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    PUK
    Earnings call· Jun 2025(Q2 FY25)

    PRUDENTIAL PLC PUK

    Aug 27, 2025 Source

    Executive summary

    Prudential plc H1 FY25 — Strong Double-Digit Growth and Enhanced Capital Returns

    Prudential plc delivered strong H1 FY25 results, achieving double-digit growth across key financial metrics and reaching an inflection point in capital generation. The company is on track to meet its 2025 guidance and 2027 objectives, driven by strategic execution in high-growth markets. An enhanced capital allocation framework was announced, committing to over $5 billion in shareholder returns between 2024 and 2027, including recurring additional capital returns from 2026.

    Highlights

    5

    • New business profit increased by 12% to $1.3 billion.

    • Operating profit after tax per share grew by 12%.

    • Gross operating free surplus generation (OFSG) rose by 14%.

    • First interim dividend per share increased by 13% to $0.0771.

    • New business profit margin expanded by 2 percentage points to 38%.

    Concerns

    4

    • Malaysia agency new business profit was impacted by industry-wide factors.

    • Singapore experienced market-led volatility affecting investment-linked products.

    • Active agents declined to 58,000, though offset by productivity gains.

    • Net investment result was down 6% due to reduced asset balances and portfolio actions in Mainland China.

    Guidance & targets

    11
    CategoryTargetConfidence
    All key metrics
    On track to achieve
    high materiality
    High
    All key metrics
    Confident in meeting
    high materiality
    High
    Dividend per share growth
    greater than 10%
    high materiality
    High
    Additional recurring capital returns
    $500 million
    high materiality
    High
    Additional recurring capital returns
    $600 million
    high materiality
    High
    Share buyback completion
    $360 million
    medium materiality
    High
    Net investment result
    Broadly stable
    medium materiality
    Medium
    Core operating variances
    Return to historic positive levels
    medium materiality
    Medium
    Gross Operating Free Surplus Generation (OFSG)
    at least $4.4 billion
    high materiality
    High
    Free surplus ratio
    Upper end of 175%-200% range
    high materiality
    Medium
    Required capital growth
    low double-digit growth
    medium materiality
    Medium

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Hong Kong
    New business profit rose 16%, driven by broad-based double-digit growth across both agency and bancassurance channels, from domestic and Mainland China visitor customer segments. Focus on writing quality new business and enhancing relationships with quality brokers.
    		—16%——
    Mainland China
    New business profit grew 8%, driven by the bancassurance channel, in line with expectations. Similar outcome expected for the full year. Strategy focuses on quality new business, a sales shift towards higher mix of participating, health and protection products, and ongoing agency force transformation.
    		—8%——
    Singapore
    New business profit grew 5%. Experienced market-led volatility impacting investment-linked products, but quickly pivoted to new health and protection products and high net worth in Q2. Confident in building trajectory in H2 due to strength of multichannel distribution.
    		—5%——
    Indonesia
    Delivered exceptional new business profit growth of 34%, sustaining strong momentum from H2 2024, driven by double-digit growth in agency and bancassurance. Growth expected to normalize in H2 due to strong prior year comparator. Officially launched new Sharia bancassurance partnership with Bank Syariah Indonesia.
    		—34%——
    Growth segment (Taiwan, Thailand, Africa, Vietnam)
    New business profit was up 11%, driven by strong underlying performances from Taiwan, Thailand, and African markets, partially offset by Vietnam.
    		—11%——
    Eastspring (Asset Management)
    Underlying profits grew in line with average funds under management. Net flows from both third-party and life remain strong, and margins remain steady.
    Average funds under management growth: 8%Net flows: strongMargins: steady
    		———Underlying profits grew by 8%

    Operational metrics

    51
    New business profit
    $1.3 billionup 12%
    H1 FY25

    Building on strong momentum generated in previous years.

    New business profit margin
    38%expanded by 2 percentage points
    H1 FY25

    Reflecting the quality and efficiency of growth.

    Operating profit after tax per share
    12%grew by 12%
    H1 FY25

    On an IFRS basis.

    Gross operating free surplus generation (OFSG)
    14%grew by 14%
    H1 FY25

    Key operating measure of capital generation, marking an inflection point.

    Net operating free surplus generation (OFSG)
    20%up 20%
    H1 FY25

    Overall group capital generation.

    Free surplus ratio
    211%
    end of H1 FY25

    Pro forma for the payment of the first interim dividend and the balance of the current $2 billion buyback program.

    Share buyback executed
    $850 million
    as of Aug 18, 2025

    Part of the ongoing $2 billion share buyback program.

    Total capital returned to shareholders
    more than $5 billion
    2024-2027

    Expected total returns, before considering any initial net proceeds from the potential IPO of the Indian asset-management business.

    Investment in capabilities
    $400 million
    since 2023

    Invested in modernizing technology, processes, and capabilities across the business.

    APE sales generated from leads
    43%vs prior year
    H1 FY25

    Increased through upgrading lead management systems and processes.

    Annualized cost savings
    $87 million
    FY25

    On track to secure through renegotiating contracts and implementing performance-based rewards with high-quality providers.

    APE sales
    $100 million
    H1 FY25

    Generated via new customer engagement platform across 8 markets.

    Major incidents
    down 90%
    H1 FY25

    Result of upgraded technology, providing greater stability and reliability.

    Uptime
    near 100%
    H1 FY25

    Result of upgraded technology, providing greater stability and reliability.

    AI and machine learning solutions
    60
    H1 FY25

    In production, supporting various use cases to drive growth and efficiency.

    Agency new business profit contribution
    55%
    H1 FY25

    Agency is the primary distribution channel.

    Agency new business profit
    up 7%quarter-on-quarter
    Q2 FY25

    Underlying momentum in agency business.

    New business profit per active agent
    rose 10%
    H1 FY25

    Offsetting a decline in active agents.

    Active agents
    58,000decline
    H1 FY25

    Focus remains on quality recruitment.

    MDRT qualifiers
    3%grew by 3%
    H1 FY25

    Reinforcing position as the world's second largest MDRT force.

    PRUVenture new recruits
    7%
    H1 FY25

    Part of agency transformation journey.

    AI chatbot queries handled
    Thousands
    every month

    Improving customer service efficiency.

    Leads generated through digital agency platform
    5.7 million
    H1 FY25

    For agent follow-up and conversion.

    Bancassurance new business profit growth
    28%
    H1 FY25

    Broad-based growth with 14 markets achieving double-digit growth.

    Bancassurance margin
    6 percentage pointsimprovement
    H1 FY25

    Resulting from broad-based growth.

    Health new business profit growth
    13%
    H1 FY25

    Fueled by innovative product development.

    Health earned premiums growth
    13%
    H1 FY25

    Fueled by innovative product development.

    New health customers acquired
    over 300,000
    H1 FY25

    Through efforts in product development and provider relationships.

    New-to-Pru customers acquired
    nearly 1 million
    H1 FY25

    Through initiatives to improve customer experience and create tailored, data-driven propositions.

    Retention rates
    1 percentage pointimproved over H1 2024
    H1 FY25

    Improved due to customer experience initiatives.

    Relationship Net Promoter Score (NPS)
    5 business units in top quartile
    H1 FY25

    Reflecting improved customer experience.

    Embedded value operating profit
    up 16%
    H1 FY25

    Highlights successful execution of strategic objectives.

    Embedded value per share growth
    5%
    H1 FY25

    Net of dividend payment and including the benefits of the share buyback.

    Embedded value per share (excluding goodwill)
    $13.24
    end of H1 FY25

    At the end of the period.

    Return on embedded value
    15%2 percentage point improvement
    H1 FY25

    Driven by higher operating profit and disciplined management of the capital base.

    Contractual Service Margin (CSM) structural growth
    $0.9 billionincrease of 8% on an annualized basis
    H1 FY25

    Comprising new business additions, normalized unwind, and net of the release to the income statement.

    Contractual Service Margin (CSM) release to income statement
    $1.2 billion
    H1 FY25

    Similar to that in the prior period.

    Insurance result growth
    6%
    H1 FY25

    Driven by a 12% increase in the adjusted CSM release, partially offset by the net investment result.

    Net investment result change
    down 6%
    H1 FY25

    Reflects the impact of reduced asset balances in the insurance business and various portfolio actions in Mainland China.

    Asset management underlying result growth
    8%
    H1 FY25

    In line with the growth in average funds under management.

    Central expenditure change
    flat
    H1 FY25

    Central expenditure continues to be tightly managed.

    Net interest payable and other items
    $111 millionincreased
    H1 FY25

    Reflecting stable interest costs but reduced interest income on central balances due to the ongoing buyback program.

    Operating tax rate
    17%
    H1 FY25

    Similar to the prior period, with immaterial impact expected from global minimum tax rates.

    Operating profit after tax (OPAT) growth
    7%
    H1 FY25

    Allowing for the 5% reduction in average share count as a result of ongoing buybacks.

    Average share count reduction
    5%
    H1 FY25

    As a result of ongoing buybacks.

    Transfer from in-force business
    $1.4 billion
    H1 FY25

    In line with the $2.7 billion expected over the 2025 year as a whole, demonstrating high-quality and predictable cash flows.

    Investment in new business
    $0.4 billion
    H1 FY25

    Funded from gross OFSG, invested in writing high-quality new business at attractive IRRs and short payback periods.

    In-force premiums growth
    11%year-on-year
    H1 FY25

    Supporting sustained positive operating leverage.

    Holding company cash balance
    $3.4 billionincreased
    H1 FY25

    Reflecting a very strong financial position.

    In-force business cash flow exposure to direct market risk
    less than 10%
    H1 FY25

    More than 90% of cash flows have no or limited exposure to direct market risk.

    New business addition to in-force book value
    12%
    FY24

    New business added to the value of the in-force book.

    Industry KPIs

    7
    MetricValueDetails
    Capital returns$850 million executed; $360 million remaining; >$5 billion totalUSD
    ROE operating ROE15%%
    Book value per share$13.24USD
    Net investment incomedown 6%%
    Retention persistency1 percentage pointpercentage points
    Net premiums written earned11%%
    Statutory regulatory capital211%%

    Product announcements

    2
    ProductTypeDetails
    Indian health businessexpansion
    Sharia bancassurance distributionexpansion

    Deals & partnerships

    2
    Bank Syariah IndonesiaSharia bancassurance partnership

    Partnership with Bank Syariah Indonesia, one of Indonesia's largest banks with 21 million customers, to expand bancassurance distribution.

    HCL GroupIndian health business setup

    Joint venture for setting up an Indian health business, with license applications and approval processes underway.

    Risks & headwinds

    6
    Ongoing market volatility and geopolitical uncertaintyongoing

    not quantified

    Mitigation: Continue to deliver high-quality growth and strong shareholder returns, demonstrating the strength of our business model.

    Market-led volatility impacting investment-linked productsH1 FY25

    not quantified

    Mitigation: Quickly pivoted to new products focused on health and protection and high net worth in the second quarter in Singapore.

    Industry-wide factors impacting agency channelH1 FY25

    not quantified

    Mitigation: Saw signs of improvement in Q2 in Malaysia with sequential increase in agency new business profit and double-digit agency recruitment.

    Structural developments affecting the whole industryH1 FY25

    not quantified

    Mitigation: Clear plans to rebuild momentum and strengthen position in Malaysia and Vietnam agency markets.

    Negative non-operating effect on embedded valueH1 FY25

    Impact of lower interest rates and revaluation of own debt

    Mitigation: Partially offset by favorable FX movements.

    Impact from valuation interest rate and asset derisking in Mainland ChinaH1 FY25

    $0.5 billion impact

    Mitigation: Partially offset by favorable FX movements.

    What to watch in Q3 FY25

    5

    Agency momentum in Malaysia and Vietnam

    next quarter (H2 FY25)
    CurrentMalaysia and Vietnam agency impacted by structural developments, but signs of improvement in Q2
    TargetRebuild momentum and strengthen position

    Why it matters

    Indicates effectiveness of strategic plans to address underperforming agency channels in key markets.

    Malaysia and Vietnam were impacted by structural developments affecting the whole industry, and we have clear plans to rebuild momentum and strengthen our position in both markets.

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Progress and Transformation

    Prudential is two years into its 5-year strategy, launched in August 2023, demonstrating strong progress across key priorities. The company has invested $400 million in modernizing technology, processes, and capabilities, with 45% allocated to technology, data, and AI. These investments have significantly enhanced productivity, scalability, and operational resilience, evidenced by a 90% reduction in major incidents and near 100% uptime.

    02

    Capital Generation Inflection Point

    The company has reached a clear inflection point in its capital generation trajectory, with gross operating free surplus generation (OFSG) increasing by 14% and net OFSG by 20%. This robust performance underpins confidence in achieving the 2027 objective of greater than $4.4 billion in gross OFSG, driven by high-quality new business growth and improving operating variances.

    03

    Enhanced Capital Allocation Framework

    Prudential announced an updated multiyear capital management program, committing to return over $5 billion to shareholders between 2024 and 2027. This includes ordinary dividend per share growth of over 10% annually from 2025-2027 and additional recurring capital returns of $500 million in 2026 and $600 million in 2027, all funded by annual capital generation.

    04

    Distribution Channel Strength and Agency Transformation

    The company's multichannel distribution model, balancing agency and bancassurance, remains a core strength. Agency contributed 55% of new business profit in H1, with a focus on quality recruitment and digital platforms. Bancassurance delivered a strong performance with a 28% increase in new business profit, driven by broad-based growth across 14 markets and a 6 percentage point margin improvement.

    05

    Market Performance Highlights

    Hong Kong new business profit rose 16%, driven by broad-based growth across channels and customer segments. Indonesia delivered exceptional new business profit growth of 34%, benefiting from ongoing transformation and a new Sharia bancassurance partnership. Mainland China new business profit grew 8%, in line with expectations, with a focus on quality growth and effective risk management.

    06

    Focus on Health and Protection

    Prudential is making significant progress in its health business, with new business profit and earned premiums both rising 13%, attracting over 300,000 new health customers. The company plans to further enhance protection sales through improved training and new propositions across both agency and bancassurance channels, alongside the progressing setup of its Indian health joint venture.

    AI-generated summary of the company’s earnings call. Not investment advice.