Our businesses and
their performance

United Kingdom

Insurance and investments

Serving the savings and retirement needs of the ageing population in the UK

People walking across a bridge in London

“The regulatory and government interventions we continued to witness in 2015 will benefit the well known, financially strong firms, such as Prudential, as more transparency and competition comes to the sector.

This changing environment creates opportunities
that play to our strengths – great investment
performance, access to a true multi-asset
fund and a customer return less impacted
by market fluctuations.”

John Foley
Chief Executive,
Prudential UK & Europe

Jackie Hunt

Our strategy

Our strategy and operating principles: UK

Prudential UK & Europe is a well established provider of retirement income and investment solutions with a focus on helping customers achieve their long-term investment goals.

Its distinct competitive advantage in with‐profits and longevity management continues to provide market-leading returns to customers over the long term. Using this core capability it is attracting new customers with a range of new products designed to meet their retirement income and savings needs in a post-pension freedom market.

By optimising its in-force business and focusing on the areas of the market where it has a distinct competitive advantage, Prudential continues to deliver sustainable cash flows for the Group and its shareholders.

Read more: Our strategy


Performance highlights

  • Robust sales performance in challenging ‘pension freedom’ environment
  • Named Company of the Year for excellence in service2
  • Retained two Five Star ratings for excellent service2, achieved for fifth consecutive year
  • Best Investment Service and Best Investment Bond Provider 20153
  • Diversified distribution model focusing on intermediaries, Prudential Financial Planning (our direct advice service) and individual customers via mail, email and telephone
  • Significant investment to develop digital distribution capabilities
  • Launch of PruFund range within ISA wrapper drives further strong performance of with-profits offering
  • Implementation of ‘pension freedom’ drives product innovation to meet changing face of UK retirement market

Visit the Prudential UK website

New business profit1 £m


IFRS operating profit (million pounds). 2014: 671 retail, 105 wholesale. IFRS operating profit (million pounds). 2014: 671 retail, 105 wholesale.

*Adjusted to exclude results of PruHealth and PruProtect

IFRS operating profit £m


IFRS operating profit (million pounds). 2014: 671 retail, 105 wholesale. IFRS operating profit (million pounds). 2014: 671 retail, 105 wholesale.

*Adjusted to exclude results of PruHealth and PruProtect

Net cash remittances £m


2011 2012 2013 2014 2015
297 313 355 325 331

Inherited estate £bn


2011 2012 2013 2014 2015
6.1 7.0 8.0 7.2 7.6*

*Representing Solvency II own funds of the UK with‐profits funds

Market overview

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A period of fundamental change and opportunity

The UK is the world’s fifth largest retail investment market. Wealth is concentrated in the 50+ age group, with the younger generation of savers being typically less well-funded. In our target over-50 demographic, the population growth rate is almost double the growth rate of the UK population as a whole, and while the introduction of pension freedom reforms in April 2015 has fundamentally changed the way in which individuals can access their savings to help fund their income in retirement, the need to accumulate savings remains unchanged. These radical changes, when combined with our trusted brand and product capabilities, provide new and significant opportunities for the profitable and capital efficient growth of our business in the UK.

The new regulatory rule book

When compared to 2012, the UK pensions industry today is almost unrecognisable. Three years of unprecedented regulatory change has resulted in a structural marketplace shift in how customers view retirement, with consumers being given greater flexibility to access their pension savings in retirement. Customers are engaging more frequently with their providers and the demand for financial advice and guidance is increasing. Those companies that are well known, financially strong and create products and services to match the pension freedom needs and expectations of customers will prosper.

Prudential is well placed in this evolving marketplace. This is evident in our new business profile relative to a few years ago. Where once bonds and annuities were the dominant components of new business, since the emergence of greater post-pension freedoms we have been writing more bond, ISA, pension saving and income drawdown business, and a significantly lower volume of annuity business, giving a better balance to our business portfolio.

What we do and how we do it

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Valuable customer franchise

For over 167 years Prudential has been providing financial security to generations of UK customers through an unwavering focus on long-term value as evidenced by our longevity experience, multi-asset investment capabilities and our financial strength. Such attributes are highly sought after today by customers adjusting to pension freedoms and by financial advisers who require a brand they can trust to help secure dependable incomes in retirement for their clients. Our inherent brand strength, in combination with our range of market-leading with-profits and retirement income products, resonate more strongly than ever with customers and distributors. This is driving significant demand for our differentiated and market-leading retirement solutions.

We continue to focus on meeting customer needs through the following actions:

  • Providing products and retirement solutions perfectly tailored to help customers take advantage of the new pension freedoms;
  • Broadening the ways in which customers can do business with us through financial adviser intermediaries, providing advice to customers in their homes through our 250 Prudential Financial Planning partners, or by telephone and increasingly online;
  • Investing in technology that enables customers to engage more flexibly with us online;
  • Enhancing access to our market-leading PruFund investment range through an ISA wrapper;
  • Introducing income drawdown specifically designed for the pension freedoms market; and
  • Consistently committing to customer service improvement, which was recognised at the 2015 Financial Adviser Service Awards where we received the accolade of Company of the Year for the first time, while also retaining our two Five Star ratings in the Life & Pensions and Investment categories for the fifth consecutive year.

Focused participation in two distinct segments

Focused participation in two distinct segments diagram Focused participation in two distinct segments diagram View larger image

Strong investment track record, product capabilities and customer outcomes

Prudential is a leader in its chosen markets, benefiting from a strong investment track record, a financially strong with-profits fund and a recognised reputation for developing innovative products.

Over the long term our with-profits fund has continued to perform strongly. Over a period spanning nearly 20 years, our asset share fund has outperformed the median investment return of our peer group by an average of just over 100 basis points per annum.

Our with-profits, or PruFund, platform gives us the ability to create products perfectly tailored for the customers of the pension freedoms world. In the past year we have made two significant enhancements that have broadened access to our proposition: making PruFund available through an ISA wrapper and through a drawdown product.

PruFund investment performance*

PruFund growth 2015: +83%. ABI fund comparator 2015: +37%. PruFund growth 2015: +83%. ABI fund comparator 2015: +37%.

*ABI Mixed Investment 20%-60% Shares TR; performance from 31 December 2005 to 31 December 2015

Our competitive strength in these areas combined with our product suite continues to attract new customers seeking protection from the impact of volatile market conditions.

Importantly for customers, our PruFund range provides smoothing in a volatile and uncertain investment environment. The strength of the proposition is reflected in the consistent growth we have experienced, both in terms of the number of customers invested and the assets under management.

PruFund comprises a range of different funds, with or without explicit guarantees, and a range of ‘risk-rated’ fund options. We meet a wide range of customer needs by providing access to PruFund through a variety of tax or product wrappers, namely ISAs, bonds, pensions and drawdown.

In Corporate Pensions, we continue to focus on securing new members and incremental business from our current portfolio of customers and on additional voluntary contribution plans within the public sector, where Prudential is the market leader, providing schemes for 73 of the 101 public sector authorities in the UK.

Our approach to bulk annuity transactions in the UK continues to be one of disciplined participation, focusing on those opportunities where we can bring both significant value to our customers and meet our shareholder return requirements. In 2015 we completed four transactions at the higher end of the market, generating sales in excess of £1.5 billion.

Broad distribution

Our diversified distribution model, focused on both third-party financial advisers and the individual customer through a direct non-advised channel and our own financial planning arm Prudential Financial Planning, has been central to the increase in retail business written in 2015. Distribution through financial advisers continues to be our most significant route to market in the UK with sales growth of 52 per cent over the same period in 2014 being achieved by our intermediary sales teams. Sales generated by Prudential Financial Planning increased by 77 per cent. The expertise and capability within our Retail Voice telephony team is ideally suited to supporting developments of our direct to consumer franchise and is complementary to the services of Prudential Financial Planning.

Our business in Poland has established a strong customer franchise, growing steadily since launching in 2013. Headquartered in Warsaw, the business now has 18 branches across the country and 597 financial planning consultants. Its success demonstrates our ability to build a new business franchise by applying our existing product and distribution expertise to a new market.

Prudential UK & Europe has well established franchise in its chosen markets which continues to drive strong growth and ongoing product demand among customers. The business is focused on delivering retail growth and the optimisation of in-force business. It will continue to develop retirement solutions based on the market-leading and differentiated PruFund range. Developments will be underpinned by the latest technology including the introduction of a new policy administration system to support the launch of a retirement account specifically designed for the post-pension freedom marketplace.

Our customers in focus

A man laughing

Mike retired in 2014, and was introduced to the Prudential Flexible Retirement and Flexible Drawdown Plan by Prudential Financial Planning.

‘The PruFund range has allowed me to look forward to my retirement with total confidence. I was introduced to the Prudential Flexible Retirement and Flexible Drawdown Plan, and discovered that this gave me much more control over my financial planning over the coming years; I was able to consolidate all my pensions into one “pot” and the fund should grow modestly while still allowing a comfortable lifestyle. I am able to adjust my pension up or down depending on my circumstances, and also take a lump sum if needed. And the real bonus is that when I do head up the ”stairway to heaven”, the monies in the fund will pass on to my wife and then on to our children.’

Prudential UK’s PruFund4 offers customers the potential for growth alongside a degree of security against losing money. With its market-leading multi-asset fund offering, Prudential UK provides access to our fund management expertise. Our innovative funds spread risk through investing in many different assets, employ a smoothing process that offers potential growth in the value of the funds while helping to manage short-term volatility, and provide a range of guarantee options to tie in with customers’ future needs.

Notes

  1. The 2014 EEV results of the Group are presented on a post-tax basis and, accordingly, prior years’ results are shown on a comparable basis.
  2. Financial Adviser Services Awards.
  3. Moneyfacts Life and Pensions Awards 2015.
  4. Any investors should note that the value of investments, and the income from them, will fluctuate, which will cause fund prices to fall as well as rise and they may not get back the original amount they invested. The customers’ circumstances and views are specific to them and should not be taken as a recommendation, advice or forecast.

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United Kingdom - Asset management

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