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International Insurance Society44th Annual Seminar
Mark Tucker, Prudential plc, Group Chief ExecutiveJuly 2008
2
Strategic allocation of capital
Underpinned by:
• Constant evaluation
• “Good growth” (RoCE > CoC)
• Sustainable earnings
Financial DriversGrowth, Productivity, Risk
Strategic DriversParticipation, Competitive, and
Organisational Strategy
Shareholder Value
NOTE:RoCE - Return on Capital EmployedCoC - Cost of Capital
3
Building a Franchise
Managing the Franchise
Two-pronged approach
1
2
4
Evolution of the Prudential Group
• Driving performance across an international Group
• Re-deployment of capital to high growth markets globally
• Strong heritage from leadership in UK life and pensions
AssetManagementInsurance
Asset ManagementAsset Management
Asia
UK
US
Where we have come from The Group today
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Participation • Should we be in our historic markets and sectors or new ones or both?
Ambition • What goals, targets and timeframe should we set for the franchises we are building?
Competitive Advantage
• What choices should we make regarding entry strategy, management model, distribution, product participation, and brand?
Leveraging Capabilities
• What sources of competitive advantage can we utilise in building up a new franchise?
Consistent strategic thinking about business fundamentals
Building a Franchise: Overview
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China
Indonesia
India
Japan
Malaysia
Singapore
Philippines
Thailand
Taiwan
South Korea
VietnamHong Kong
1992
2000
2008
No Participation
Life Business Participation
Driven by regional growth and stability
Building a Franchise: Participation
7
Building a Franchise: Ambition
Clear ambition…
• Recognised as market leader
• Market share growth not at expense of profitability
Disciplined focus on market leadership and profitability
…leading to results
New Business
Value
418
208
243
241
144
367
266
259
277
285
653514
0
200
400
600
800
1,000
1,200
2004 2005 2006 2007
Asia US UK
£ million
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Building a Franchise: Competitive Advantage and CapabilitiesReliance on organic growth on the back of accelerated greenfield acquisitions and JVs
Life Business Participation
China
Indonesia
India
Japan
Malaysia
Singapore
Philippines
Thailand
Taiwan
South Korea
Vietnam
‘Cold start’
Acquisition of entry vehicle
JV
No Participation
Hong Kong
9
• Clearly defined Group ambitions and growth targets• Empowerment of the country CEO to define business strategies within this
framework• Inter-regional and inter-Group leverage of expertise and support
FederalManagement
Model
Distribution
ProductParticipation
Brand
• Strong agency relationships• Innovative bank distribution• Direct sales
• Product innovation• Tailored to consumer needs• Consistently striving to meet customer needs with capital efficient solutions
• Brand recognition• Striking logo transcends language barriers• Common set of customer friendly values• All based on financial strength and long term commitment to markets
Bus
ine
ss M
ode
l
Building a Franchise: Competitive advantage and capabilities
Country management aligns business model to local needs
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1.Consistency between product range and customer proposition
2.Low cost without sacrificing quality of service
3.Flexibility
Building a Franchise
Market-driven product portfolio management
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•Launching consumer finance
•Entering the drawdown space
•Meeting a wider range of customer needs
•Assessing current offers in the market
Managing the Franchise
Expanding the product portfolio in Asia
12
Conclusion
•Disciplined capital allocation
•Disciplined risk management
•Capital adequacy
•Returns and growth