
without allowing for the real world investment return that will be
earned on the assets held. By contrast, EEV reflects all future
profits, with no equivalent liability to the contractual service
margin, but values those profits on a risk adjusted real world
basis, namely allowing for the future investment returns that are
expected to be earned by the assets held but uses a higher discount
rate that allows for the uncertainties in these cash flows. The
value of future new business is excluded from the embedded value.
The EEV Principles provide consistent definitions of the components
of EEV, a framework for setting assumptions and an approach to the
underlying methodology and disclosures. The EEV Principles were
designed to provide guidance and common principles that could be
understood by both users and preparers alongside prescribing a
minimum level of disclosures to enable users to understand an
entity's methodology, assumptions and key judgements as well as the
sensitivity of an entity's EEV to key assumptions. Results prepared
under the EEV Principles represent the present value of the
shareholders' interest in the post-tax future profits (generally on
a local statutory basis) expected to arise from the current book of
long-term business, after sufficient allowance has been made for
the aggregate risks in the business. The shareholders' interest in
the Group's long-term business is the sum of the shareholders'
total net worth and the value of in-force business.
For the purposes of preparing EEV results, insurance joint ventures
and associates are included at the Group's proportionate share of
their embedded value and not at their market value. Asset
management and other non-insurance subsidiaries, joint ventures and
associates are included in the EEV results at the Group's
proportionate share of IFRS shareholders' equity, with central
Group debt shown on a market value basis. Further information is
contained in note 4.
Key features of the Group's EEV methodology include:
-
Economic assumptions: The
projected post-tax profits assume a level of future investment
return and are discounted using a risk discount rate. Both the risk
discount rate and the investment return assumptions are updated at
each valuation date to reflect current market risk-free rates, such
that changes in market risk-free rates impact all projected future
cash flows. Risk-free rates, and hence investment return
assumptions, are based on observable market data, with current
market risk-free rates assumed to remain constant throughout the
projection, with no trending or mean reversion to longer-term
assumptions. Different products will be sensitive to different
assumptions, for example, participating products or products with
guarantees are likely to benefit disproportionately from higher
assumed investment returns.
- Time value of financial
options and guarantees: Explicit quantified allowances are made for
the time value of financial options and guarantees (TVOG). The TVOG
is determined by weighting the probability of outcomes across a
large number of different economic scenarios and is typically less
applicable to health and protection business that generally
contains more limited financial options or guarantees. At 30 June
2023, the TVOG is $(308) million (31 December 2022: $(151)
million). The magnitude of the TVOG at 30 June 2023 would be
approximately equivalent to a circa 7 basis point (31 December
2022: 3 basis point) increase in the weighted average risk discount
rate.
-
Allowance for risk
in the risk discount rates: Risk discount rates are set equal to the
risk-free rate at the valuation date plus product-specific
allowances for market and non-market risks. Risks that are
explicitly captured elsewhere, such as via the TVOG, are not
included in the risk discount rates.
The
allowance for market risk is based on a product-by-product
assessment of the sensitivity of shareholder cash flows to varying
market returns. This approach reflects the inherent market risk in
each product group and results in lower risk discount rates for
products where the majority of shareholder profit is uncorrelated
to market risk and appropriately higher risk discount rates for
products where there is greater market exposure for
shareholders.
For example, for health and
protection products, which represent 51 per cent of the value of
in-force business (30 June 2022: 56
per cent, 31 December 2022: 51 per cent) and 37 per cent of new
business profit (30 June 2022: 42
per cent, 31 December 2022: 43 per cent), the major sources of
shareholder profits are underwriting profits or fixed shareholder
charges which have low market risk sensitivity. The proportion of
health and protection business varies with interest rates as well
as the mix of business sold in the current
period.
The
construct of UK-style with-profits or similar participating funds
in some business units (representing 27 per cent of the value of
in-force (30 June 2022: 22 per cent, 31 December 2022: 26 per cent)
and 12 per cent of new business profit (30 June 2022: 19 per cent,
31 December 2022: 18 per cent)) reduce the market volatility of
both policyholder and shareholder cash flows due to smoothed bonus
declarations and for some markets the presence of an estate.
Accordingly, 78 per cent of the value of in-force (30 June 2022: 78
per cent, 31 December 2022: 77 per cent) is products with low
market risk sensitivity and this is reflected in the overall risk
discount rate.
For
unit-linked products where fund management charges fluctuate with
the investment return, a portion of the profits will typically be
more sensitive to market risk due to the higher proportion of
equity-type assets in the investment portfolio resulting in a
higher risk discount rate. This business represents 16 per cent of
the value of in-force (30 June 2022: 15 per cent, 31 December 2022:
17 per cent) and 3 per cent of the value of new business profit (30
June 2022: 12 per cent, 31 December 2022: 11 per cent) which limits
the impact on the overall risk discount rate.
The
remaining parts of the business (6 per cent of the value of
in-force business (30 June 2022: 7 per cent, 31 December 2022: 6
per cent) and 48 per cent of the value of new business (30 June
2022: 27 per cent, 31 December 2022: 28 per cent)) relate to other
products not covered by the above. The high proportion of new
business in the current period reflects the higher proportion of
savings product in Hong Kong as the border reopened.
The
allowance for non-market risk comprises a base Group-wide allowance
of 50 basis points plus additional allowances for emerging market
risk where appropriate. At 30 June 2023, the total allowance for
non-market risk is equivalent to a $(3.0) billion (31 December
2022: $(2.8) billion) reduction, or around (7) per cent (31
December 2022: (7) per cent) of the embedded value.
Movement in Group EEV Shareholders' Equity
|
|
2023 $m
|
|
2022 $m
|
|
|
Half year
|
|
Half year
|
Full year
|
|
|
Insurance
and asset
management
operations
|
Other
(central)
operations
|
Group
total
|
|
Group
total
|
Group
total
|
New business profit
|
1
|
1,489
|
-
|
1,489
|
|
1,098
|
2,184
|
Profit from in-force business
|
2
|
844
|
-
|
844
|
|
1,001
|
2,358
|
Long-term business
|
|
2,333
|
-
|
2,333
|
|
2,099
|
4,542
|
Asset management
|
|
132
|
-
|
132
|
|
117
|
234
|
Operating profit from long-term and asset management
businesses
|
|
2,465
|
-
|
2,465
|
|
2,216
|
4,776
|
Other income (expenditure)
|
4
|
-
|
(221)
|
(221)
|
|
(263)
|
(542)
|
Operating profit (loss) before restructuring and IFRS 17
implementation costs
|
|
2,465
|
(221)
|
2,244
|
|
1,953
|
4,234
|
Restructuring and IFRS 17 implementation costs
|
|
(33)
|
(56)
|
(89)
|
|
(147)
|
(282)
|
Operating profit (loss) for the period
|
|
2,432
|
(277)
|
2,155
|
|
1,806
|
3,952
|
Short-term fluctuations in investment returns
|
2
|
323
|
(11)
|
312
|
|
(5,201)
|
(6,874)
|
Effect of changes in economic assumptions
|
2
|
(92)
|
-
|
(92)
|
|
(806)
|
(1,571)
|
Profit attaching to corporate transactions
|
|
-
|
-
|
-
|
|
62
|
57
|
Mark-to-market value movements on core structural
borrowings
|
5
|
-
|
(38)
|
(38)
|
|
631
|
865
|
Non-operating results
|
|
231
|
(49)
|
182
|
|
(5,314)
|
(7,523)
|
Profit (loss) for the period
|
|
2,663
|
(326)
|
2,337
|
|
(3,508)
|
(3,571)
|
Non-controlling interests share of (profit) loss
|
|
(11)
|
-
|
(11)
|
|
(10)
|
(29)
|
Profit (loss) for the period attributable to equity holders of the
Company
|
|
2,652
|
(326)
|
2,326
|
|
(3,518)
|
(3,600)
|
Equity items:
|
|
|
|
|
|
|
|
Foreign exchange movements on operations
|
|
(496)
|
21
|
(475)
|
|
(1,198)
|
(1,195)
|
Intra-group dividends and investment in
operationsnote
(i)
|
|
(958)
|
958
|
-
|
|
-
|
-
|
Other external dividends
|
|
-
|
(361)
|
(361)
|
|
(320)
|
(474)
|
New share capital subscribed
|
|
-
|
4
|
4
|
|
-
|
(4)
|
Other movementsnote
(ii)
|
|
122
|
(96)
|
26
|
|
(248)
|
(127)
|
Net increase (decrease) in shareholders' equity
|
|
1,320
|
200
|
1,520
|
|
(5,284)
|
(5,400)
|
Shareholders' equity at beginning of period
|
|
40,262
|
1,922
|
42,184
|
|
47,355
|
47,355
|
Effect of HK RBC
|
|
-
|
-
|
-
|
|
229
|
229
|
Shareholders' equity at beginning of period after adoption of HK
RBC
|
|
40,262
|
1,922
|
42,184
|
|
47,584
|
47,584
|
Shareholders' equity at end of period
|
|
41,582
|
2,122
|
43,704
|
|
42,300
|
42,184
|
|
|
|
|
|
|
|
|
Contribution to Group EEV:
|
|
|
|
|
|
|
|
At end of
period:
|
|
|
|
|
|
|
|
Long-term business
|
2
|
40,179
|
-
|
40,179
|
|
38,965
|
38,857
|
Asset management and other
|
4
|
650
|
2,122
|
2,772
|
|
2,586
|
2,565
|
Shareholders' equity, excluding goodwill attributable to equity
holders
|
|
40,829
|
2,122
|
42,951
|
|
41,551
|
41,422
|
Goodwill attributable to equity holders
|
|
753
|
-
|
753
|
|
749
|
762
|
Shareholders' equity at end of period
|
|
41,582
|
2,122
|
43,704
|
|
42,300
|
42,184
|
|
|
|
|
|
|
|
|
At
beginning of period:
|
|
|
|
|
|
|
|
Long-term business
|
2
|
38,857
|
-
|
38,857
|
|
44,646
|
44,646
|
Asset management and other
|
4
|
643
|
1,922
|
2,565
|
|
1,931
|
1,931
|
Shareholders' equity, excluding goodwill attributable to equity
holders
|
|
39,500
|
1,922
|
41,422
|
|
46,577
|
46,577
|
Goodwill attributable to equity holders
|
|
762
|
-
|
762
|
|
778
|
778
|
Shareholders' equity at beginning of period
|
|
40,262
|
1,922
|
42,184
|
|
47,355
|
47,355
|
|
2023 $m
|
|
2022 $m
|
|
Half year
|
|
Half year
|
Full year
|
EEV shareholders' equity per share (in cents)note
(iii)
|
Insurance
and asset
management
operations
|
Other
(central)
operations
|
Group
total
|
|
Group
total
|
Group
total
|
At
end of period:
|
|
|
|
|
|
|
Based on shareholders' equity, net of goodwill attributable to
equity holders
|
1,483¢
|
77¢
|
1,560¢
|
|
1,511¢
|
1,507¢
|
Based on shareholders' equity at end of period
|
1,511¢
|
77¢
|
1,588¢
|
|
1,539¢
|
1,534¢
|
|
|
|
|
|
|
|
At
beginning of period:
|
|
|
|
|
|
|
Based on shareholders' equity, net of goodwill attributable to
equity holders
|
1,437¢
|
70¢
|
1,507¢
|
|
1,696¢
|
1,696¢
|
Based on shareholders' equity at beginning of period
|
1,464¢
|
70¢
|
1,534¢
|
|
1,725¢
|
1,725¢
|
|
2023
|
|
2022
|
|
Half year
|
|
Half year
|
Full year
|
EEV basis basic earnings per sharenote
(iv)
|
Before non-
controlling
interests
|
After
non-
controlling
interests
|
Basic
earnings
per share
|
|
Basic
earnings
per share
|
Basic
earnings
per share
|
|
$m
|
$m
|
cents
|
|
cents
|
cents
|
Based on operating profit
|
2,155
|
2,144
|
78.2¢
|
|
65.6¢
|
143.4¢
|
Based on profit (loss) for the period
|
2,337
|
2,326
|
84.9¢
|
|
(128.6)¢
|
(131.6)¢
|
Notes
(i)
Intra-group dividends represent dividends that have been paid in
the period. Investment in operations reflects movements in share
capital.
(ii)
Other movements include reserve movements in respect of share-based
payments, treasury shares and intra-group transfers between
operations that have no overall effect on the Group's shareholders'
equity.
(iii)
Based on the number of issued shares at 30 June 2023 of 2,753
million shares (30 June 2022: 2,749 million shares; 31 December
2022: 2,750 million shares).
(iv)
Based on weighted average number of issued shares of 2,740 million
shares in half year 2023 (half year 2022: 2,736 million shares;
full year 2022: 2,736 million shares).
Movement in Group Free Surplus
Operating free surplus generation is the financial metric we use to
measure the internal cash generation of our business operations and
for our life operations is generally based on (with adjustments as
discussed below) the capital regimes that apply locally in the
various jurisdictions in which the Group operates. It represents
amounts emerging from the in-force business during the year, net of
amounts reinvested in writing new business. For asset management
businesses, it equates to post-tax adjusted operating profit for
the year.
For insurance business, free surplus is generally based on (with
adjustments including recognition of certain intangibles and other
assets that may be inadmissible on a regulatory basis) the excess
of the regulatory basis net assets (EEV total net worth) over the
EEV capital required to support the covered business. For
shareholder-backed businesses, the level of EEV required capital
has been based on the Group Prescribed Capital Requirements (GPCR)
used in our GWS reporting as set out in note 6.1(e). Adjustments
are also made to enable free surplus to be a better measure of
shareholders' resources available for distribution as described in
the reconciliation to GWS surplus as disclosed in note I(i) of the
Additional financial information.
For asset management and other non-insurance operations (including
the Group's central operations), free surplus is taken to be IFRS
basis shareholders' equity, net of goodwill attributable to
shareholders, with central Group debt recorded as free surplus to
the extent that it is classified as capital resources under the
Group's capital regime.
A reconciliation of EEV free surplus to the GWS shareholder capital
surplus over group minimum capital requirements is also set out in
note I(i) of the Additional financial information.
|
|
|
2023 $m
|
|
2022 $m
|
|
|
|
Half year
|
|
Half year
|
Full year
|
|
Note
|
Insurance
and asset
management
operations
|
Other
(central)
operations
|
Group total
|
|
Group total
|
Group total
|
Expected transfer from in-force business
|
|
1,399
|
-
|
1,399
|
|
1,287
|
2,406
|
Expected return on existing free surplus
|
|
130
|
-
|
130
|
|
159
|
347
|
Changes in operating assumptions and experience
variances
|
|
(223)
|
-
|
(223)
|
|
(60)
|
(227)
|
Operating free surplus generated from in-force long-term
business
|
2
|
1,306
|
-
|
1,306
|
|
1,386
|
2,526
|
Investment in new businessnote
(i)
|
2
|
(414)
|
-
|
(414)
|
|
(279)
|
(567)
|
Long-term business
|
|
892
|
-
|
892
|
|
1,107
|
1,959
|
Asset management
|
|
132
|
-
|
132
|
|
117
|
234
|
Operating free surplus generated from long-term and asset
management businesses
|
|
1,024
|
-
|
1,024
|
|
1,224
|
2,193
|
Other income and expenditure
|
4
|
-
|
(221)
|
(221)
|
|
(263)
|
(542)
|
Restructuring and IFRS 17 implementation costs
|
|
(32)
|
(56)
|
(88)
|
|
(146)
|
(277)
|
Operating free surplus generated
|
|
992
|
(277)
|
715
|
|
815
|
1,374
|
Non-operating free surplus generatednote
(ii)
|
|
(53)
|
(13)
|
(66)
|
|
(1,310)
|
(1,924)
|
Free surplus generated for the period
|
|
939
|
(290)
|
649
|
|
(495)
|
(550)
|
Equity items:
|
|
|
|
|
|
|
|
Net cash flows paid to parent companynote
(iii)
|
|
(1,024)
|
1,024
|
-
|
|
-
|
-
|
Other external dividends
|
|
-
|
(361)
|
(361)
|
|
(320)
|
(474)
|
Foreign exchange movements on operations
|
|
(110)
|
21
|
(89)
|
|
(247)
|
(316)
|
New share capital subscribed
|
|
-
|
4
|
4
|
|
-
|
(4)
|
Other movements and timing differences
|
|
188
|
(162)
|
26
|
|
(248)
|
(127)
|
Net movement in free surplus before non-controlling interest and
before net subordinated debt issuance/redemption
|
|
(7)
|
236
|
229
|
|
(1,310)
|
(1,471)
|
Net subordinated debt redemption
|
|
-
|
(397)
|
(397)
|
|
(1,699)
|
(1,699)
|
Net movement in free surplus before non-controlling
interest
|
|
(7)
|
(161)
|
(168)
|
|
(3,009)
|
(3,170)
|
Change in amounts attributable to non-controlling
interests
|
|
(5)
|
-
|
(5)
|
|
(5)
|
(10)
|
Balance at the beginning of the period (as previously
reported)
|
|
6,678
|
5,551
|
12,229
|
|
14,049
|
14,049
|
Effect of HK RBC
|
|
-
|
-
|
-
|
|
1,360
|
1,360
|
Balance at beginning of period
|
|
6,678
|
5,551
|
12,229
|
|
15,409
|
15,409
|
Balance at end of period
|
|
6,666
|
5,390
|
12,056
|
|
12,395
|
12,229
|
|
|
|
|
|
|
|
|
Representing:
|
|
|
|
|
|
|
|
Free surplus excluding distribution rights and other
intangibles
|
|
5,723
|
2,686
|
8,409
|
|
8,589
|
8,390
|
Distribution rights and other intangibles
|
|
943
|
2,704
|
3,647
|
|
3,806
|
3,839
|
Balance at end of period
|
|
6,666
|
5,390
|
12,056
|
|
12,395
|
12,229
|
|
|
|
2023 $m
|
|
2022 $m
|
|
|
|
30 Jun
|
|
30 Jun
|
31 Dec
|
Contribution to Group free surplus:
|
Note
|
Insurance
and asset
management
operations
|
Other
(central)
operations
|
Group total
|
|
Group total
|
Group total
|
At end of period:
|
|
|
|
|
|
|
|
Long-term business
|
2
|
6,016
|
-
|
6,016
|
|
5,960
|
6,035
|
Asset management and other
|
4
|
650
|
5,390
|
6,040
|
|
6,435
|
6,194
|
Total
|
|
6,666
|
5,390
|
12,056
|
|
12,395
|
12,229
|
|
|
|
|
|
|
|
|
|
At beginning of period:
|
|
|
|
|
|
|
|
Long-term business
|
2
|
6,035
|
-
|
6,035
|
|
5,960
|
5,960
|
Asset management and other
|
4
|
643
|
5,551
|
6,194
|
|
8,089
|
8,089
|
Total
|
|
6,678
|
5,551
|
12,229
|
|
14,049
|
14,049
|
Notes
(i)
Free surplus invested in new business primarily represents
acquisition costs and amounts set aside for required
capital.
(ii)
Non-operating free surplus generated for other operations
represents the post-tax IFRS basis short-term fluctuations in
investment returns, the movement in the mark-to-market value
adjustment on core structural borrowings which did not meet the
qualifying conditions as set out in the Insurance (Group Capital)
Rules and gain or loss on corporate transactions for other
entities.
(iii)
Net cash flows to parent company reflect the cash remittances as
included in the holding company cash flow at transaction rates. The
difference to the intra-group dividends and investment in
operations in the movement in EEV shareholders' equity primarily
relates to intra-group loans, foreign exchange and other non-cash
items.
Notes on the EEV financial results
1 Analysis of new business profit and EEV for long-term
business operations
|
Half year 2023
|
|
New
business
profit
(NBP)
|
Annual
premium
equivalent (APE)
|
Present
value of new
business
premiums
(PVNBP)
|
New business
Margin
(APE)
|
New business
Margin
(PVNBP)
|
Closing EEV
shareholders'
equity, excluding
goodwill
|
|
$m
|
$m
|
$m
|
%
|
%
|
$m
|
CPL (Prudential's share)
|
171
|
394
|
1,481
|
43%
|
12%
|
3,131
|
Hong Kong
|
670
|
1,027
|
5,364
|
65%
|
12%
|
17,496
|
Indonesia
|
61
|
150
|
629
|
41%
|
10%
|
1,763
|
Malaysia
|
73
|
185
|
915
|
39%
|
8%
|
3,557
|
Singapore
|
198
|
386
|
2,441
|
51%
|
8%
|
7,060
|
Growth markets and other
|
316
|
885
|
3,600
|
36%
|
9%
|
7,172
|
Total long-term operations
|
1,489
|
3,027
|
14,430
|
49%
|
10%
|
40,179
|
|
|
|
|
|
|
|
|
Half year 2022 (AER)
|
|
New
business
profit
(NBP)
|
Annual
premium
equivalent (APE)
|
Present
value of new
business
premiums
(PVNBP)
|
New business
Margin
(APE)
|
New business
Margin
(PVNBP)
|
Closing EEV
shareholders'
equity, excluding
goodwill
|
|
$m
|
$m
|
$m
|
%
|
%
|
$m
|
CPL (Prudential's share)
|
217
|
507
|
2,119
|
43%
|
10%
|
3,302
|
Hong Kong
|
211
|
227
|
1,774
|
93%
|
12%
|
17,246
|
Indonesia
|
52
|
110
|
442
|
47%
|
12%
|
1,956
|
Malaysia
|
70
|
172
|
845
|
41%
|
8%
|
3,524
|
Singapore
|
244
|
390
|
3,184
|
63%
|
8%
|
6,712
|
Growth markets and other
|
304
|
807
|
3,364
|
38%
|
9%
|
6,225
|
Total long-term operations
|
1,098
|
2,213
|
11,728
|
50%
|
9%
|
38,965
|
|
|
|
|
|
|
|
Half year 2022 (CER)
|
|
New
business
profit
(NBP)
|
Annual
premium
equivalent (APE)
|
Present
value of new
business
premiums
(PVNBP)
|
New business
Margin
(APE)
|
New business
Margin
(PVNBP)
|
Closing EEV
shareholders'
equity, excluding
goodwill
|
|
$m
|
$m
|
$m
|
%
|
%
|
$m
|
CPL (Prudential's share)
|
203
|
474
|
1,982
|
43%
|
10%
|
3,043
|
Hong Kong
|
211
|
227
|
1,771
|
93%
|
12%
|
17,269
|
Indonesia
|
50
|
106
|
424
|
47%
|
12%
|
1,944
|
Malaysia
|
66
|
165
|
809
|
40%
|
8%
|
3,328
|
Singapore
|
249
|
398
|
3,253
|
63%
|
8%
|
6,902
|
Growth markets and other
|
290
|
762
|
3,196
|
38%
|
9%
|
6,083
|
Total long-term operations
|
1,069
|
2,132
|
11,435
|
50%
|
9%
|
38,569
|
|
|
|
|
|
|
|
Full year 2022 (AER)
|
|
New
business
profit
(NBP)
|
Annual
premium
equivalent (APE)
|
Present
value of new
business
premiums
(PVNBP)
|
New business
Margin
(APE)
|
New business
Margin
(PVNBP)
|
Closing EEV
shareholders'
equity, excluding
goodwill
|
|
$m
|
$m
|
$m
|
%
|
%
|
$m
|
CPL (Prudential's share)
|
387
|
884
|
3,521
|
44%
|
11%
|
3,259
|
Hong Kong
|
384
|
522
|
3,295
|
74%
|
12%
|
16,576
|
Indonesia
|
125
|
247
|
1,040
|
51%
|
12%
|
1,833
|
Malaysia
|
159
|
359
|
1,879
|
44%
|
8%
|
3,695
|
Singapore
|
499
|
770
|
6,091
|
65%
|
8%
|
6,806
|
Growth markets and other
|
630
|
1,611
|
6,580
|
39%
|
10%
|
6,688
|
Total long-term operations
|
2,184
|
4,393
|
22,406
|
50%
|
10%
|
38,857
|
Note
The
movement in new business profit from long-term operations is
analysed as follows:
|
$m
|
Half year 2022 new business profit
|
1,098
|
Foreign exchange movement
|
(29)
|
Sales volume
|
449
|
Effect of changes in interest rates and other economic
assumptions
|
(137)
|
Business mix, product mix and other items
|
108
|
Half year 2023 new business profit
|
1,489
|
2 Analysis of movement in net worth and value of
in-force business for long-term business operations
|
|
2023 $m
|
|
2022 $m
|
|
|
Half year
|
|
Half year
|
Full year
|
|
|
Free
surplus
|
Required
capital
|
Net
worth
|
Value of
in-force business
|
Embedded
value
|
|
Embedded
value
|
Embedded
value
|
|
|
|
|
|
|
note (i)
|
|
note (i)
|
note (i)
|
Balance at beginning of period
|
|
|
|
|
|
|
|
|
Balance at beginning of period (as previously
reported)
|
6,035
|
5,556
|
11,591
|
27,266
|
38,857
|
|
44,646
|
44,646
|
Effect of HK RBC
|
-
|
-
|
-
|
-
|
-
|
|
229
|
229
|
Balance at beginning of period
|
6,035
|
5,556
|
11,591
|
27,266
|
38,857
|
|
44,875
|
44,875
|
New business contribution
|
(414)
|
228
|
(186)
|
1,675
|
1,489
|
|
1,098
|
2,184
|
Existing business - transfer to net worth
|
1,399
|
(178)
|
1,221
|
(1,221)
|
-
|
|
-
|
-
|
Expected return on existing businessnote
(ii)
|
130
|
40
|
170
|
947
|
1,117
|
|
1,183
|
2,559
|
Changes in operating assumptions, experience variances and other
itemsnote
(iii)
|
(223)
|
(5)
|
(228)
|
(45)
|
(273)
|
|
(182)
|
(201)
|
Operating profit before restructuring and IFRS 17 implementation
costs
|
892
|
85
|
977
|
1,356
|
2,333
|
|
2,099
|
4,542
|
Restructuring and IFRS 17 implementation costs
|
(28)
|
-
|
(28)
|
(1)
|
(29)
|
|
(32)
|
(116)
|
Operating profit
|
864
|
85
|
949
|
1,355
|
2,304
|
|
2,067
|
4,426
|
Non-operating resultnote
(iv)
|
(53)
|
(28)
|
(81)
|
312
|
231
|
|
(6,014)
|
(8,469)
|
Profit (loss) for the period
|
811
|
57
|
868
|
1,667
|
2,535
|
|
(3,947)
|
(4,043)
|
Non-controlling interests share of (profit) loss
|
(2)
|
-
|
(2)
|
(6)
|
(8)
|
|
(7)
|
(22)
|
Profit (loss) for the period attributable to equity holders of the
Company
|
809
|
57
|
866
|
1,661
|
2,527
|
|
(3,954)
|
(4,065)
|
Foreign exchange movements
|
(103)
|
(44)
|
(147)
|
(333)
|
(480)
|
|
(1,156)
|
(1,146)
|
Intra-group dividends and investment in operations
|
(843)
|
-
|
(843)
|
-
|
(843)
|
|
(832)
|
(999)
|
Other movementsnote
(v)
|
118
|
-
|
118
|
-
|
118
|
|
32
|
192
|
Balance at end of period
|
6,016
|
5,569
|
11,585
|
28,594
|
40,179
|
|
38,965
|
38,857
|
(i) Total embedded value
The total embedded value for long-term business operations at the
end of each period shown below, excluding goodwill attributable to
equity holders, can be analysed further as follows:
|
|
2023 $m
|
|
2022 $m
|
|
|
30 Jun
|
|
30 Jun
|
31 Dec
|
Value of in-force business before deduction of cost of capital and
time value of options and guarantees
|
29,636
|
|
28,442
|
28,126
|
Cost of capital
|
(734)
|
|
(693)
|
(709)
|
Time value of options and guaranteesnote
|
(308)
|
|
(368)
|
(151)
|
Net value of in-force business
|
28,594
|
|
27,381
|
27,266
|
Free surplus
|
6,016
|
|
5,960
|
6,035
|
Required capital
|
5,569
|
|
5,624
|
5,556
|
Net worth
|
11,585
|
|
11,584
|
11,591
|
Embedded value
|
40,179
|
|
38,965
|
38,857
|
Note
The time value of options and guarantees (TVOG) arises from the
variability of economic outcomes in the future and is, where
appropriate, calculated as the difference between an average
outcome across a range of economic scenarios, calibrated around a
central scenario, and the outcome from the central economic
scenario, as described in note 6.1(d). At 30 June 2023, the TVOG is
$(308) million, with the substantial majority arising in Hong Kong.
The TVOG reflects the variability of guaranteed benefit payouts
across the range of economic scenarios around interest rates at the
valuation date and represents some of the market risk for the key
products in Hong Kong. As this market risk is explicitly allowed
for via the TVOG, no further adjustment is made for this within the
EEV risk discount rate, as described in note 6.1(h).
(ii) Expected return on existing business
The expected return on existing business reflects the effect of
changes in economic and operating assumptions in the current
period, as described in note 6.2(c). The movement in this amount
compared to the prior period from long-term operations is analysed
as follows:
|
$m
|
Half year 2022 expected return on existing business
|
1,183
|
Foreign exchange movement
|
(22)
|
Effect of changes in interest rates and other economic
assumptions
|
(81)
|
Growth in opening value of in-force business and other
items
|
37
|
Half year 2023 expected return on existing business
|
1,117
|
(iii) Changes in operating assumption, experience variances
and other items
Overall the total impact of operating assumption changes,
experience variances and other items in half year 2023 was $(273)
million (half year 2022: $(182) million; full year 2022: $(201)
million) comprising changes in operating assumptions of $49 million
in half year 2023 (half year 2022: $61 million; full year 2022: $32
million) and experience variances and other items of $(322) million
(half year 2022: $(243) million; full year 2022: $(233)
million).
(iv) Non-operating results
The EEV non-operating result from long-term operations can be
summarised as follows:
|
2023 $m
|
|
2022 $m
|
|
Half year
|
|
Half year
|
Full year
|
Short-term fluctuations in investment returnsnote
(i)
|
323
|
|
(5,208)
|
(6,893)
|
Effect of change in economic assumptionsnote
(ii)
|
(92)
|
|
(806)
|
(1,571)
|
Loss attaching to corporate transactions
|
-
|
|
-
|
(5)
|
Non-operating results
|
231
|
|
(6,014)
|
(8,469)
|
Notes
(i) The
credit of $323 million in short-term fluctuations in investment
returns mainly reflects higher expected investment returns given
movements in interest rates, with many markets seeing a fall in the
first half of 2023, and rising equity markets in some
regions.
(ii) The
charge of $(92) million for effect of change in economic
assumptions primarily arises from decreases in interest rates in
many markets with the effect of lower assumed fund earned rates
that impact projected future cash flows being marginally greater
than the benefit from future interest rates.
(v) Other
reserve movements
Other movements include reserve movements in respect of intra-group
loans and other intra-group transfers between operations that have
no overall effect on the Group's shareholders' equity.
3 Sensitivity of results for long-term business
operations to alternative economic assumptions
The tables below show the sensitivity of the embedded value and the
new business profit for insurance business operations
to:
-
1 per cent and 2 per cent increases in interest rates and 0.5 per
cent decrease in interest rates. This allows for consequential
changes in the assumed investment returns for all asset classes,
market values of fixed interest assets, local statutory reserves,
capital requirements and risk discount rates (but excludes changes
in the allowance for market risk);
-
1 per cent rise in equity and property yields;
-
1 per cent and 2 per cent increases in the risk discount rates. The
main driver for changes in the risk discount rates from period to
period is changes in interest rates, the impact of which is
expected to be partially offset by a corresponding change in
assumed investment returns, the effect of which is not included in
the risk discount rate sensitivities. The impact of higher
investment returns can be approximated as the difference between
the sensitivity to increases in interest rates and the sensitivity
to increases in risk discount rates;
-
For embedded value only, 20 per cent fall in the market value of
equity and property assets; and
-
For embedded value only, holding the group minimum capital
requirements (GMCR) under the GWS Framework in contrast to EEV
required capital based on the group prescribed capital requirements
(GPCR). This reduces the level of capital and therefore the level
of charge deducted from the embedded value for the cost of
locked-in required capital. This
has the effect of increasing EEV.
The sensitivities shown below are for the impact of instantaneous
and permanent changes (with no trending or mean reversion) on the
embedded value of long-term business operations and include the
combined effect on the value of in-force business and net assets
(including derivatives) held at the valuation dates indicated. The
results only allow for limited management actions, such as changes
to future policyholder bonuses, where applicable. If such economic
conditions persisted, the financial impacts may differ to the
instantaneous impacts shown below. In this case, management could
also take additional actions to help mitigate the impact of these
stresses. No change in the mix of the asset portfolio held at the
valuation date is assumed when calculating sensitivities, while
changes in the market value of those assets are recognised. The
sensitivity impacts are expected to be non-linear. To aid
understanding of this non-linearity, impacts of both a 1 per cent
and 2 per cent increase to interest rates and risk discount rates
are shown.
If the changes in assumptions shown in the sensitivities were to
occur, the effects shown below would be recorded within two
components of the profit analysis for the following period, namely
the effect of changes in economic assumptions and short-term
fluctuations in investment returns. In addition to the sensitivity
effects shown below, the other components of the profit for the
following period would be calculated by reference to the altered
assumptions, for example new business profit and expected return on
existing business.
New business profit from long-term business
|
|
|
|
|
Half year 2023 $m
|
Full year 2022 $m
|
New business profit
|
1,489
|
2,184
|
Sensitivity to alternative economic assumptions:
|
|
|
|
Interest rates and consequential effects - 2% increase
|
(54)
|
220
|
|
Interest rates and consequential effects - 1% increase
|
(25)
|
134
|
|
Interest rates and consequential effects - 0.5%
decrease
|
12
|
(97)
|
|
Equity/property yields - 1% rise
|
87
|
160
|
|
Risk discount rates - 2% increase
|
(449)
|
(551)
|
|
Risk discount rates - 1% increase
|
(254)
|
(309)
|
Embedded value of long-term business
|
|
|
|
30 Jun 2023 $m
|
31 Dec 2022 $m
|
Embedded value
|
40,179
|
38,857
|
Sensitivity to alternative economic assumptions:
|
|
|
|
Interest rates and consequential effects - 2% increase
|
(4,202)
|
(3,988)
|
|
Interest rates and consequential effects - 1% increase
|
(2,242)
|
(2,067)
|
|
Interest rates and consequential effects - 0.5%
decrease
|
1,181
|
1,058
|
|
Equity/property yields - 1% rise
|
2,002
|
1,884
|
|
Equity/property market values - 20% fall
|
(1,969)
|
(1,840)
|
|
Risk discount rates - 2% increase
|
(7,852)
|
(7,371)
|
|
Risk discount rates - 1% increase
|
(4,462)
|
(4,155)
|
|
Group minimum capital requirements
|
116
|
117
|
New business sensitivities vary with changes in business mix and
APE sales volumes. In particular the directional movements in the
new business profit interest rate sensitivities from 31 December
2022 to 30 June 2023 reflect the movements in the business unit mix
driven by the increase in the APE sales growth in Hong Kong, which
is more sensitive to changes in the risk discount rates than the
level of future investment returns.
For a 1 per cent increase in assumed interest rates, the $(2,242)
million negative effect comprises a $(4,462) million negative
impact of increasing the risk discount rate by 1 per cent,
partially offset by a $2,220 million benefit from assuming 1 per
cent higher investment returns. Similarly, for a 2 per cent
increase in assumed interest rates the $(4,202) million negative
effect comprises a $(7,852) million negative impact of increasing
the risk discount rates by 2 per cent, partially offset by a $3,650
million benefit from higher assumed investment returns. Finally,
for a 0.5 per cent decrease in assumed interest rates, there would
be a $1,181 million positive effect reflecting the benefit of a 0.5
per cent reduction in risk discount rates being partially offset by
lower assumed investment returns. These offsetting impacts are
sensitive to economics and the net impact can therefore change from
period to period depending on the current level of interest
rates.
In order to illustrate the impact of varying specific economic
assumptions, all other assumptions are held constant in the
sensitivities above and, therefore, the actual changes in embedded
value were these economic effects to materialise may differ from
the sensitivities shown. For example, market risk allowances within
the risk discount rate may change if interest rates change and
these are not allowed for in the above. If market risk allowances
were changed as expected when interest rates are increased by 1 per
cent, the expected reduction in EEV would be $(2,009) million
(compared with the $(2,242) million impact shown above). Similarly,
if interest rates actually decreased by 0.5 per cent, it would lead
to a $1,039 million
increase (compared with the $1,181 million
increase shown above).
4 EEV results for other (central)
operations
EEV results for other income and expenditure represents the
post-tax IFRS results for other (central) operations (before
restructuring and IFRS 17 implementation costs). It mainly includes
interest costs on core structural borrowings and corporate
expenditure for head office functions that are not
recharged/allocated to the insurance and asset management
business.
Certain costs incurred within the head office functions are
recharged to the insurance operations and recorded within the
results for those operations. The assumed future expenses within
the value of in-force business for insurance operations allow for
amounts expected to be recharged by the head office functions on a
recurring basis. Other costs that are not recharged to the
insurance operations are shown as part of other income and
expenditure for the current period and are not included within the
projection of future expenses for in-force insurance
business.
In line with the EEV Principles, the allowance for the future costs
of internal asset management services within the EEV results for
long-term insurance operations excludes the projected future
profits or losses generated by any non-insurance entities within
the Group in providing those services (ie the EEV for long-term
insurance operations includes the projected future profit or loss
from asset management and service companies that support the
Group's covered insurance businesses). Following the implementation
of IFRS 17, a similar adjustment is made to eliminate the
intra-group profit within the results of central
operations.
The EEV shareholders' equity for other operations is taken to be
IFRS shareholders' equity, with central Group debt shown on a
market value basis. Free surplus for other operations is taken to
be IFRS shareholders' equity, net of goodwill attributable to
equity holders, with central Group debt recorded as free surplus to
the extent that it is classified as capital resources under the
Group's capital regime. Under the GWS Framework, debt instruments
issued at the date of designation which met the transitional
conditions set by the Hong Kong IA are included as GWS eligible
group capital resources. In addition, debt issued since the date of
designation which met the qualifying conditions as set out in the
Insurance (Group Capital) Rules are also included as GWS eligible
group capital resources.
Shareholders' equity for other (central) operations can be compared
across metrics as shown in the table below.
|
2023 $m
|
|
2022 $m
|
|
30 Jun
|
|
30 Jun
|
31 Dec
|
IFRS basis shareholders' equity
|
1,733
|
|
1,758
|
1,495
|
Mark-to-market value adjustment on central
borrowingsnote
5
|
389
|
|
193
|
427
|
EEV basis shareholders' equity
|
2,122
|
|
1,951
|
1,922
|
Debt instruments treated as capital resources
|
3,268
|
|
3,849
|
3,629
|
Free surplus of other (central) operations
|
5,390
|
|
5,800
|
5,551
|
5 Net core structural borrowings of
shareholder-financed businesses
|
|
2023 $m
|
|
2022 $m
|
|
|
30 Jun
|
|
30 Jun
|
|
31 Dec
|
|
|
IFRS
basis
|
Mark-to-
market
value
adjustment
|
EEV
basis at
market
value
|
|
IFRS
basis
|
Mark-to-
market
value
adjustment
|
EEV
basis at
market
value
|
|
IFRS
basis
|
Mark-to-
market
value
adjustment
|
EEV
basis at
market
value
|
|
|
note (ii)
|
note (iii)
|
|
|
|
note (iii)
|
|
|
note (ii)
|
note (iii)
|
|
Holding company cash and short-term investmentsnote
(i)
|
(3,314)
|
-
|
(3,314)
|
|
(2,143)
|
-
|
(2,143)
|
|
(3,057)
|
-
|
(3,057)
|
Central borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt
|
2,317
|
(265)
|
2,052
|
|
2,289
|
(173)
|
2,116
|
|
2,286
|
(306)
|
1,980
|
|
Senior debt
|
1,632
|
(124)
|
1,508
|
|
1,977
|
(20)
|
1,957
|
|
1,975
|
(121)
|
1,854
|
Total central borrowings
|
3,949
|
(389)
|
3,560
|
|
4,266
|
(193)
|
4,073
|
|
4,261
|
(427)
|
3,834
|
Net core structural borrowings of shareholder-financed
businesses
|
635
|
(389)
|
246
|
|
2,123
|
(193)
|
1,930
|
|
1,204
|
(427)
|
777
|
Notes
(i)
Holding company includes centrally managed Group holding companies.
The definition of holding company cash and short-term investments
was updated at 31 December 2022 ie holding company includes central
holding and service companies. Further information is provided in
note I(iv) of the Additional financial information.
(ii)
As recorded in note C5.1 of the IFRS financial
results.
(iii)
The movement in the value of core structural borrowings includes
issuances and redemptions in the period and foreign exchange
effects for pounds sterling denominated debts. The movement in the
mark-to-market value adjustment can be analysed as
follows:
|
|
|
2023 $m
|
|
2022 $m
|
|
|
|
Half year
|
|
Half year
|
Full year
|
|
Mark-to-market value adjustment at beginning of period
|
(427)
|
|
438
|
438
|
|
Credit included in the income statement
|
38
|
|
(631)
|
(865)
|
|
Mark-to-market value adjustment at end of period
|
(389)
|
|
(193)
|
(427)
|
6 Methodology
and accounting presentation
6.1 Methodology
(a) Covered business
The EEV basis results for the Group are prepared for 'covered
business' as defined by the EEV Principles. Covered business
represents the Group's long-term insurance business (including the
Group's investments in joint venture and associate insurance
operations), for which the value of new and in-force contracts is
attributable to shareholders. The definition of long-term insurance
business comprises those contracts falling under the definition for
regulatory purposes.
The EEV results for the Group's covered business are then combined
with the post-tax IFRS results of the Group's asset management and
other operations (including interest costs on core structural
borrowings and corporate expenditure for head office functions that
is not recharged/allocated to the insurance operations), with an
adjustment to deduct the unwind of expected margins on the internal
management of the assets of the covered business. Under the EEV
Principles, the results for covered business incorporate the
projected margins of attaching internal asset management, as
described in note (g) below.
(b) Valuation of in-force and new business
The EEV basis results are prepared incorporating best estimate
assumptions about all relevant factors including levels of future
investment returns, persistency, mortality, morbidity and expenses,
as described in note 7(c). These assumptions are used to project
future cash flows. The present value of the projected future cash
flows is then calculated using a discount rate, as shown in note
7(a), which reflects both the time value of money and all other
non-diversifiable risks associated with the cash flows that are not
otherwise allowed for.
The total profit that emerges over the lifetime of an individual
contract as calculated under the EEV basis is the same as that
calculated under the IFRS basis. Since the EEV basis reflects
discounted future cash flows, under the EEV methodology the profit
emergence is advanced, thus more closely aligning the timing of the
recognition of profit with the efforts and risks of current
management actions, particularly with regard to business sold
during the period.
New business
In determining the EEV basis value of new business, premiums are
included in projected cash flows on the same basis of
distinguishing regular and single premium business as set out in
the Group's new business sales reporting.
New business premiums reflect those premiums attaching to the
covered business, including premiums for contracts classified as
investment contracts under IFRS 17. New business premiums for
regular premium products are shown on an annualised
basis.
New business profit represents profit determined by applying
operating and economic assumptions
as at the end of the period. New business profitability is a key
metric for the Group's management of the development of the
business. In addition, new business margins are shown by reference
to annual premium equivalent (APE) and the present value of new
business premiums (PVNBP). These margins are calculated as the
percentage of the value of new business profit to APE and PVNBP.
APE is calculated as the aggregate of regular premiums on new
business written in the period and one-tenth of single premiums.
PVNBP is calculated as the aggregate of single premiums and the
present value of expected future premiums from regular premium new
business, allowing for lapses and the other assumptions made in
determining the EEV new business profit.
(c) Cost of capital
A charge is deducted from the embedded value for the cost of
locked-in required capital supporting the Group's long-term
business. The cost is the difference between the nominal value of
the capital held and the discounted value of the projected releases
of this capital, allowing for post-tax investment earnings on the
capital.
The EEV results are affected by the movement in this cost
from period to period, which
comprises a charge against new business profit and generally a
release in respect of the reduction in capital requirements for
business in force as this runs off.
Where required capital is held within a with-profits long-term
fund, the value placed on surplus assets within the fund is already
adjusted to reflect its expected release over time and so no
further adjustment to the shareholder position is
necessary.
(d) Financial options and guarantees
Nature of financial options and guarantees
Participating products, principally written in the Chinese
Mainland, Hong Kong, Malaysia, Singapore and Taiwan, have both
guaranteed and non-guaranteed elements. These products provide
returns to policyholders through bonuses that are smoothed. There
are two types of bonuses: regular and final. Regular bonuses are
declared once a year and, once credited, are guaranteed in
accordance with the terms of the particular products. Final bonuses
are guaranteed only until the next bonus declaration.
There are also various non-participating long-term products with
guarantees. The principal guarantees are those for whole-of-life
contracts with floor levels of policyholder benefits that typically
accrue at rates set at inception and do not vary subsequently with
market conditions. Similar to participating products, the
policyholder charges incorporate an allowance for the cost of
providing these guarantees, which, for certain whole-of-life
products in Hong Kong, remains constant throughout varying economic
conditions, rather than reducing as the economic environment
improves and vice versa.
Time value
The value of financial options and guarantees comprises the
intrinsic value (arising from a deterministic valuation on best
estimate assumptions) and the time value (arising from the
variability of economic outcomes in the future).
Where appropriate (ie where financial options and guarantees are
explicitly valued under the EEV methodology), a full stochastic
valuation has been undertaken to determine the time value of
financial options and guarantees. The economic assumptions used for
the stochastic calculations are consistent with those used for the
deterministic calculations. Assumptions specific to the stochastic
calculations reflect local market conditions and are based on a
combination of actual market data, historic market data and an
assessment of long-term economic conditions. Common principles have
been adopted across the Group for the stochastic asset models, such
as separate modelling of individual asset classes with an allowance
for correlations between various asset classes. Details of the key
characteristics of each model are given in note 7(b).
In deriving the time value of financial options and guarantees,
management actions in response to emerging investment and fund
solvency conditions have been modelled. Management actions
encompass, but are not confined to, investment allocation
decisions, levels of regular and final bonuses and credited rates.
Bonus rates are projected from current levels and varied in
accordance with assumed management actions applying in the emerging
investment and fund solvency conditions. In all instances, the
modelled actions are in accordance with approved local practice and
therefore reflect the options available to management.
(e) Level of required capital and net
worth
In adopting the EEV Principles, Prudential has based required
capital on the applicable local statutory regulations, including
any amounts considered to be required above the local statutory
minimum requirements to satisfy regulatory
constraints.
For shareholder-backed businesses, the level of required capital
has been based on the GPCR.
-
For CPL operations, the level of required capital follows the
approach for embedded value reporting issued by the China
Association of Actuaries (CAA) reflecting the C-ROSS regime. The
CAA has started a project to assess whether any changes are
required to the embedded value guidance in the Chinese Mainland
given changes in regulatory rules, regulations and the external
market environment since the standard was first issued. To date, no
outcomes have been proposed by the CAA and Prudential has made no
change to its EEV basis for CPL in half year 2023. At such time
that there is a new basis, Prudential will consider the effect of
proposals.
-
For Hong Kong participating business, the HK RBC regime recognises
the value of future shareholder transfers on an economic basis as
available capital with an associated required capital. Within EEV,
the shareholder value of participating business continues to be
recognised as VIF with no recognition within free surplus and no
associated required capital.
-
For Singapore life operations, the level of net worth and required
capital is based on the Tier 1 Capital position under the
risk-based capital framework (RBC2), which removes certain negative
reserves permitted to be recognised in the full RBC2 regulatory
position applicable to the Group's GWS capital position, in order
to better reflect free surplus and its generation.
Free surplus is the shareholders' net worth in excess of required
capital. For the Hong Kong business, the HK RBC framework requires
liabilities to be valued on a best estimate basis and capital
requirements to be risk based. EEV free surplus excludes regulatory
surplus that arises where HK RBC technical provisions are lower
than policyholder asset shares or cash surrender values to more
realistically reflect how the business is managed.
(f) With-profits business and the treatment of
the estate
For the Group's relevant operations, the proportion of surplus
allocated to shareholders from the with-profits funds has been
based on the applicable profit distribution between shareholders
and policyholders. The EEV methodology includes the value
attributed to the shareholders' interest in the residual estate of
the in-force with-profits business. In any scenarios where the
total assets of the life fund are insufficient to meet policyholder
claims in full, the excess cost is fully attributed to
shareholders. As required, adjustments are also made to reflect any
capital requirements for with-profits business in excess of the
capital resources of the with-profits funds.
(g) Internal asset management
In line with the EEV Principles, the in-force and new business
results from long-term business include the projected future profit
or loss from asset management and service companies that support
the Group's covered insurance businesses. The results of the
Group's asset management operations include the
current period profit
from the management of both internal and external funds. EEV basis
shareholders' other income and expenditure is adjusted to deduct
the expected profit anticipated to arise in the current period in
the opening VIF from internal asset management and other services.
This deduction is on a basis consistent with that used for
projecting the results for covered insurance business. Accordingly,
Group operating profit includes the actual profit earned in respect
of the management of these assets.
(h) Allowance for risk and risk discount
rates
Overview
Under the EEV Principles, discount rates used to determine the
present value of expected future cash flows are set by reference to
risk-free rates plus a risk margin.
The risk-free rates are largely based on local government bond
yields at the valuation date and are assumed to remain constant
throughout the projection, with no trending or mean reversion to
longer-term assumptions that cannot be observed in the current
market.
The risk margin reflects any non-diversifiable risk associated with
the emergence of distributable earnings that is not allowed for
elsewhere in the valuation. In order to better reflect differences
in relative market risk volatility inherent in each product group,
Prudential sets the risk discount rates to reflect the expected
volatility associated with the expected future shareholder cash
flows for each product group in the embedded value model, rather
than at a Group level.
Where financial options and guarantees are explicitly valued under
the EEV methodology, risk discount rates exclude the effect of
these product features.
The risk margin represents the aggregate of the allowance for
market risk and allowance for non-diversifiable non-market risk. No
allowance is required for non-market risks where these are assumed
to be fully diversifiable.
Market risk allowance
The allowance for market risk represents the beta multiplied by the
equity risk premium.
The beta of a portfolio or product measures its relative market
risk. The risk discount rates reflect the market risk inherent in
each product group and hence the volatility of product-specific
cash flows. These are determined by considering how the profit from
each product is affected by changes in expected returns across
asset classes. By converting this into a relative rate of return,
it is possible to derive a product-specific beta. This approach
contrasts with a top-down approach to market risk where the risks
associated with each product are not directly reflected in the
valuation basis.
The Group's methodology allows for credit risk in determining the
best estimate returns and through the market risk allowance, which
covers expected long-term defaults, a credit risk premium (to
reflect the volatility in downgrade and default levels) and
short-term downgrades and defaults.
Allowance for non-diversifiable non-market risks
The majority of non-market and non-credit risks are considered to
be diversifiable. An allowance for non-diversifiable non-market
risks is estimated as set out below.
A base level allowance of 50 basis points is applied to cover the
non-diversifiable non-market risks associated with the Group's
covered business. For the Group's businesses in less mature markets
(such as the Philippines, Thailand and
Africa) additional allowances of 250 basis points, or higher where
there is more uncertainty, are applied. The level and application
of these allowances are reviewed and updated based on an assessment
of the Group's exposure and experience in the markets. For the
Group's business in more mature markets, no additional allowance is
necessary. At 30 June 2023, the total allowance for
non-diversifiable non-market risk is equivalent to a $(3.0)
billion, or (7) per cent, reduction to the embedded value of
long-term business operations.
(i) Foreign currency translation
Foreign currency profits and losses have been translated at average
exchange rates for the period. Foreign currency transactions are
translated at the spot rate prevailing at the date of the
transactions. Foreign currency assets and liabilities have been
translated at closing exchange
rates. The principal exchange rates are shown in note A1 of the
Group IFRS financial results.
(j) Taxation
In determining the post-tax profit for the period for
covered business, the overall tax rate includes the impact of tax
effects determined on a local regulatory basis. Tax
payments and receipts included in the projected future cash flows
to determine the value of in-force business are calculated using
tax rates that have been announced and substantively enacted by the
end of the reporting period.
6.2 Accounting presentation
(a) Analysis of post-tax profit or loss
To the extent applicable, the presentation of the EEV profit or
loss for the period is consistent with the classification between
operating and non-operating results that the Group applies for the
analysis of IFRS results. Operating results are determined as
described in note (b) below and incorporate the
following:
-
New business profit, as defined in note 6.1(b) above;
-
Expected return on existing business, as described in note (c)
below;
-
The impact of routine changes of estimates relating to operating
assumptions, as described in note (d) below; and
-
Operating experience variances, as described in note (e)
below.
In addition, operating results include the effect of changes in tax
legislation, unless these changes are one-off and structural in
nature, or primarily affect the level of projected investment
returns, in which case they are reflected as a non-operating
result.
Non-operating results comprise:
-
Short-term fluctuations in investment returns;
-
Mark-to-market value movements on core structural
borrowings;
-
Effect of changes in economic assumptions; and
-
The impact of corporate transactions, if any, undertaken in the
period.
Total profit or loss in the period attributable to shareholders and
basic earnings per share include these items, together with actual
investment returns. The Group believes that operating profit, as
adjusted for these items, better reflects underlying
performance.
(b) Investment
returns included in operating profit
For the investment element of the assets covering the total net
worth of long-term insurance business, investment returns are
recognised in operating results at the expected long-term rates of
return. These expected returns are calculated by reference to the
asset mix of the portfolio.
(c) Expected
return on existing business
Expected return on existing business comprises the expected unwind
of discounting effects on the opening value of in-force business
and required capital and the expected return on existing free
surplus. The unwind of discount and the expected return on existing
free surplus are determined after adjusting for the effect of
changes in economic and operating assumptions in the current period
on the embedded value at the beginning of the period, for example,
the unwind of discount on the value of in-force business and
required capital is determined after adjusting both the opening
value and the risk discount rates for the effect of changes in
economic and operating assumptions in the current
period.
(d) Effect
of changes in operating assumptions
Operating profit includes the effect of changes to operating
assumptions on the value of in-force business at the end of
the reporting
period. For presentational purposes the effect of changes is
delineated to show the effect on the opening value of in-force
business as operating assumption changes, with the experience
variances subsequently being determined by reference to the
assumptions at the end of the reporting period, as discussed
below.
(e) Operating
experience variances
Operating profit includes the effect of experience variances on
operating assumptions, such as persistency, mortality, morbidity,
expenses and other factors, which are calculated with reference to
the assumptions at the end of the reporting period.
(f) Effect of changes in economic assumptions
Movements in the value of in-force business at the beginning of
the period caused
by changes in economic assumptions, net of the related changes in
the time value of financial options and guarantees, are recorded in
non-operating results.
7 Assumptions
(a) Principal economic assumptions
The EEV results for the Group's covered business are determined
using economic assumptions where both the risk discount rates and
long-term expected rates of return on investments are set with
reference to risk-free rates of return at the end of the reporting
period. Both the risk discount rate and expected rates of return
are updated at each valuation date to reflect current market
risk-free rates, with the effect that changes in market risk-free
rates impact all projected future cash flows. The risk-free rates
of return are largely based on local government bond yields and are
assumed to remain constant throughout the projection, with no
trending or mean reversion to longer-term assumptions that cannot
be observed in the current market. The risk-free rates of return
are shown below for each of the Group's insurance operations.
Expected returns on equity and property assets and corporate bonds
are derived by adding a risk premium to the risk-free rate based on
the Group's long-term view and, where relevant, allowing for market
volatility.
As described in note 6.1(h), risk discount rates are set equal to
the risk-free rate at the valuation date plus allowances for market
risk and non-diversifiable non-market risks appropriate to the
features and risks of the underlying products and
markets.
Risks that are explicitly allowed for elsewhere in the EEV basis,
such as via the cost of capital and the time value of options and
guarantees, as set out in note 2(i), are not included in the risk
discount rates.
|
Risk discount rate %
|
|
New business
|
|
In-force business
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
30 Jun
|
|
30 Jun
|
31 Dec
|
|
30 Jun
|
|
30 Jun
|
31 Dec
|
CPL
|
7.2
|
|
7.4
|
7.4
|
|
7.2
|
|
7.4
|
7.4
|
Hong Kongnote
(i)
|
4.6
|
|
3.9
|
4.8
|
|
5.4
|
|
4.5
|
5.5
|
Indonesia
|
9.1
|
|
10.7
|
10.0
|
|
9.8
|
|
11.3
|
10.6
|
Malaysia
|
5.7
|
|
6.1
|
5.8
|
|
6.3
|
|
6.7
|
6.5
|
Philippines
|
13.6
|
|
14.6
|
14.5
|
|
13.6
|
|
14.6
|
14.5
|
Singapore
|
4.9
|
|
4.9
|
5.0
|
|
5.1
|
|
5.1
|
5.2
|
Taiwan
|
3.6
|
|
3.4
|
3.5
|
|
4.1
|
|
4.1
|
4.0
|
Thailand
|
9.9
|
|
10.4
|
10.0
|
|
9.9
|
|
10.4
|
10.0
|
Vietnam
|
4.2
|
|
5.3
|
6.9
|
|
4.4
|
|
5.1
|
6.7
|
Total weighted averagenote
(ii)
|
5.9
|
|
6.5
|
6.9
|
|
6.0
|
|
5.9
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
10-year government bond yield %
|
|
Equity return (geometric) %
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
30 Jun
|
|
30 Jun
|
31 Dec
|
|
30 Jun
|
|
30 Jun
|
31 Dec
|
CPL
|
2.7
|
|
2.9
|
2.9
|
|
6.7
|
|
6.9
|
6.9
|
Hong Kongnote
(i)
|
3.8
|
|
3.0
|
3.9
|
|
7.3
|
|
6.5
|
7.4
|
Indonesia
|
6.6
|
|
7.9
|
7.3
|
|
10.8
|
|
12.1
|
11.5
|
Malaysia
|
3.9
|
|
4.3
|
4.1
|
|
7.4
|
|
7.8
|
7.6
|
Philippines
|
6.4
|
|
7.4
|
7.3
|
|
10.6
|
|
11.6
|
11.5
|
Singapore
|
3.0
|
|
3.0
|
3.1
|
|
6.5
|
|
6.5
|
6.6
|
Taiwan
|
1.3
|
|
1.3
|
1.3
|
|
5.3
|
|
5.3
|
5.3
|
Thailand
|
2.6
|
|
3.1
|
2.7
|
|
6.9
|
|
7.4
|
7.0
|
Vietnam
|
2.7
|
|
3.4
|
5.0
|
|
7.0
|
|
7.6
|
9.3
|
Total weighted average (new business)note
(ii)
|
3.9
|
|
3.8
|
4.2
|
|
7.2
|
|
7.2
|
7.5
|
Total weighted average (in-force business)note
(ii)
|
3.8
|
|
3.6
|
4.0
|
|
7.3
|
|
7.2
|
7.6
|
Notes
(i)
For Hong Kong, the assumptions shown are for US dollar denominated
business. For other businesses, the assumptions shown are for local
currency denominated business.
(ii)
Total weighted average assumptions have been determined by
weighting each business's assumptions by reference to the EEV basis
new business profit and the closing net value of in-force business.
The changes in the risk discount rates for individual businesses
reflect the movements in the local government bond yields, changes
in the allowance for market risk (including as a result of changes
in asset mix) and changes in product mix.
(iii)
Expected long-term inflation assumptions range from 1.5 per cent to
5.5 per cent for all periods shown above.
(b) Stochastic assumptions
Details are given below of the key characteristics of the models
used to determine the time value of financial options and
guarantees as referred to in note 6.1(d).
-
The stochastic cost of guarantees is primarily of significance for
the Hong Kong, Malaysia, Singapore, Taiwan and Vietnam
businesses;
-
The principal asset classes are government bonds, corporate bonds
and equity;
-
The interest rates are projected using a stochastic interest rate
model calibrated to the current market yields;
-
The equity returns are assumed to follow a log-normal
distribution;
-
The corporate bond return is calculated based on a risk-free return
plus a mean-reverting spread;
-
The volatility of equity returns ranges from 17 per cent to 35 per
cent for all periods; and
-
The volatility of government bond yields ranges from 1.1 per cent
to 2.0 per cent for all periods.
(c) Operating assumptions
Best estimate assumptions are used for projecting future cash
flows, where best estimate is defined as the mean of the
distribution of future possible outcomes. The assumptions are
reviewed actively and changes are made when evidence exists that
material changes in future experience are reasonably certain. Where
experience is expected to be adverse over the short term, a
provision may be established.
Assumptions required in the calculation of the time value of
financial options and guarantees, for example relating to
volatilities and correlations, or dynamic algorithms linking
liabilities to assets, have been set equal to the best estimates
and, wherever material and practical, reflect any dynamic
relationships between the assumptions and the stochastic
variables.
Demographic assumptions
Persistency, mortality and morbidity assumptions are based on an
analysis of recent experience, and reflect expected future
experience. When
projecting future cash flows for medical reimbursement business
that is repriced annually, explicit allowance is made for expected
future premium inflation and separately for future medical claims
inflation.
Expense assumptions
Expense levels, including those of the service companies that
support the Group's long-term business, are based on internal
expense analysis and are appropriately allocated to acquisition of
new business and renewal of in-force business. For mature business,
in general, it is Prudential's policy not to take credit for future
cost reduction programmes until the actions to achieve the savings
have been delivered. An allowance is made for short-term required
expenses that are not representative of the longer-term expense
loadings of the relevant businesses. At 30 June 2023, the allowance
held for these costs across the Group was $(120) million. If future
expense overruns are expected to be short-lived, they are
capitalised and subsequently amortised against future
overruns.
Expenses comprise costs borne directly and costs recharged from the
Group head office functions that are attributable to
the long-term
insurance (covered) business. The assumed future expenses for the
long-term insurance business allow
for amounts expected to be recharged by the head office functions.
Development expenses are allocated to covered business and are
charged as incurred.
Corporate expenditure, which is included in other income and
expenditure, comprises expenditure of the Group head office
functions that is not recharged/allocated to the long-term
insurance or asset management operations, primarily for
corporate-related activities that are charged as incurred, together
with restructuring and IFRS 17 implementation costs incurred across
the Group as recorded in note B1.1 of the Group IFRS financial
results.
Tax rates
The assumed long-term effective tax rates for operations reflect
the expected incidence of taxable profit or loss in the projected
future cash flows as explained in note 6.1(j). The
local standard corporate tax rates applicable are as
follows:
|
%
|
CPL
|
25.0
|
Hong Kong
|
16.5% on 5% of premium income
|
Indonesia
|
22.0
|
Malaysia
|
24.0
|
Philippines
|
25.0
|
Singapore
|
17.0
|
Taiwan
|
20.0
|
Thailand
|
20.0
|
Vietnam
|
20.0
|
8 Insurance new business
|
Single premiums
|
|
Regular premiums
|
|
Annual premium equivalents (APE)
|
|
Present value of new business premiums (PVNBP)
|
|
2023 $m
|
|
2022 $m
|
|
2023 $m
|
|
2022 $m
|
|
2023 $m
|
|
2022 $m
|
|
2023 $m
|
|
2022 $m
|
AER
|
Half
year
|
|
Half
year
|
Full
year
|
|
Half
year
|
|
Half
year
|
Full
year
|
|
Half
year
|
|
Half
year
|
Full
year
|
|
Half
year
|
|
Half
year
|
Full
year
|
CPLnote
(i)
|
397
|
|
858
|
1,254
|
|
355
|
|
421
|
759
|
|
394
|
|
507
|
884
|
|
1,481
|
|
2,119
|
3,521
|
Hong Kong
|
116
|
|
656
|
842
|
|
1,015
|
|
162
|
438
|
|
1,027
|
|
227
|
522
|
|
5,364
|
|
1,774
|
3,295
|
Indonesia
|
132
|
|
120
|
250
|
|
137
|
|
98
|
222
|
|
150
|
|
110
|
247
|
|
629
|
|
442
|
1,040
|
Malaysia
|
46
|
|
45
|
99
|
|
180
|
|
168
|
350
|
|
185
|
|
172
|
359
|
|
915
|
|
845
|
1,879
|
Singapore
|
535
|
|
1,715
|
2,628
|
|
332
|
|
219
|
507
|
|
386
|
|
390
|
770
|
|
2,441
|
|
3,184
|
6,091
|
Growth markets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Africa
|
4
|
|
4
|
9
|
|
84
|
|
75
|
148
|
|
85
|
|
76
|
149
|
|
170
|
|
151
|
308
|
Cambodia
|
1
|
|
-
|
-
|
|
9
|
|
7
|
18
|
|
9
|
|
7
|
18
|
|
38
|
|
30
|
69
|
Indianote
(ii)
|
130
|
|
135
|
273
|
|
115
|
|
106
|
196
|
|
128
|
|
120
|
223
|
|
619
|
|
609
|
1,148
|
Laos
|
-
|
|
-
|
-
|
|
-
|
|
-
|
-
|
|
-
|
|
-
|
-
|
|
1
|
|
-
|
1
|
Myanmar
|
-
|
|
-
|
-
|
|
3
|
|
1
|
3
|
|
3
|
|
1
|
3
|
|
8
|
|
4
|
6
|
Philippines
|
38
|
|
36
|
61
|
|
90
|
|
84
|
176
|
|
94
|
|
87
|
182
|
|
331
|
|
297
|
615
|
Taiwan
|
54
|
|
86
|
157
|
|
335
|
|
271
|
486
|
|
339
|
|
281
|
503
|
|
1,254
|
|
994
|
1,835
|
Thailand
|
71
|
|
72
|
150
|
|
111
|
|
92
|
220
|
|
118
|
|
99
|
235
|
|
470
|
|
394
|
932
|
Vietnam
|
8
|
|
66
|
99
|
|
108
|
|
130
|
288
|
|
109
|
|
136
|
298
|
|
709
|
|
885
|
1,666
|
Total
|
1,532
|
|
3,793
|
5,822
|
|
2,874
|
|
1,834
|
3,811
|
|
3,027
|
|
2,213
|
4,393
|
|
14,430
|
|
11,728
|
22,406
|
Notes
(i)
New business in CPL is included at Prudential's 50 per cent
interest in the joint venture.
(ii)
New business in India is included at Prudential's 22 per cent
interest in the associate.
(iii)
The table above is provided as an indicative volume measure of
transactions undertaken in the reporting period that have the
potential to generate profit for shareholders. The amounts shown
are not, and not intended to be, reflective of revenue recorded in
the Group IFRS income statement.
9 Post balance sheet events
First interim ordinary dividend
The 2023 first interim ordinary dividend approved by the Board of
Directors after 30 June 2023 is as described in note B4 of the IFRS
financial results.
Independent review report to Prudential plc
Conclusion
We have been engaged by Prudential plc ('the Company' or 'the
Group') to review the European Embedded Value ('EEV') Financial
Results in the half-yearly financial report for the six months
ended 30 June 2023 which comprise the EEV Results Highlights, Basis
of Preparation, the Movement in Group EEV Shareholders' Equity, the
Movement in Group Free Surplus and the related explanatory notes 1
to 9. The EEV Financial Results should be read in conjunction with
the condensed set of IFRS financial statements in the half-yearly
financial report. We have read the other information contained in
the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the EEV
Financial Results.
Based on our review, nothing has come to our attention that causes
us to believe that the EEV Financial Results in the half-yearly
financial report for the six months ended 30 June 2023 are not
prepared, in all material respects, in accordance with the European
Embedded Value Principles issued by the European Insurance CFO
Forum in 2016 ('the EEV Principles'), using the methodology and
assumptions set out in the notes to the EEV Financial
Results.
Basis for Conclusion
We conducted our review in accordance with International Standard
on Review Engagements 2410 (UK) "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity"
(ISRE) issued by the Financial Reporting Council. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
Emphasis of Matter - basis of preparation for the EEV Financial
Results
We draw attention to the Basis of Preparation of the EEV Financial
Results. The EEV Financial Results are prepared to provide
additional information to the users of the half-yearly financial
report. As a result, the EEV Financial Results may not be suitable
for another purpose.
Our opinion is not modified in respect of this matter.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those
performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE 2410 (UK), however future events or conditions
may cause the Group to cease to continue as a going
concern.
Responsibilities of the directors
The directors are responsible for preparing the EEV Financial
Results in accordance with the EEV Principles using the methodology
and assumptions set out in the notes to the EEV Financial
Results.
In preparing the EEV Financial Results, the directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do
so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the EEV Financial Results, we are responsible for
expressing to the Group a conclusion on the EEV Financial Results
in the half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with the
terms of our engagement letter to provide a review conclusion to
the Company on the EEV Financial Results. Our review of the EEV
Financial Results has been undertaken so that we might state to the
Company those matters we have been engaged to state in this report
and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
29 August 2023
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: 30 August
2023
|
PRUDENTIAL
PUBLIC LIMITED COMPANY
|
|
|
|
By: /s/
Ben Bulmer
|
|
|
|
Ben
Bulmer
|
|
Group
Chief Financial Officer
|
Prudential (NYSE:PUK)
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