prudential corporation asia - investisfiles.investis.com/prudential/pdfs/04112004/04112004.pdf ·...

1

PrudentialCorporation Asia

Mark NorbomPrudential Corporation Asia

November 2004

Welcome to VietnamWelcome to Vietnam

Ministry of financestate securities commission

Vietnamese securities market

• Nguyễn Đoan Hùng - Vice Chairman of the SSC• Ho chi minh city Nov. 2004

Vietnamese securities market• @ The establishment and development of the

Vietnamese securities market• - 28/11/1996: Decree 75/CP to establish the SSC• - 11/7/1998: Decree 48/CP on securities and

securities market and Decision 127/TTg to establish securities trading centers (STC)

• - 20/7/2000: the opening of Ho Chi Minh City STC• - 5/8/2003: Decision 163/TTg to approve Securities

market development strategy until 2010• -28/11/2003: Decree 144/CP to replace Decree

48/CP• - 19/2/2004: Decree 66/CP to merge SSC into MOF


• @ Market size• - Listed issuers: 25 listed companies (Total

market face value of VND 1,256 billion)• - Gov. Bond listed: 150 types of bonds listed

total value of VND 17,300 billions. • - BIDV Bank bonds listed: VND 157.7 billions.• - Market capitalization: 3.7% GDP 2003 (

share value account for 0.65%).• - 900 trading sessions held so far, trading

value of VND 13 billions per session .

Vietnamese securities market• @ Market intermediaries• - 13 securities companies : total legal equity capital of

VND 605.75 billions;• - 01 joint venture fund management company; 01

investment fund (VF1) of VND 300 billions;• - 05 custodian banks (3 foreign + 2 Vietnamese) ; • - 01 Settlement bank: BIDV Bank;• - 08 auditors admitted for securities industry; • @ Investor accounts: 19,000 accounts • In which: + 145 accounts of domestic institutional

investors;• + 21 accounts of foreign institutional

investors;• + 106 accounts of individual investors.

Vietnamese securities market• @ System and trading mechanism• - Trading mechanism: Auction; Negotiation• - Trading sessions: Auction (9am-10:30 am);• Negotiation(10:30-

11:00am) • - Orders: Limit orders; ATO orders• - Trading units: +Round lot: 10 shares; • +Block trade: 10,000 shares• - Trading band: ± 5% of reference price• - Settlement : T+3• - Order matching principle: Price, time

Vietnamese securities market• @ Qualification for Public offering of

stocks • - Joint-stock companies, or Equitized SOE• - Minimum legal equity capital of VND 5 billions• - Positive earnings of the year before listing• - Feasible business plan for the fund to be

raised• - Offering through intermediaries to at least 50

investors outside the issuer• - Size and Profitability Exemptions for offering

of stocks by issuers in infrastructure development and high technology sectors

Vietnamese securities market• @ Bond offerings• - SOE’s, joint stock and limited liability companies• - Legal capital of minimum VND 10 billions• - Positive earnings for 2 consecutive years before

the offering• - Feasible business plan for funds to be raised• - Offering to at least 50 investors outside the issuer• - Underwriter required• - Commitments to fulfill debt obligations to

investors• - Bond custodian who represents bond holders

Vietnamese securities market• @ Stock Listing requirement at STC• - Public offering licensed by the SSC• - Minimum legal equity of VND 5 billions • - Sound financial condition, and positive

earnings for pervious 2 years (1 year only for Equitized SOEs to be immediately listed)

• - At least 20% of stocks held by at least 50 investors outside the issuer

• - Directors, Management, Employee-shareholders commit to hold 50% of their shares for at least 3 years afterwards.

Vietnamese securities market• @ Corporate bond listing

requirements at the STC• - Public offering licensed by the SSC• - Equity capital of at least VND 10 billions • - Sound financial condition, and positive

earnings for 2 years before listing• - At least 50 bondholders• @ Gov. Bond listing: conducted at the

request by the institution nominated by the government for offering.

Vietnamese securities market• @ Information disclosure :• - Periodical information disclosure:• + Financial reports: quarterly and annually• + Annual report• - Irregular infor. disclosure (within 24 hours)• + Events/facts that may affect stock prices• - Infor. Disclosure on request• + At the requests of the SSC and the STC• @ Means for infor. disclosure: STC bulletin &

public media

Vietnamese securities market• @Foreign ownership limits• - Maximum shareholding: 30%• - Bond holding: no limit• - Maximum shareholding at securities

business joint ventures: 49%• @ Foreign investor trading• - Trading code for Foreign investors• - Principal: free inflow• - Repatriation of principal: after 1 year • - Tax regime: no repatriation tax; no personal

income tax.


• @ Development Target– Size: Market cap 2 – 3% of GDP by 2005 (est. 2005 GDP

of USD 62.5 billions) and 10 – 15% of GDP by 2010– Become a reliable Safe, transparent and efficient market for

medium and long term funding for the economy;– Competitive and ready for market liberalization.

• @ Development solutions• - Improve legal framework for capital

market • - Implementation of Decree 144/CP;

Decree 161/CP and the Securities Law expected to be passed in 2006 .

• - Coordinate with the Ministry of Planning

Vietnamese securities market• @ Development solutions• - Develop the capability for Gov. and municipal

and corporate bond offerings.• - Coordinate with the State Bank of Vietnam to

conduct listing linked equitization of State owned banks; listing of joint stock banks’ shares.

• - Coordinate with the MOF to improve tax and fee incentives.

• - Encourage institutional investors (mutual funds, life insurance, pension funds) to invest in the market

• - Hanoi Trading Center starts operation.

Vietnamese securities market• @ Development solutions• - Modernizing the trading system• - Establish the Depository center• - Expand the network of and quality of services of

securities companies, • - Speed up establishment of fund management

companies and investment funds.• - Improve information disclosure.• - Strengthen supervision, surveillance of markets

and apply suitable enforcement actions.

• We wish you all great success in doing business with vietnam

• Thank you!


November 2004

Our Operating ExcellenceOur Operating Excellence

Delivering profitable and sustainable growth

Strong top-line growth - even faster bottom-line growth

Leveraging regional scale, expertise and innovation

Creating a lastingfoundation

Driving proven successmodels to all markets

Continued strong growth

Accelerating profitability

Building sustainability

Integrated operating model

Leadership development

Risk management

Brand strength

Business building expertise

Multi-channel distribution

Product innovation

Customer centricity

22

Our People Strategy Our People Strategy

Shulamite KhooPrudential Corporation Asia

November 2004

Our people challenges

23

Limited pools of experienced

personnel

Rapidgrowth

Aggressive market

competition

Our approach

Retainthem

Attractwho we

want

Plan who we

need

24

Growth in staff

94 95 96 97 98 99 00 01 02 9/0403

‘000 staff

0

1

2

3

4

5

6

78

670

7687

1613108864 242120 23Prudentialoperations

11 X

25

Highly qualified staff across region

Total staff : 7,687• University graduates : 5,933• Accountants : 238• Actuarial staff : 106

26

CEOs who understand local markets

China

Malaysia

Taiwan

Japan

India

Singapore

Hong Kong Korea

India

China Korea

Japan

Malaysia

Hong Kong

TaiwanIndonesia

Vietnam

Philippines

Singapore

Thailand

Years with Prudential in Asia (average) : 5 yearsFinancial services experience (average) : 23 years

FundsInsurance

Our core people strategies

Leadership and management review

Leadership review forum

PRUmentor development programme

Secondments and direct mentoring

Performance related rewards

Market driven compensation

RESPECT principles

Leadership behaviours

Long term leadership : Develop future leaders today

Unique culture and ourstrong brand : A placewhere you are proud to work

Leverage scale, growthand diversity todeliver outstandingcareer opportunities

Regional career development opportunities

2002 2003 9/2004

People transfers between our Asia businesses

1625

57

29

Examples of career development opportunities

Sin Fook - From Indonesia to

Hong Kong to Beijing

30

Clive - From United Kingdom to Hong Kong to Philippines to Hong Kong to Malaysia

Virginia - From Hong Kong to

Taiwan to Korea

Kevin - From Australia to

Singapore to Mumbai to Tokyo

to Singapore

Regional learning

Over 127 courses offered : 59 offered in Mandarin, Japanese and Korean

A web based platform : face-to-face and e-learning

Open to all Prudential : over 3,150 programmes completed

Learning Management Systems in 11 operations in 7 countries servicing 2,878 users

31

Summary

Our People Strategy is focused on :• Leveraging our scale, growth and diversity to offer

outstanding career opportunities

• A long term approach to leadership and talent development

• Creating a brand and culture which people are proud to choose

• Rewards linked to business performance

• Engaging employees both intellectually and emotionally, based on common set of operating principles

A significant resource pool to support our continued growth

33

ComplianceCompliance

Steve BickellPrudential Corporation Asia

November 2004

34

Compliance issues continue to make headlines

Compliance is a critical area of importance to Prudential Corporation Asia

34

35

Prudential’s approach

Compliance with local regulations

Adopt Group standards

Strong operational based compliance functions

Embed a compliance culture

Leverage Group and regional expertise

36

Raising profile of compliance

Culture

Infrastructure Process

Management compensation scheme


Foster strong relationships with regulators

Risk-based compliance plans

Systems-based controls

Align compliance resources to growth

Prudential Corporation Asia and Group oversight

Integrated with risk management and internal audit

37

Addressing local compliance issues

Ensuring sales to citizens of Mainland China meet regulatory requirements

Important to reassure the Chinese regulators

37

38

Addressing local compliance issues

Hong Kong agents selling in Mainland China

PreventionClear communication

Agency contract stresses illegality of selling in China

Emphasised in training to agents and leaders

DetectionMonitor sales reports for any unusual activity

Require evidence that the sales were physically in Hong Kong

ReactionSwift and high profile disciplinary action

Liaison with regulators

39

Using Group experience

Leveraging Group

expertise

Sharing best practice and standards

Creating synergies

Second staff from UK to Asia

Close working relationship with Group

Anti-money laundering training

Shared mandatory standards

Singapore sales compliance training

Uniform corporate governance framework

40

Summary

Compliance will continue to have a high profile

Prudential Corporation Asia leverages its international expertise to drive best practices through the operations

Keep prevention and detection procedures upgraded for regulatory developments

41

Building the Integrated Operating Model

Common IT Platform and Processes

Building the Integrated Operating Model

Common IT Platform and Processes

Clive Baker and Krishnan NarayananPrudential Services Asia

November 2004

Current operating model : Multiple systems

Benefits Disadvantages

Enhancements done 12 times

Need 12 IT support teams

Multiple backup sites required

Local management distracted by operational issues

Supported rapid growth in first 10 years

Enabled local customization for speed to market

No language issues

Triggers for change

Help drive customer centricity

Some systems need replacing

We now have scale

Increasingly greater synergies

Triggers and evaluation

Rigorous and comprehensive

evaluation of options

Flexible

Scalable

Customer based

Next generation IT

Competitive advantage

Lower operating costs

Solution

43


Developing and implementing common system and processes

across region

Prudential Services Asia (PSA)

44

Distribution

Life OperationsLife

administrationChannel

management

Automated underwriting

Rating engine

Spokes focus on sales, marketing and distribution

Hub focuses on IT development and

processes

Integrated platform

Imaging and workflow

General ledger

Data warehouse

Sales force automation

Call centreCustomers

Life Operations

Hub

Malaysia

China Spoke

Spoke Spoke

Spoke

Spoke

Spoke

Spoke

Spoke

Shared IT and common processes

Standardization

One IT development team (not 12)

Two locations to meet languages needs and provide disaster recovery

Benefits of the integrated operating model

Leverage regional scale and expertise

Efficiency (Scale benefits)

• Productivity• Lower costs

Effectiveness (Expertise benefits)

• Standardised operations• Improve customer service• Easier to market• One time development• Regional best practices

Advantages of Malaysia as IT hub

Lower cost

Quality infrastructure

Highly trained labour pool

Offers multiple languages

Tax incentives

Leverages Prudential Malaysia’s capabilities and experience

48

Located in IT development centre in Cyberjaya

Prudential Services Asia : Location

49

Prudential Services Asia : Today

Recruited highly-skilled team :– Industry expertise– Regional experience

Go live : Early in 2005

China hub : In planning

50

Prudential Services Asia key to driving an integrated operating model leveraging on regional scale and expertise

Competitive edge by reducing costs and delivering synergies

Superior level of service by streamlining processes and procedures across the region

More efficient and effective customer relations management

Summary

Investment Management of Life Assets

Investment Management of Life Assets

Garth Jones and Kelvin BlacklockPrudential Corporation Asia

November 2004

An interesting and complex investment challenge

Asia life insurance assets

£7.8 billion in assets under management, managing more than 70 fundsMany different types of product :– Participating and Non-participating– Unit linked– Regular and single premiums

Many types of investment mandates– Plain vanilla : Domestic assets only, no derivatives– Full asset universe and full derivative availability

Multiple currencies– 12 base currencies, many with restrictions on convertibility : Vietnam to

Japan– Global investment universe but local liabilities

Huge variation in Regulatory environments– Life Fund / Assets less Reserves– RBC / Book Value


The Philosophy : We have not had to reinvent the wheel

PrudentialCorporation Asia Architecture for managing life assets

Prudential has over 150 years of experience managing UK Life assets – Very large (c. £ 70 billion) fund investing across global asset markets – Substantial resources and expertise already in place

Significant competitive advantage:

– The PMG responsible for oversight and control of portfolio management for UK Life assets who have an average 15 years with Prudential

– Focus on many common issues e.g. ALM, asset allocation, risk based capital, regulatory and accounting requirements etc

Asia leverages PMG’s experience, resources and management approach

Architecture for managing life assets

Strategic asset allocation (SAA)

Fundmanagement

Tactical asset allocation (TAA)


3 stage process

Architecture for managing life assetsPrudentialCorporation Asia

Long term

“Big Picture”

Focus

Risk / reward trade off between assets and liabilities using Stochastic modeling / deterministic scenarios to assess short and long term positions

Balancing PRE, Life Fund strength, Economic and Regulatory Capital with shareholder returns

Objective


Determining and defining risk profile and resultant asset mix of fund

Approach


Example of stochastic modelling

Distribution of shareholder value for strategies A and B

Mean result BExtreme result

B

Mean result A

Extreme result A

AB

Strategy A is more attractive with a higher mean and lower extreme measure of shareholder value


Objective Determining and defining risk profile and resultant asset mix of fund


Long-term SAA – value add from asset class returns in excess of

liabilities requirement.

Desired resultsSAA/TAA and IMF performance contribution

Cumulativereturn

Liabilities cumulative SAA Cumulative

8000

7000

6000

5000

4000

3000

2000

1000

000 03 06 09 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69

Objective


Long term

“Big Picture”

Focus


Determining and defining risk profile and resultant asset mix of fund


Objective


Asset mis-pricing

Medium term

Extreme valuation signals on asset pricing eg substantial deviations from equilibrium

Balancing PRE, Life Fund strength, Economic and Regulatory Capital with shareholder returns

Medium-term adjustments to “pure” SAA within a risk controlled framework allowing for asset mis-pricing


Focus Approach


Active asset returns from TAA – value add from tilts away from SAA position.

Desired resultsSAA / TAA and IMF performance contribution

Liabilities cumulative SAA Cumulative TAA Cumulative

00 03 06 09 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69

Cumulativereturn

Objective

Focus


Asset mis-pricing

“Medium term”

Medium-term adjustments to “pure” SAA within a risk controlled framework allowing for asset mis-pricing


Corporate bond spreads comparison : Japan versus the US in 5 years industry sector

10 13 144544

63

114

266

AA A BBB BBRating

bps

JPN industry versus JGB

US industry versus UST (local spread)

300

250

200

150

100

50

0

Rationale for TAA into US credits out of domestic bonds

TAA : Example : US Fixed Income for Prudential Corporation Asia funds

US credit risk premiums more attractive than Asian local marketsDeeper and wider US credit markets offer diversification benefitsDeregulation in several countries allowed life funds to invest up to 30% offshore

20-25% of AUM for several of the Asian life funds was allocated to FX hedged US corporate bonds with the fund management outsourced to PPMA in Chicago

Hedged US corp bond versus Asian local bond market returns% returns - 12 months to 30 Sep 20047

6

5

4

3

2

1

0Singapore Taiwan Japan

US high investment grade

US investment grade

Local bond markets

* Local returns for all = HSBC Local Bond Indices except Japan = Merrill Lynch 1-10JGBUS Corp Bonds = Merrill Lynch Benchmarks from SICAVs

£ 12mn of value added over past 12 months

TAA : Example : US Fixed Income for Prudential Corporation Asia funds

TAA into Hedged US credit out of domestic bonds in several countries added excess returns to funds as US credit markets outperformed domestic bond markets resulting in £ 12 million of value add

The SAA duration for the Korean life fund was 6yrsAs a result of this extreme pricing anomoly we reduced the duration on the fund by 1 y to 5yr, to try to take advantage of a rise in yields back towards equilibrium

Actual yields Valuation MeasureYield on 10 Year Government Bonds

95 96 97 98 99 00 01 02 03468

10

12

141618

2022

Required Return on 10 Year Government Bonds

0

2

4

6

8

10

12

14

16

Discounted with LT CPI

95 96 97 98 99 00 01 02 03

TAA : Korean example

The Korean bond market remains expensive from a medium term valuation perspective

Despite a strong run , Korean equities appear cheap as earnings have risen faster than prices

MSCI Index Lev el

1995 1996 1997 1998 1999 2000 2001 2002 2003

50

100

150

200

250

300

Source: DATASTREAM

Source : Datastream

TAA : Korean example

MSCI index levelReal Earnings Yield

1995 1996 1997 1998 1999 2000 2001 2002 20034

6

8

10

12

14

16

18

Real Earnings Yld

Source: DATASTREAM

As a result of this extreme pricing anomoly we added a 5% allocation to Korean equities to the Korean Life fund which has an SAA position of 100% fixed income

Valuation measure : Real earnings yield


Objective

Focus


Investment views

Benchmark and risk tolerance in IMA

Asset mis-pricing

Medium / shorter term

Fund management

Approach

Regional functional reporting ensures process and risk management consistency

Clear Investment Management Agreements with risk management parameters (credit, concentration etc) and compliance aspects

Performance Related Fees aligned with strategic asset allocation where possible

Asset tilts within portfolios and stock selection within asset classes, without changing the overall risk profile of the fund


Desired resultsSAA / TAA and IMF performance contribution

Active asset returns from TAA – value add from tilts away from SAA position.

Cumulativereturn

Liabilities cumulativeFund Management Cumulative

SAA CumulativeTAA Cumulative

10000

9000

8000

7000

6000

5000

4000

3000

2000

1000

000 03 06 09 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69

Focus

Objective

Fund management


Investment views


Asset mis-pricing



Fund management performance contribution

100

110

120

130

140

150

160

170

180

190

Cumulativereturn

Fund management contribution

00 03 06 09 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66

Objective

Fund management

Small annual contribution

cumulative impact can be large



Tilts across asset classes

0

5

10

15

Weights%

Domesticbonds

Overseasbonds

Domesticequities

Globalequities

Property Cash

Benchmark average weights Actual average weights

Focus

Objective

Fund management


Investment views


Asset mis-pricing



Stock selection within asset classes

-0.6-0.4-0.20.00.20.40.60.81.01.2

Domesticbonds

Overseasbonds

Domesticequities

Globalequities

Property Cash

Relative returns

%

Objective

Fund management


Focus

Investment views


Asset mis-pricing


Investment performance

Source of funds No of funds FUM (£ m)

Life funds Unit linked funds%100908070605040302010

03 month YTD 1 year 3 year

< (3.0)%0.0-0.1%

(1.0)-(3.0)%1.0-3.0%

(1.0)-0.0%>3.0%

%100

9080706050403020100

3 month YTD 1 year 3 year

< (3.0)%0.0-0.1%

(1.0)-(3.0)%1.0-3.0%

(1.0)-0.0%>3.0%

IndonesiaSingaporeMalaysiaPhilippinesTotal

5106324

1461,102144

91,401

Singapore LifeHK LifeJapan LifeTotal

1214

1,3181,222622

3,161

Source of funds No of funds FUM (£ m)

Added significant value to our life companies’ funds

United Kingdom Life

23Malaysia Life*

242Total

127

43Hong Kong Life

49Singapore Life

Value added last 3 years (£ million)Clients

Value added for life funds

* Value added in 12 months ended 31 Dec 03


PrudentialCorporation Asia Architecture for managing life assets

Governance and controls

SAA Steering Committee

TAA Steering Committee

Local Investment Committee

Long-term allocation among different asset classes


Medium-term adjustments to “pure” SAA within a risk

controlled framework


Two green lights required

A strong competitive advantage in asset management

Summary : Investment management of life assets

Large and complex funds, but managed by strong and effective architecture

Leveraging Prudential’s experience in the UK

Rigorous and consistent approach applying specialist knowledge and experience

Scale and depth of fund management capabilities

Strong track record of delivering consistent risk controlled out-performance

76



November 2004

Our Growth OpportunitiesOur Growth Opportunities











Risk management

Brand strength



Product innovation

Customer centricity

4

Overview of the Funds BusinessOverview of the Funds Business

Ajay SrinivasanPrudential Corporation Asia

November 2004

Key messages

Mutual funds in Asia have grown strongly and the potential to grow is substantial

We have a track record of delivery and have built a sizeable business in a short time

We add considerable value to the Life companies through fund management of Life Funds

Our goal is to be a significant and profitable force in all our chosen markets

We have the vision, the strategy and the people to succeed

Mutual funds market in Asia : Size and growth

7379Total

3Malaysia**

5Singapore

9

15

219

China

India

Japan

33

20

11

13

10

Source : www.ici.org, Cerulli Associates, Monetary Authority of Singapore, Association of Mutual Funds in India, Securities Investment Trust Association, SITCA, KITCA, * local retail funds only, **Securities Commission of Malaysia (private funds only),

78 (17)Korea

15 20Hong Kong*

35 26Taiwan

405

4

6

10

17

241

65

18

44

FUM 2002(£ billion)

FUM 2003(£ billion)

2003 v 2002growth (%)

Asian mutual fund market is embryonic compared to other countries

Mutual funds market in Asia : Opportunity for growth

Source : UBS, Bloomberg

Mutual funds markets as % of GDP%80

70

60

50

40

30

20

10

096 97 02 0300 0198 99

JapanMalaysiaChinaTaiwanIndiaUKUS

Customer perspective– One of two best of breed products in our offering (ie life and mutual

funds)– Create more loyal customers for Prudential in Asia

Financial perspective– Create shareholder value building on Prudential Corporation Asia’s

core strengths – Funds business has attractive return on capital profile

Synergies with life business– Leverage existing local market knowledge (eg customers, competitors,

culture and regulatory environment)– Use Prudential brand strength to broaden Prudential’s customer base

in Asia

Funds business : Fit with overall strategy

Funds division : Structure

Ajay SrinivasanManaging Director, Funds

Pankaj Razdan

India

Kelvin Blacklock

CIO, F/I

Ted PullFinance,

Planning and Risk

Suraj MishraInternational

Funds

Mark TohMalaysia

Felix Pang Japan

Oscar WongHK

Thomas Tsao

Taiwan

S H Hwang Korea

Kong SiewCheong

Singapore

Nick ScottCIO, Equities

Country CEOs

Kong SiewCheong

Operations

Regional functions

New HireMarketing

IndiaTaiwan

Malaysia

Japan

Korea

19982000

2001

2001

2002

Hong Kong2000

Singapore

2001

Funds division : Extensive presence in Asia

*•••••••*

# Represents year of commencement of mutual funds business * Opportunities being reviewed

ChinaHong KongIndiaIndonesiaJapanKoreaMalaysiaPhilippinesSingaporeTaiwanThailandVietnam

••••••••

CountryUnit

linkedMutual funds

••

10

Foreign players are increasing penetration and moving towards multi-country leadership positions

Mutual funds : Peer comparison

HK Sing IndiaKoreaTaiwanJapan VietnamChinaMal

Prudential (7)

Templeton (7)

Alliance Cap (6)

AIG Global (5)

Jardine Fleming (5)

ABN Amro (5)

HSBC (5)

Schroders (5)

Fidelity (4)

Aberdeen (2)

Source : Internal research Note : Presence with licence and office set up as of Sep 2004 * Opportunities being reviewed

**

Strong FUM growth

Rapid growth in FUM

£ billion

FUM growth mainly due to increase in net inflows

Total

LI

MF

£ billion20181614121086420

98 99 00 01 02 03 9/04 2001 2002 2003 9/2004

2.5

2.0

1.5

1.0

0.5

0

Note : FUM excludes advisory assets

Constant exchange rate

Drivers of profitability : Diversity of geographic presence and client base

Source : Prudential Corporation Asia as at 30 September 2004, FUM excludes advisory assets

FUM by clientsSeptember 2004

Our FUM is derived from various countries and a diverse client base

FUM by countries September 2004

Hong Kong 11%

India 10%

Japan 9%

Korea 8%

Malaysia 2%Singapore 18%

Taiwan 12%

UK 30%MF 38%

Asia Life 30%

UK Life 30%

Others 2%

Our asset mix is moving towards products with higher margin

Drivers of profitability : Asset mix

September 2004 actualSeptember 2003 actual

Source : Prudential Corporation Asia as at 30 September 2004, FUM excluded advisory assets

Others 2%

Equity 45%

Bond 53%

Others 2%

Equity 47%

Bond 51%

Our net inflows were 10% of gross inflows in 2003, in line with overall US market which was 11%

Our persistency versus US

Net inflow as % of gross inflow

Source : 2003 US Mutual Funds Handbook

%12

8

4

0US mutual funds

market*

Our mutual funds operations

Strong growth in revenue and economies of scale

Net revenue continuing to grow

£ million50454035302520151050

2001 2002 2003 June 2004

Cost as % of net revenue*

2001 2003 June 20042002

* Net revenue = Gross management fee less commission

%9080706050403020100

Strong growth in profits

Profit before tax£ million

14

12

10

8

6

4

2

0

-298 99 00 01 02 03 6/04

-1 0

3

9

1213

10

Profitability has improved due to economies of scale and effective cost control

Constant exchange rate

Return on capital

Strong trend on increasing return on capital

* June 2004 figure was annualised for consistent comparison

Pre-tax return on capital invested= PBT / accumulated capital (pre-dividend)

%181614121086420

2000 2001 2002 2003 6/2004*

We have added significant value to our life companies’ funds

United Kingdom Life

23Malaysia Life*

242Total

127

43Hong Kong Life

49Singapore Life

Value added last 3 years (£ million)Clients

Value added for life funds

* Value added in 12 months ended 31 December 2003

1 year (%) 3 year (%)

Mutual funds : Fund performance summary

India

Taiwan

Singapore

Malaysia

Japan

Korea

Total

58

60

100

83

100

65

66

50

67

50

100

100

N/A

65

% of funds in top two quartiles as of June 2004

Two-thirds of our funds are in top two quartiles

Examples of our awards and recognition

PRUlink Singapore Managed Fund won the 10 year Special Award

for highest absolute return over 10 years in

entire Singapore authorized investment

linked products category

(Investment Fund Awards 2003)

Prudential ICICI Asset Management among top 50 most trusted services

brands in India(2004 A. C. Nielsen

independent survey)

Prudential Unit Trusts Malaysia received 4

awards for the following funds :

Pru Growth FundPru Small-Cap FundPru Balanced Fund

PCA Asia Securities Investment Trust’s Hi-

Tech Fund recognized as Best Performing Funds in

‘Three-year Taiwan TMT (Technology Media

Telecommunication)’category

(Standard and Poor’s Taiwan Investment Funds

Awards 2003)

21

Hong Kong MPF*

Japan**

Korea

Singapore

Malaysia

Taiwan

India

Market share***

10%

5%

7%

3%

13%

2%

N/A

Market leading position

Top 5 ranking in 4 out of 7 markets with material market share

Top 5 ranking

Source : AMFI, SITCA, Securities Commission of Malaysia, The Investment Trust Association of Japan, KITCA* By members numbers ** By Foreign players’ AUM *** As of June 2004

N/A

Mutual funds : Strategic objectives

To achieve :1. Scale and materiality in terms of :

– FUM– Profitability– Geographic coverage

2. A material base of retail customers

3. A highly salient and relevant brand built on superior and consistent fund performance

4. A qualitatively superior business – Employer of choice– The best team in the business– A business that shareholders truly value

and count on for reliable delivery

23

Product

Customer Brand

Distribution

Four pillars of our strategy

Build on the Prudence heritage and add saliency to the brand as it

represents a fund management company

Continuing to increase our multi channel distribution reach so that customers

can access us when and where they choose

Range of products and fund performance to meet our customers’ changing needs

Understanding our target customers’ needs

Key factors to considerTotal market FUM and fee pools – institutional and retail

Population demographics and retail savings pools

Mutual funds “share of wallet”

Customer strategy : Mutual funds

Customer strategy

How do we decide which customer segments to target?

Our approach to understanding target customers’needs

Customer propositions are developed based on customers’ needs

Target customersInvestment mindset / behaviourAttitude toward mutual fundBarriers to mutual fundAppeal of propositions

Customer research

Agree on prime customer targetIdentify triggers for products, service and communications

Shareinsights

Identify and prioritize opportunitiesDevelop product, service and communications that leverage our understanding of our customers

Developpropositions

Product

Customer Brand

Distribution

Four pillars of our strategy







Mutual funds : Single regional brand

Brand platform

Find mutual funds confusing and difficult to understandFind the idea of a brand that is committed to understanding their needs and offering products to meet those needs highly appealingWould look for ‘well known’brands they can trust to look after their hard-earned money and help simplify purchase decisions

Consumer Insights Making your money work as hard as you do

Different names, same proposition

Our regional brand positioning based on commitment to put the customer at the centre of everything we do

India : Prudential ICICI brand building

Television Commercial

Product

Customer Brand

DistributionProduct

Product development

Jon AllenRegional product development

- Funds

Regional product development facilitates synergies between our funds and life businesses

Role of regional product development (RPD)

Regional product development team

Prudential Corporation Asia mutual fund

companies

Prudential Corporation Asia investment

linked life companies

Regional compliance

Regional CIOs

Regional risk management

Product approval committee

Regional operations

3rd party fund providers

Creating competitive advantage

Centralised approach to product development

Work within each business as a consultant

Add value via early adoption of global product trends

Our life companies who sell investment

linked products

Our mutual fund companies

Regional product development team

Build products that meet these needs

Product propositions to our target customers

Specific investment goalseg to grow capital to achieve

specific returns

“Financially Savvy”

I = Investment

Specific lifestage goalseg marriage, children’s education, retirement

“Needs focused”

N = Needs

Without specific goalseg want to invest or save

but need advice

“Advice based”

A = Advice

They save or invest for

Apply across each distribution channel

India example : Product mapping methodology

“Bottom Up” approach to customer needs

A = Advice

Risk basedExisting products

Customer voice + Distributor feedback + Global trends = what to build

N = Needs

Lifestage

I = Investment driven

HybridBondEquity

Eg : Need in India for school fees provision - Child Care PlanNew products

Examples of successful product launches

Successful execution validates our approach

£ 130 millionBond and equity product focused on

paying regular yieldMonthly

Income Plan

FUMat 30 Sep 04Key featureProduct Country

£ 107 millionActive bond and equity product focused on absolute returnsBalanced Fund

£ 43 millionSharia compliant bond and equity

product focused on absolute returnsIslamic Dynamic

£ 37 millionActive equity fund investing in China and IndiaDragon Peacock

KLCI Index Hybrid Actively managed bond combined with the KLCI Equity Index £ 28 million

Product

Customer Brand

DistributionProduct

Product innovation

Felix PangCEO, PCAAM Japan

Greenfield start-up in mature market – 70 competitors – Over 2,500 funds

Despite highly competitive environment, demographics make Japan a very attractive market

– World’s second largest economy– Large population with high level

of wealth

PCA ASSET Japan : Background

Source : UBS

Japan 12%

US 33%

Europe 32%

Rest of world 23%

Global GDP

Opportunities in Japan

Japan has the fastest aging population in the worldOlder generation has higher saving pools

Source : 2000 data for others and GDP growth rate. Original data by The Council for Financial Services Information (BOJ Organization).

Retail saving pools by life-stage£ billion

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0Young Singles

OlderSingles

Mature Singles

YoungParents

OlderParents

Mature Parents

EmptyNesters Retired

2001 2008

Source : Ministry of Health, Labour and Welfare of Japan

Over 65years old

15-64

0-14

100

90

80

70

60

50

40

30

20

10

01920 1950 1970 1990 2010 2030 2050

% of population by age group

So what products did we focus on in Japan?

Consider depositors’ risk tolerance and monthly allowance needs after retirement

Customers prefer regular income products with low to medium risk

* Source : NRI

Proportion of regular dividend fund is increasing

Our target customers

Customers’ needs Market trend

The older generation

% of regular dividend fund in total market

25

20

15

10

5

03/03 6/03 9/03 12/0312/02 3/04 6/04

39

PCA ASSET Japan : Introducing key products

Growth in 2003-4 through United States high yieldopen fund

Open-ended fund investing in United States high yield (BBB rating and above),

Target to pay stablemonthly dividend payout,

Attracted many new distributors for PCA Asset Management Japan

40

Investment in US High Yield Open fund has generated better returns than investments in bank deposits and government bonds

Comparison of returns

*Source : Bloomberg, Fund Mar (NRI)

%8

7

6

5

4

3

2

1

0Bank deposit Japan 10-year

government bond 10 yearPCA US high

yield open

0.25

1.45

7.2

Annualised return

PCA ASSET Japan : Introducing key products

US high yield open fund’s FUM grown 65 times over last 18 months

FUM of US high yield open fund£ million

700

600

500

400

300

200

100

01/03 3/03 5/03 7/03 9/03 11/03 1/04 3/04 5/04 7/04 9/04

2/03 4/03 6/03 8/03 10/03 12/03 2/04 4/04 6/04 8/04

65 X

Currently ranked 18 out of 33

PCA ASSET Japan : Competitor comparison

FUM positions against key competitors

*Source : Nikkin Investment Trust

-10(103)912 1,015 Credit Suisse

38365 1,319 954 UBS

106934 1,813 879 Barclays

119363 669 305 BNP

568404 475 71 Commerz

595205 240 HSBC

1,261768 828 61 PCA Asset

% ChangeJuly 04June 02All in £ million

71

Our asset management product pools

Group synergies

US High Yield is managed in the United States by our group company, PPMA

Another successful example : Our India fund launched end of September 2004

We will continue to launch funds that leverage our understanding of customers, group knowledge and skill base

Market recognition

Fastest Growing AMC

PCA ASSET launches the First India Equity Open in Japan

DistributionProduct

Customer Brand

Distribution strategy

Pankaj Razdan and Mark TohCEO, Pru-ICICI and CEO, PUTB

Distribution channels vary across markets

0

20

40

60

80

100

Japan Korea Taiwan Hong Kong India Singapore Malaysia

Source : Cerulli, Prudential Corporation Asia

Channel Mix - 2003

BanksAgentsOthers (Internet / IFA)

Securities brokersInsurance companiesDirect sales force

%

Penetration of mutual funds in India is still very low

India : Opportunities

Source : Marakon 2002

Distribution of personal financial holdings by asset class

Cash and deposits 55%

Life insurance 12%

Pensions 23%

Equity 2%

Mutual funds 1%

Other / Misc 7%

Structural changes in Indian economy could be drivers of future growth for mutual funds business

India : Opportunities

Young and growing population

Low interest rates

Source : Forecast Asia Tables for India, CLSA securities report and Bloomberg Data

Multiple channel strategy required to grow investor base in India

India : Retail distribution strategy

Financial savings pool by social economic classification*

£ 25 billion

£ 26 billion

£ 25 billion

£ 21 billion

£ 69 billionTop 8 Metros

Over 1,000,000

500,000 – 1000,000

100,000 – 500,000

Below 100,000

0 20 40 60 80 100 %

SEC A* For period 2003-2008

SEC B SEC C SEC D SEC E

City populationFinancial

savings pool

Alternate channels

Tied agency

Banks

Independent financial advisors

Institutional brokers

Direct sales

Retail customers

High Net-worth customers

CorporateLarge Corporate

Focus on multiple channel structure

India : Retail distribution structure

India : Our wide coverage

India : Our points of sale

Number of points

of sale

Over 20,000 points of sale

Distribution structure

Branches Brokers Banks Agency Retail shops

2,000 brokers with 8,000 branches

16 banks with 1,200

branches10,000 80030

53

Products were mainly distributed by agents in 2000

Malaysia : Mutual funds distribution pattern

Channel Mix - 2000

Banks 17%

Agents 80%

Direct sale force3%

Direct sales team

Retail tied agents

Institutional agents

Large Corporate investors

Corporate investors

High Net-worth customers

Retail Investors

Prudential Unit Trusts Malaysia : Distribution structure

Multiple-channels to reach out to and serve different market segments

Institutional unit trust agents (IUTAs)

Hong Leong Bank Berhad

We have partnerships with a panel of reputable 3rd party institutional distributors, including banks and stockbrokers

Leveraging Prudential Assurance agents

Leverage Prudential Assurance’s large, professional agency force – 37 branch and agency

offices– Training, customer service

and collection

Top 32% of Prudential life agents now licensed to sell unit trusts

57

Direct sales : For segments not catered to by traditional channels

Covering major business areas in Peninsular and East Malaysia,

Catering mainly to larger corporate clients and high net worth individuals

58

Multiple channels contribute to business growth with institutional agents playing significant role

FUM by channel

Prudential Unit Trusts Malaysia : FUM by channel

%100

80

60

40

20

02001 2002 2003

36

22

42

68

15

16

65

13

22

Retail agent IUTA Direct sales

Increasing influence of banks for Unit Trust distribution in Malaysia

Malaysia : Mutual funds distribution pattern

Channel mix - 2003Channel mix - 2000

Direct sale force4%

Banks 44%

Agents 52%

Direct sale force3%

Banks 17%

Agents 80%

Recap : Four pillars of our strategy

Product

Customer Brand

Distribution







Thomas Tsao November 2004

Mutual Funds : Opportunity in China

Mutual Funds : Opportunity in China

China’s household savings provide a large and growing savings pool in China

Bank deposits per capita

Source : CEIC

£600

500

400

300

200

100

01985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Bank deposits per capita

25% CAGR

Opportunity to increase penetration of mutual funds by targetinglarge proportion of balances held as bank deposits

Distribution of personal financial holdings

100

80

60

40

20

0China US

Other / Miscellaneous

Mutual fund

Equities

Fixed incomesecurities

Pensions

Life insurance

Cash and deposits

%

Source : Marakon 2002


China’s equity and bond markets experienced substantial growth over last few years

China’s equity and bond markets

Source : UBS

Market cap of Shanghai and Shenzhen stock market

£ billion350

300

250

200

150

100

50

01995 1996 1997 1998 1999 2000 2001 2002 2003

Bond market size

£ billion300

250

200

150

100

50

01995 1996 1997 1998 1999 2000 2001 2002 2003

6.5X11X

02468

1012141618

1998 1999 2000 2001 2002 2003 H1/04020406080100120140160

£ billion

Asset under management Number of mutual funds

Number of funds

Rapid growth of China mutual fund industry

Source : UBS

China mutual funds market still embryonic. Strong growth since 1998 and is expected to continue

Summary : China

Favorable demographics make China an attractive market for Mutual Funds

Mutual Funds market in China is embryonic but growing substantially

Entry to China Mutual Fund market presents significant growth opportunities

We have proven track record to capture these opportunities

Ajay SrinivasanPrudential Corporation Asia

November 2004

Mutual Funds Growth Opportunities in Asia

Mutual Funds Growth Opportunities in Asia

Mutual funds in Asia : Future outlook

7 good reasons for significant growth of mutual funds in Asia

1. Large population

2. Positive economic outlook and growing wealth

3. High propensity to save

4. Very low penetration for mutual funds

5. Continued trend towards growth in professional wealth management

6. Regulatory reform to give rise to new products such as Pension and Offshore products

7. Attractive profit pool

1. Geography and demographics

Source : Asian Demographics

China

India

Indonesia

Japan

Philippines

Thailand

South Korea

Malaysia

Taiwan

Hong Kong

Singapore

Total

1,276

1,015

203

127

78

61

48

24

22

7

3

2,864

2001Pop’n (m)

1,359

1,165

215

127

92

64

50

29

24

7

4

3,136

2011EPop’n (m)

0.6%

1.4%

0.6%

0.0%

1.7%

0.5%

0.5%

2.0%

0.5%

0.9%

1.3%

0.9%

CAGRAsian region

Asia accounts for almost half of the world’s population and three of its four most populous countries

China

Indonesia

India

Japan

MalaysiaSingapore

Philippines

Thailand

TaiwanVietnam

Hong Kong

South Korea

2. Positive economic growth in Asia

Asia has weathered many crises in past 30 years and still produced high average GDP growth rates

Source : UBS , CEIC and Datastream

Average annual GDP growth (1974-2003)%10

8

6

4

2

0

2.73.3

5.2 5.46.0 6.3 6.4

6.9 6.9 7.0

8.8

3.02.1 2.3

JapanPhilippines

IndiaIndonesia

Hong KongThailand

MalaysiaSingapore

TaiwanKorea

ChinaUS

UKEurope

Source : Datastream, CEIC and UBS

3. High propensity to save

Savings as a % of GDP - 2003

US

26

4543

32 33

2431

25

11

TaiwanIndia

JapanKorea

Hong KongThailand

MalaysiaSingapore

4. Low penetration of mutual funds

Source: Marakon 2002 Note : United Kingdom Life and Pensions sectors are combined

Mutual funds

Equities

Fixed income securities

Pensions

Life insurance

Cash / Deposits

Other / Miscellaneous

%100

90

80

70

60

50

40

30

20

10

0HK MY SG IN JP TW KR CH UK US

Asian household assets much more concentrated towards cash and deposits than in UK or US


Consistent growth in professionally managed wealth over the last 10 years in Asia but it is only half the US

5. Continued trend towards professional management

Source : Internal research

2622

57

%100

80

60

40

20

0US 2001Asia 2001Asia 1991

Rest of household assets Professionally managed

6. Regulatory reform : New products opportunities

Offshore products

Pension productsPension reform in Asia due to :

Demographics are set to worsen significantlyUnfunded or under funded pension schemes in AsiaReplacement rates are set to fall in most markets

Major markets in Asia

Predominantly domestic markets

Both domestic and offshore markets

India, China and Malaysia

Taiwan, Korea, Japan, Singapore and Hong Kong

Our estimate of current offshore

market is£70 - 110 billion

Pension reform gives rise to new market opportunities for asset management companies

India Taiwan Singapore Malaysia Japan Korea

Equity Balanced Fixed Income Offshore Fixed Income

7. Attractive management fee rates

Industry average annual gross management fees by product types

%

2.0

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0

Mutual funds market overview

Significant growth trend has begun in Asia

Source : www.ici.org

CAGR of FUM growth (1998-2003) %16141210

86420

Americas Europe Asia Pacific

Well placed to capitalise on opportunities

7 reasons why our funds business is well positioned

1. Established presence in Key Asian Mutual Funds markets

2. Customer-centric approach to understand customers’ needs

3. Wide range of products to meet our customers’changing needs

4. Established distribution network which are tailored to market needs

5. Good brand recognition

6. Proven track records in fund performance

7. Quality people and systems in place

Key messages

Mutual funds in Asia have grown strongly and the potential to grow is substantial

We have a track record of delivery and have built a sizeable business in a short time

We add considerable value to the Life companies through fund management of Life Funds

Our goal is to be a significant and profitable force in all our chosen markets

We have the vision, the strategy and the people to succeed

1



November 2004

Our Growth OpportunitiesOur Growth Opportunities

3

Growth Opportunities in AsiaGrowth Opportunities in Asia

Dan BardinPrudential Corporation Asia

November 2004

Growth map of Asia

Hong Kong, Singapore, Malaysia

Regional leadershipPeople and best practice

Thailand, Indonesia, Philippines

Leading next stage of market development

ChinaDeregulation : Step change in growth Japan, Taiwan, Korea

Distribution pioneersFocus on profitable segments

Vietnam, India

Leveraging our leadership position

4

Today we will give you a more detailed review of some of our key growth markets

Markets for discussion today

Chee Cheong Managing profitable growth

Huynh Thanh Phong Leveraging the platform

Shikha Sharma Leadership through innovation

Captain Chia Preparing for future growth

6

Taiwan :Managing Profitable Growth

Taiwan :Managing Profitable Growth

Chee CheongPCA LIFE TaiwanNovember 2004

Life insurance market

Taiwan : Overview

CharacteristicsCountryPopulation 22.5m

Insurance penetration* 8.28%

No of competitors 29Local players’ share 64%(2003 APE)Prudential entered in 1999 through acquisition of Chinfon Life2003 APE £3,594m

2003 Total Premiums £18,753m Top 5 players - 2003 APE shareCathay Life 15%Chunghwa Post 13%Nan Shan (AIG) 12%Shin Kong 8%Far Glory 7%PCA LIFE : No 11 3%

* Insurance Premiums as % of GDP

The low interest rate environment has created irrational market practice

Key developments

Low interest rate environment

Focus on single premium and short-term endowment

Bancassurance growth through deposit stripping

Pressure on overall profit margins

Hot sales – “Buy before price rise”

Market growth fuelled by single premium sales and a focus on short term endowments

Market context

£ billionTotal sales Product mix

Single premium Regular premium

6

4

2

02000 2001 2002 2003 Q3/2004

%100

80

60

40

20

02000 Q3/2004

AccidentShort-term endowmentLife

Unit linkedAnnuitiesHealth

Our approach : Business model

Acquisition of Chinfon Life

First mover in linked marketFocus on profitable segments

Clear market differentiation to build brand name

Rapid expansion of agencyNew model for partnerships

Value people as key assetsAttract, develop and retain top talent

Entry

Distribution

Brand

Product

People

Our approach : Product portfolio

We have gained first mover advantage in linked business

* Securities Investment Trust Enterprise

Largest ULP customer pool,100,000 by June 2004

Focus on long term protection and savings needs

Offer comprehensive rider options

Synergy with PCA SITE* inTaiwan on fund options

11

Our approach : Product mix

We have built a strong position in linked and avoided low margin segments

PCA LIFE product mix – Total sales

Accident

Life

Short-term endowment

Unit linked

Annuities

Health

2000 Q3/2004PCA LIFE Market PCA LIFE Market

%100

80

60

40

20

0

Our approach : Agency growth

We have maintained growth in sales and size of our agency force

£ million

0

20

40

60

80

100

120

140

2000 2001 2002 2003 Q3/2004

Agency APE

Build scale Focus on linked business

Agents

7,123

10,779

Constant exchange rates

We have built a differentiated model for non-agency distribution

Our approach : Partnerships distribution

£ million

Non-Agency APE5 different non-agency relationships in place

Focus on multi-channel bancassurance

– Telemarketing– Financial consultants

E-Sun Bank partnershipsigned February

2000 2001 2002 2003 Q3/2004

20181614121086420


Voted one of the 5 “Best Life Insurers” in Taiwan*

Our approach : Brand position

Brand awareness**

Cathay Nan Shan(AIG)

Shin Kong ING –Antai

PCA LIFE Mass Mutual Mercury

Taiwan Life

FubonLife

2003 APEMarket rank : 1st 3rd 4th 7th 11th 12th 14th 10th

* Commonwealth Magazine ** PCA LIFE Brand Audit Survey

0

20

40

60

80

100%

Our results

Our strategy has resulted in impressive APE and NBAP margin performance

APE NBAP margin £ million

110

90

70

50

30

10

2000 Q3/2004

%70

60

50

40

30

20

10

02000 Q3/2004


The market still has plenty of growth potential

Going forward : Market opportunities

Further expansion expected from bancassurance

Pensions reform to open up new product segment for participation

0

10

20

30

40

50

‘03A ‘04F ‘05F ‘06F ‘07F ‘08F ‘09F

£ billion

Deutsche Bank Thompson Dialog Swiss Re

14% CAGRPremium growth

6% CAGR

10% CAGR

Our strategy focuses on leveraging our current business model for sustainable and profitable growth

Going forward : Our strategy

Distribution• Focus on improvement in agency productivity• Build on our differentiated bancassurance model

Product and customer

• Maintain focus on unit linked and profitable segments• Customer centric focus

Brand • Build on advantaged brand position to access broader customer set and increase linked growth

Summary

A highly differentiated position built in the Taiwan market– First mover in unit-linked products– Selective product participation strategy– Strong agency platform and growing partnerships distribution

Differentiation translated into robust profit performance and strong brand position despite difficult market conditions

People strategy aimed at valuing people as key assets and attracting, developing and retaining top talent

Leverage current platform to continue driving sustainable and profitable growth

20

Vietnam :Leveraging the Platform

Vietnam :Leveraging the Platform

Huynh Thanh PhongPrudential Vietnam

November 2004

Vietnam : Overview

Characteristics

Top 5 players

Country

Life insurance marketIn-force premiums £78m2003 new premiums £167mTotal premium volume £245m Prudential

BaoVietManulifeAIABaoMinh-CMG

Public monopoly set up 1996 (Bao Viet)Opened to foreign insurers 1999Second foreign license acquired by Prudential

Population 81mInsurance penetration* <1%


Vietnam : Political structure

Form of State : One party rule (Communist Party of Vietnam)

The Executive : Cabinet constitutionally responsible to elect National Assembly

Head of State : President (appointed by National Assembly)

Communist Party Politburo

National Assembly

Communist Party Secretariat

Central Committee

The TroikaPrime Minister President Communist Party

Vietnam : Demographic profile

Population : 81 million

: 75% in rural areas

Major urban centres : Hanoi and Ho Chi Minh City (HCMC)

Second tier cities : Haiphong, Cantho, Danang

Very young population : 35% under 15

1 million enter work force each year

High literacy rate : 89%

Life expectancy : 67

Young population with growing urban centres

Vietnam : Opening up to the world

Source : World Bank

1990 2002

No of domestic enterprises 110 70,000

No of foreign enterprises 108 2,400

Share of private sector non-oil exports 3% 65%

Share of FDI in industrialoutput

9% 36%

Emerging diversified economy

An emerging diversified economy

Economy a basket case late ’80s and early ’90s

Opened to foreign investment in early ’90s

Impressive achievements : – Poverty reduction– Education – Public health

Vietnam : Economic profile

Less developed country– Total GDP : £24 billion

(2003)– GDP per capita : £270

(2003)Household income – Higher in Ho Chi Minh City

and Hanoi : £2,300Export – Low value-added products

and raw commodities– 47% of GDP

Less developed country but with impressive GDP growth

GDP growth since market liberalization

Index300

250

200

150

100

50

090 91 92 93 94 95 96 97 98 99 00 01 02

China

Vietnam

ASEAN Crisis 5

Eastern Europe

Commonwealthof Independent States

Prudential in Vietnam

26

Our approach : Business model

Entry • Greenfield• First mover advantage

Distribution • Focus on tied agency• Rapid build of critical mass

Operations• Significant investment in

infrastructure and people• Adapt regional best practice

Brand • Big Bang approach to build leadership profile

Product • Simple• Savings oriented

0

10

20

30

40

50

60

70

80

90

1999 2000 2001 2002 2003

Our approach : First mover advantage

Source : Vietnam Insurance Association - Cases exclude riders

£ million

First mover advantage has allowed us to achieve leadership position

Baominh CMG

Prudential

Bao Viet

ManulifeAIA

Market share (APE)Recognition of market potential

Effective lobbying of regulator

Team in place 3 years before launch

Build process completed before receiving licence

We have built a truly national distribution network

Our approach : National coverage

Ho Chi Minh City

Hanoi

Da Nang

Hai Phong

Red River Delta

North East

North West

North Central Coast

South Central Coast

Central Highland

South East

Mekong River Delta

Number of branches2000 2004North West

North East

Red River Delta

North Central coast

South Central coastCentral Highland

South East

Mekong River Delta

Hai Phong

Hanoi

Ho Chi Minh

Da Nang

2

2

11

4

2

2

4

8

1

5

5

2

9

16

•

•

•

• • •••

•••••• •

•

•

•

••

•

•

••

•

••

•

•

•

••

•

••

••

•

•

•••••

••

••

• •

Our approach : Simple product offer

Focus on unmet needs of customers– Children education

financial planning– Regular saving plan

Package basic plans with riders

Simple illustration of benefits

We have designed simple, easy to understand products suited to the early stage of the market’s development

30

Our Growth has been supported by enviable brand awareness relative to competitors

Brand awareness

Source : Prudential 2002 brand audits in Vietnam : Survey of 575 respondents in 7 cities

Total awarenessFirst brand that comes to mind

Our approach : Brand recognition

% of respondents

0

20

40

60

80

100

Prudential Bao Viet AIA Bao Minh-CMG

Manulife

Our approach : Critical Mass

Critical mass has been achieved and we are moving to the next stage of market development

0

5

10

15

20

25

30

35

40

2000 2001 2002 2003 Q3/20040

5

10

15

20

25

30

35

40

NBAPE Number of agents

£ million Agents ’000



The market is still in the very early stages of development

Growth in insurance penetration

00.5

1.0

1.5

2.0

2.5

3.0

3.5

2003 2008

Life premiums / GDP %

Source : Swiss Re. Note: Forecast penetration based on a 7% annual GDP growth until 2008


We have only just started penetrating the accessible customer base

Market penetration – Relevant population

0

20

40

60

80

% 100

Penetrated Un-penetrated Total relevant market

72%

28%

PrudentialOthers

Note : Relevant population : 19-64 years old in urban areas with HHI > 1.5 million VND

100%

Our strategy : Product expansion

Expansion of our product portfolio will attract a broader segment of customer to our business

NeedsRetirement

Regular savings

Protection

Education

Older singles

Young parents

Older parents

Mature parents

Emptynesters

Youngsingles

Whole Life and Term Life

PruSave PruSave

PruScholar, PruMaster

IncreasingPruCash

EnhancedPruSave

Enhanced PruSave

VietnamPioneering retirement savings category

How to motivate a young population to take action?

Our strategy : Leveraging our distribution

We will migrate our distribution network to the next stage of development

Expand to provinces to increase scale

Segment to improve efficiency

Enhance productivity via training and more products

CharacteristicsMajor urban centre focusSimple agency modelBasic product set

Size37,800 Total agentsLocated in 45 provincesSupported by 65 branches

Current model

Our Strategy: Leveraging the Platform

We will continue to drive the next stage of market development in Vietnam

National networkPowerful brandComprehensive infrastructureQuality people

Develop new product segments

Motivate new customer savings and protection behaviour

Build on our distribution

Work with regulator to be a financial services pioneer in Vietnam

Summary

Prudential has built a market leading business

First mover advantage has given us a strong lead over our competitors

Economic and demographic drivers of growth remain positive, as Vietnam continues to catch up with other emerging markets

Significant growth opportunities remain

We will build on the platform we have created to grow our leadership position in the market

40

India :Leadership through Innovation

India :Leadership through Innovation

Shikha SharmaICICI Prudential Life Insurance

November 2004

India : Overview

CountryPopulation 1,055mInsurance penetration* 2.2%

Life insurance market

CharacteristicsPre-2000 : Public monopolyMarket deregulated in 2000 Prudential entered in 2000 through joint venture with ICICI

Top 5 playersLife Insurance Company in India (LIC)ICICI PrudentialBirla Sun LifeBajaj AllianzTATA AIG

In-force premiums £5.2bFY’04** new premiums £1.6bTotal premiums £6.8b

* Insurance Premiums as % of GDP** April 2003 – March 2004

Insurance industry prior to deregulation

Prior to deregulation in 2000, market was a public monopoly with limited focus on customer needs

Public monopoly – 2,000 offices – Over 800,000 agents

Distribution through tied agents only

“Push” sales approach purely on a tax savings platform

Traditional style product offering : Endowment and money back plans

Inflexible and inadequate products

Pensions : Small part of product offer

Limited focus on customer needs

Our approach : A new life insurance model for India

Distribution Rapid expansion of agencyMulti-channel platform

Operations Best in classCustomer centric

Brand Creation of a superbrand

ProductComprehensive portfolioInnovative and flexible

EntryJoint venture entry platformStrong, respected partner

People Talent from diverse industries

Our approach : Our joint venture partnership

We have built a powerful joint venture partnership with a highly innovative, market leading local player

Reputation

Insurance expertise

Product

Distribution

Operation

Brand strength

Infrastructure

Customer base

Local knowledge

Market innovators

Mar 2003

25Locations

Mar 2002

13

29Branches 14

18,000Advisors 10,000

Mar 2004

54

70

33,000

Initial years, emphasis was on expanding the reach

Now, penetrating those cities for increasing market share

Focus on sales and service processes to achieve higher penetration into High Net Worth (HNW) segment

We have created a large-scale, nationwide agency network

Our approach : Our rapid expansion of agency

Sept 2004

66

88

41,000

• 800 Financial sales consultants

• 7 bancassurance partners

• 15 Key non-bank partners

• Direct and telemarketing

• Expands speed and quality of reach to customer

• Multi-channel approach for customer acquisition

Our approach : Our multi channel distribution

At the same time we have created powerful non-agency channels

% Sales by channel

0

20

40

60

80

100

2001 2002 2003 Q3/2004

Tied agency

Non-agency

Our approach : Multi-product strategy

We have a comprehensive and innovative product portfolio

Customer centric product positioning based on customer life stage and income needs– Retirement Solutions– Child Plans

Innovative and flexible product solutions– Unbundling of benefits – Introduction of a variety of rider options

Focus on UL (Unit Linked and Universal Life) to address different risk-return customer profiles– Capital efficient

products47

Our approach : Product coverage

LifeTime Pension

CashBak

LifeTime

Age / Life stage

Inco

me

15 25 45 60

Par products

Linked / Univ. Life

Linked

Trad. SmartKid

SmartKid Linked

Older parentsYoung parents /

Older singles

Save n ProtectForever Life Pension

SecurePlus PensionSecure Plus / CashPlus

Premier Life-LP

30 Matured parentsEmpty nesters

Young singles

LifeLink-SP

Front line sales growth is supported with a strong VOC Framework

Our approach : Active listening

Seniormanagement

meetings

Focusedgroupdiscussions

CustomerFirst

Welcomecalling,businessreply cards

Customerand partner satisfaction

surveys

Measuring overall

satisfaction levels

In-depth understanding ofcustomer issues

Our approach : Operational excellence

Operational and Investment risk management framework

Operational efficiency – monitoring core delivery processes using the Six Sigma

methodology– Financial control through active cost management

Claims experience analysis

Robust operational structure to balance the growth

Our approach : Creation of a superbrand

“The Most Trusted Private Life Insurer” : Economic Times AC Nielsen survey, 2003

Best Life Insurer of 2003-04 from Outlook Money : Two consecutive years

2004 Award for Excellence from Institute of Marketing and Management

Only private life insurer awarded in India

Our success has been recognised by our customers and our industry peers

%

Source : A C Nielson Syndicated Brand Track - April 2004 – 1661 respondents

Brand saliency and purchase consideration

54% would consider ICICI Prudential for buying a policy in the next 1 year

ICICI Prudential

HDFC Standard Life

SBI Life

Birla Sun Life

Tata AIG

OM Kotak Mahindra

Allianz-Bajaj

ING Vysya

Max New York Life

LIC

10092 92

54

72

30

45

21

52

14

49

13

33

12

34

1014 14

4552

Total AwarenessConsideration

80

100

60

40

20

0

Our results

Exponential growth and leadership of the market

APE Growth (100% basis) Retail market share (private players)

Crossed 1 million policies in September 2004

ICICI Prudential34%

Birla Sunlife

Others

Bajaj Allianz

TATA AIG

£ million

4

20

60

93

0

20

40

60

80

100

2001 2002 2003 Q3/2004


Market Leadership through executional excellence

Calendar quarters

Our results : Strategic milestones

0

5

10

15

20

25

30

35

40

45

50

Risk management framework and Investment in technology

BCP Quality initiative

Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04

APE (£ million)

Tied distribution

setup

Alternate distribution

Linked products

Pension products

Child product

DM / TM

Linked pensions

Term plans

Group business Universal

Life products

Child linked product

Growth opportunities

Current operations in 66 cities with established branches, constituting 67% of the urban market

Low penetration in these 66 cities, with advisor density of only 4.7 per ‘000 target market households– Total households penetration : 8.5%– High net worth households penetration : 1.5%

Average sum assured of £2,500 – Industry average of £1,000

Need for further expansion to improve penetration and reach

Going forward : Our strategy

Distribution• Segmented distribution to improve productivity of the

sales force• Strong relationships within partnership distribution

Operations • Hub and spoke model• Quality Initiatives across delivery processes

Product • Innovation platform for product differentiation

People • Leadership and capability development• Top talent management

Customer• Focus on needs based selling• Product Offerings for group business

Summary

Creation of a new model for life insurance in India

Leadership in innovation supported through our strong partnership with ICICI

Competitive differentiation translated into high sales growth and market share

Robust growth opportunities through expanding penetration of our large-scale distribution network

On-going focus on innovation to maintain our lead in the market

58

Captain ChiaCITIC-Prudential Life Insurance

November 2004

China : Preparing for Future Growth

China : Preparing for Future Growth

China : Overview

CharacteristicsGeographical restrictionsDomestic companies still dominatePrudential entered in 2000 through joint venture with CITIC

Top 3 players (domestic)

CountryPopulation 1,292mLife Insurance penetration* 2.5%

Life insurance marketIn-force premiums £7.8b2003 new premiums £12bTotal premium volume £20b


Top 3 players (foreign)

China Life

Ping AnChina Pacific

AIAAntai / INGCITIC-Prudential

The past 4 years have seen a gradual opening of the China market

Key industry developments

Geographically restricted : 15 cities

Licensing centralized for foreign players

Participation restricted to individual business

Foreign players Entry year1992199620002002200319981999199920022002200220002001 2003200320032004200420042004

AIA BranchManulifePrudential UK JVGenerali JVAviva JVAntai/ING JVAllianz JVAXA JVSun Life JVING JVNew York Life JVCMG JVJohn Hancock JVNippon Life JVCigna JVAegon Life JVCNP JVMetLife JVStandard Life JVSkandia JV

No of cities8433 322222211 1111111

Total players 20 Total foreign operations 42

Our joint venture partnership

We have a strong joint venture relationship built on trust

Reputation

Insurance expertise

Product

Distribution

Operations

People

Local expertise

Brand

Well respected

Customer base

National coverage

Our approach : People model

Our people model ensures we have the resources available to manage our expansion strategy

Expertise sourced from across Region

Implementation of regional best practice

Build strong pipeline of talent through Leadership Development Programmes

Over 300 people brought in from Prudential operations around the Region

Over 200 local management hires since launch

62

We have built substantial experience in setting up operations

Our approach : Speed to market

Multi-disciplined task force

Securing licenses

Premises set up

Development strategy

Resource hiring

Agency recruitment

4,300 agents and 396 staff in 4 years in Guangzhou

2,500 agents and 134 staff in 1 year in Beijing

300 agents in 2 months and 52 staff in 4 months in Suzhou

Achievements

Our firm foundations have led to rapid expansion of our agency channel in each market

Our approach : Agency expansion

Guangzhou Life Beijing Life

78% 62%

22%38%

2000 2001 2002 2003 Q3/20040

1,0002,0003,0004,0005,0006,0007,0008,000

No of agents

0

2

4

6

8

10

12

14

APE £ million

APE

117% agent CAGR255% APE CAGR

We have a broad product portfolio to cover our customer needs and created a leadership position in unit linked

Our approach : Product and services differentiation

Market segmentation strategy – Retirement products for aging

population and disappearance of “Iron Rice Bowl”

– Juvenile products for “one child policy”

Customer- focused strategy– Innovative in unit-linked

product to address the need of middle class and capital efficient issue

65

ChinaPioneering simple, easy to understand policy

contract for our customers

Product Explanation VCD

Our results

Exponential growth and leadership of the market

Our APE growth Market share (foreign players)*

* January – August 2004 total premium

£ million14

12

10

8

6

4

2

02001 2002 2003 Q3/2004

AIA

Others

Manulife

CITIC PRU

Antai / ING

Going forward : A step change in access

Our total accessible market will increase with deregulation

Current market

Guangzhou

Beijing

Suzhou

Total

7m

15m

7m

29m

Potential markets

North China

South China

West China

East China

Central China

Total

257m

161m

155m

200m

222m

995m

We will leverage the experience we have already built to manage our expansion

Going forward : Managing our expansion

Targeted expansion

Resource

Speed to market

Robust market selection Criteria– Population size and relative wealth– Level of competition– CITIC presence

Leveraging our people model– Regional support– Expansion of leadership programme

Set up expertise– Securing first mover advantage

Regional centres will provide the infrastructure necessary to support growth

Going forward : Our vision of the future

Regional hub ability– Economic scale– Low cost – Pooling of resources

and experience

Clear strategy, good execution

Strong and proven management team

Summary

Powerful joint venture relationship with a respected and influential local player in CITIC

Built a strong platform in China after only 4 years

Proven track record in establishing successful new operations

Anticipated deregulation means step change in access

Our platform already in place to manage the next stage of growth

Agency ProductivityAgency Productivity

Agency Productivity KPIs

No. of Agents

74

Total CasesTotal Cases

Total APE

Active Rate

Cases/Agent

APE/Agent

Cases/Active Agent

APE/Active Agent

Product Mix/Agent

APE/Product

Level 1 KPI Level 2 KPI Level 3 KPI

NBAP Margin/Product

Total NBAP

Agency Force Profile

Total Agency Force (# of Agents)Philippines Life

Thailand Life

Hong Kong Life

Singapore Life

Malaysia Life

China Life

Indonesia Life

Taiwan Life

Vietnam Life

India Life

As at September 2004

Agency Productivity KPIs

Rank by Productivity *

Rank by Size of Agency Force

No. of Life CompetitorsCOUNTRIES

215Vietnam

-825Thailand

4/5729Taiwan

1/2212Singapore

2/3340Philippines

1516Malaysia

1/2351Indonesia

1/2112India **

2364Hong Kong

2221China **

* Ranked based on first year premium per agent** Foreign companies only


November 2004

SummarySummary

Our 29 speakers

Years with Prudential in Asia (average) : 6 yearsFinancial services experience (average) : 20 years


79

Vision : Market leadershipPrudentialCorporation Asia

…for our customers, staff, distributors, partners, and shareholders

Superior service and professional advice

Flexible multi-distributionInnovative productsBest people and management

Highest growth rate and return

Brand strength and reputation

To be the market leading savings, investment and protection company in Asia…











Risk management

Brand strength



Product innovation

Customer centricity

Key points : Seizing the opportunity

Growth opportunity in Asia remains significant for insurance and funds management

We are uniquely positioned to seize this opportunity

We are strengthening our foundation to ensure sustainability of above-market performance

Our scale and our focus will yield accelerated profitability : Strong top-line growth, even faster bottom-line growth


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