Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Prudential PLC (NYSE:PUK) reported an 11% increase in new business profit, reaching $3.1 billion, aligning with their guidance.
• The company achieved a compounded annual growth rate of 21% in new business profit over the past two years.
• Prudential PLC (NYSE:PUK) generated $2.6 billion in free surplus last year, indicating strong financial health.
• The company announced a 13% increase in dividends per share, alongside a $2 billion share buyback program accelerated to complete by the end of 2025.
• Prudential PLC (NYSE:PUK) is well-positioned to capture growth opportunities in fast-growing markets like China, India, Indonesia, and Malaysia, with GDP growth expected around 5% or more in 2025.

Negative Points

• Gross operating free surplus generation was down 2% over the year, reflecting challenges in maintaining surplus growth.
• The company's net negative variances, although improved, still amounted to $299 million, indicating ongoing operational challenges.
• In Malaysia, new business profit was down 4% due to a shift in channel mix towards Bancassurance, affecting margins.
• Customer sentiment in Vietnam remains challenged, impacting Prudential PLC (NYSE:PUK)'s market position despite efforts to build quality business.
• The Mainland China capital position remains a focus, with strategic asset allocation and distribution adaptation needed to manage risks.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Sign with PUK.

Q: Can you elaborate on the strategic initiatives that are driving the growth in new business profit and free surplus? A: Anil Wadhwani, CEO, explained that the company's strategy focuses on writing high-quality new business, particularly in Health and Protection, and enhancing operational efficiency. This includes improving customer experience, managing claims, and investing in technology to boost agent productivity. These efforts have resulted in an 11% increase in new business profit and a compounded annual growth rate of 21% over the past two years.

Q: How is Prudential leveraging AI and technology in its operations? A: Anil Wadhwani highlighted that AI is transforming customer and agent interactions, impacting health businesses, policy underwriting, servicing, and claims cost management. The company is investing in technology to enhance agent experience and productivity, which has led to a 5% growth in new business profit per active agent.

Q: What are the expectations for capital generation and shareholder returns in the coming years? A: Benjamin Bulmer, CFO, stated that 2025 is expected to be an inflection point for growth in free surplus. The company aims to generate at least $4.4 billion in free surplus by 2027. Prudential has announced over $600 million in dividends for 2024 and is accelerating its $2 billion share buyback program to complete by the end of 2025.

Q: Could you provide more details on the potential IPO of the Indian Asset Management business? A: Anil Wadhwani mentioned that Prudential is evaluating a potential listing of its Indian Asset Management business, which would involve a partial divestment of shares. This move is subject to approvals and market conditions, with the intention to return net proceeds to shareholders.

Q: How is Prudential addressing the challenges in its Malaysian market? A: Anil Wadhwani noted that the company is revitalizing its Agency distribution channel in Malaysia by focusing on next-generation agents and developing agent leaders. Despite challenges, Bancassurance performed well through effective collaboration with strategic bank partners.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.