SECURITIES AND EXCHANGE COMMISSION
 

Washington, D.C. 20549
 

FORM 6-K
 

REPORT OF FOREIGN PRIVATE ISSUER
 

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
 

For the month of  March, 2010


 

PRUDENTIAL PUBLIC LIMITED COMPANY
 

(Translation of registrant's name into English)
 
 

LAURENCE POUNTNEY HILL,
LONDON, EC4R 0HH, ENGLAND
(Address of principal executive offices)
 
 

Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
 
 
Form 20-F X     Form 40-F
 
 

Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
 
Yes      No X
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-            
 
 


Enclosures: Prudential plc FY09 unaudited results Pt4.2
 

Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities
 
Level 1 principally includes exchange listed equities, mutual funds with quoted prices, exchange traded derivatives such as futures and options, and national government bonds unless there is evidence that trading in a given instrument is so infrequent that the market could not possibly be considered active. It also includes other financial instruments (including net assets attributable to unit holders of consolidated unit trusts and similar funds) where there is clear evidence that the year end valuation is based on a traded price in an active market.
 
Level 2 - inputs other than quoted prices included within level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices)
 
Level 2 principally includes corporate bonds and other non- national government debt securities which are valued using observable inputs, together with over-the-counter derivatives such as forward exchange contracts and non-quoted investment fund valued with observable inputs. It also includes net assets attributable to unitholders of consolidated unit trusts and similar funds and investment contract liabilities that are valued using observable inputs.
 
The nature of Prudential's operations in the US and the UK mean that a significant proportion of the assets backing non-linked shareholder backed business are held in corporate bonds, structured securities and other non-national government debt securities. These assets, in line with market practice, are generally valued using independent pricing providers in the US and third party broker quotes in the UK and Asia either directly or via third parties such as IDC or Bloomberg. Such assets have generally been classified as level 2 as the nature of broker quotations means that it does not strictly meet the definition of a level 1 asset. However these valuations are determined using independent external quotations from multiple sources and are subject to  a number of monitoring controls such as monthly price variances, stale price reviews and variance analysis on prices achieved on subsequent trades.
 
In addition level 2 includes debt securities that are valued internally using standard market practices. Of the total level 2 debt securities of £83,301 million at 31 December 2009, £6,426 million are valued internally. The majority of such securities use matrix pricing, which is based on assessing the credit quality of the underlying borrower to derive a suitable discount rate relative to government securities. Under matrix pricing, the debt securities are priced taking the credit spreads on comparable quoted public debt securities and applying these to the equivalent debt instruments factoring a specified liquidity premium. The majority of the parameters used in this valuation technique are readily observable in the market and, therefore, are not subject to interpretation.
 
Level 3 - Significant inputs for the asset or liability that are not based on observable market data (unobservable inputs)
 
Level 3 principally includes investments in private equity funds, investments in property funds which are exposed to bespoke properties or risks investments which are internally valued or subject to a significant number of unobservable assumptions and certain derivatives which are bespoke or long dated. It also includes debt securities which are rarely traded or traded only in privately negotiated transactions and hence where it is difficult to assert that these have been based on observable market data. The inherent nature of the vast majority of these assets means that, in normal market conditions, there is unlikely to be significant change in the specific underlying assets classified as level 3.
 
At 31 December 2009 the Group held £5,190 million, 3 per cent of the fair valued financial instruments, within level 3. Of these amounts £3,510 million was held by the Group's participating funds and therefore shareholders' profit and equity are not impacted by movements in the valuation of these financial instruments. Total level 3 assets represented 3.7 per cent of the total assets of the participating funds at 31 December 2009.
Total level 3 liabilities were £348 million out of total participating fund liabilities of £104,817 million
.
 
Of the £1,684 million level 3 financial investments, net of derivative liabilities which support non-linked shareholder-backed business (3.6 per cent of the total assets net of derivative liabilities backing this business), £1,653 million are externally valued and £31 million are internally valued. Internal valuations, which represent only 0.04 per cent of the total assets net of derivative liabilities supporting non-linked shareholder-backed business, are inherently more subjective than external valuations.
 
If the value of all level 3 investments backing non-linked shareholder-backed business was varied by 10 per cent, the change in valuation would be £ 3 million, which would reduce shareholders' equity by this amount before tax. Of this amount a £5 million increase would pass through the income statement substantially as part of short term fluctuations outside of operating profit offset by a £8 million decrease included as part of other comprehensive income, being unrealised movements on assets classified as available-for-sale.
 


 

31 December 2009

Level 1
Level 2
Level 3
Total

£m
£m
£m
£m
With-profits




Equity securities and portfolio holdings in unit trusts
28,688
799
475
29,962
Debt securities
7,063
39,051
1,213
47,327
Other investments (including derivative assets)
79
1,199
2,170
3,448
Derivative liabilities
(54)
(504)
(25)
(583)
Total financial investments net of derivative liabilities
35,776
40,545
3,833
80,154
Borrowing attributable to the with-profits fund held at fair value
-
(105)
-
(105)
Investment contract liabilities without discretionary participation feature held at fair value
-
-
-
-
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(1,354)
(305)
(323)
(1,982)
Total
34,422
40,135
3,510
78,067
Percentage of total
44%
51%
5%
100%
Unit-linked and variable annuity




Equity securities and portfolio holdings in unit trusts
38,616
4
-
38,620
Debt securities
3,283
5,525
40
8,848
Other investments (including derivative assets)
30
80
-
110
Derivative liabilities
-
-
-
-
Total financial investments net of derivative liabilities
41,929
5,609
40
47,578
Investment contract liabilities without discretionary participation features held at fair value
-
(12,242)
-
(12,242)
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(1,324)
(7)
(2)
(1,333)
Total
40,605
(6,640)
38
34,003
Percentage of total
119%
(19)%
0%
100%
Non-linked shareholder-backed




Equity securities and portfolio holdings in unit trusts
557
36
179
772
Debt securities
5,783
38,725
1,068
45,576
Other investments (including derivative assets)
155
787
632
1,574
Derivative liabilities
(20)
(703)
(195)
(918)
Total financial investments net of derivative liabilities
6,475
38,845
1,684
47,004
Investment contract liabilities without discretionary participation features held at fair value
-
(1,598)
-
(1,598)
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(110)
(342)
(42)
(494)
Total
6,365
36,905
1,642
44,912
Percentage of total
14%
82%
4%
100%
Group total




Equity securities and portfolio holdings in unit trusts
67,861
839
654
69,354
Debt securities
16,129
83,301
2,321
101,751
Other investments (including derivative assets)
264
2,066
2,802
5,132
Derivative liabilities
(74)
(1,207)
(220)
(1,501)
Total financial investments net of derivative liabilities
84,180
84,999
5,557
174,736
Borrowing attributable to the with-profits fund held at fair value
-
(105)
-
(105)
Investment contract liabilities without discretionary participation features held at fair value
-
(13,840)
-
(13,840)
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(2,788)
(654)
(367)
(3,809)
Total
81,392
70,400
5,190
156,982
Percentage of total
52%
45%
3%
100%
 

31 December 2008

Level 1
Level 2
Level 3
Total

£m
£m
£m
£m
With-profits




Equity securities and portfolio holdings in unit trusts
30,427
885
509
31,821
Debt securities
6,765
34,858
1,342
42,965
Other investments (including derivative assets)
77
1,569
2,122
3,768
Derivative liabilities
(166)
(2,861)
-
(3,027)
Total financial investments net of derivative liabilities
37,103
34,451
3,973
75,527
Borrowing attributable to the with-profits fund held at fair value
-
(158)
-
(158)
Investment contract liabilities without discretionary participation features held at fair value
-
-
-
-
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(1,010)
(384)
(381)
(1,775)
Total
36,093
33,909
3,592
73,594
Percentage of total
49%
46%
5%
100%
Unit-linked and variable annuity




Equity securities and portfolio holdings in unit trusts
29,097
114
-
29,211
Debt securities
2,650
3,615
33
6,298
Other investments (including derivative assets)
117
87
-
204
Derivative liabilities
-
-
-
-
Total financial investments net of derivative liabilities
31,864
3,816
33
35,713
Investment contract liabilities without discretionary participation features held at fair value
-
(10,309)
-
(10,309)
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(877)
-
-
(877)
Total
30,987
(6,493)
33
24,527
Percentage of total
126%
(26)%
0%
100%
Non-linked shareholder-backed




Equity securities and portfolio holdings in unit trusts
745
27
318
1,090
Debt securities
6,514
35,451
3,996
45,961
Other investments (including derivative assets)
427
1,210
692
2,329
Derivative liabilities
(38)
(1,521)
(246)
(1,805)
Total financial investments net of derivative liabilities
7,648
35,167
4,760
47,575
Investment contract liabilities without discretionary participation features held at fair value
-
(1,307)
-
(1,307)
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(311)
(815)
(65)
(1,191)
Total
7,337
33,045
4,695
45,077
Percentage of total
16%
73%
11%
100%
Group total




Equity securities and portfolio holdings in unit trusts
60,269
1,026
827
62,122
Debt securities
15,929
73,924
5,371
95,224
Other investments (including derivative assets)
621
2,866
2,814
6,301
Derivative liabilities
(204)
(4,382)
(246)
(4,832)
Total financial investments net of derivative liabilities
76,615
73,434
8,766
158,815
Borrowing attributable to with-profits fund at fair value
-
(158)
-
(158)
Investment contract liabilities without discretionary participation features held at fair value
-
(11,616)
-
(11,616)
Net asset value attributable to unit holders of consolidated unit trusts and similar funds
(2,198)
(1,199)
(446)
(3,843)
Total
74,417
60,461
8,320
143,198
Percentage of total
52%
42%
6%
100%
 


U    Policyholder liabilities
 
Analysis of movement in policyholder liabilities and unallocated surplus of with-profits funds
 
Group insurance operations
 
A reconciliation of the total policyholder liabilities and unallocated surplus of with-profits funds of the Group is as follows:
 

Insurance operations

UK
US
Asia
Total

£m
£m
£m
£m
At 1 January 2008
138,290
34,848
17,179
190,317
Premiums
9,372
6,728
4,162
20,262
Surrenders
(4,281)
(3,852)
(1,191)
(9,324)
Maturities/Deaths
(8,324)
(564)
(354)
(9,242)
Net cash flows
(3,233)
2,312
2,617
1,696
Shareholders transfers post tax
(284)
-
(23)
(307)
Investment-related items and other movements
(16,331)
(4,552)
(4,293)
(25,176)
Foreign exchange translation differences
(2,481)
12,753
5,589
15,861





At 31 December 2008 / 1 January 2009
115,961
45,361
21,069
182,391
Premiums
6,867
9,177
3,807
19,851
Surrenders
(3,971)
(3,255)
(1,201)
(8,427)
Maturities/Deaths
(7,239)
(733)
(342)
(8,314)
Net cash flows
(4,343)
5,189
2,264
3,110
Shareholders transfers post tax
(202)
-
(20)
(222)
Change in reserving basis in Malaysia
-
-
(63)
(63)
Assumption changes (shareholder-backed business)
(46)
-
(4)
(50)
Investment-related items and other movements
14,118
2,986
4,242
21,346
Foreign exchange translation differences
707
(5,225)
(2,069)
(6,587)
Disposal of Taiwan agency business
-
-
(3,508)
(3,508)
As at 31 December 2009
126,195
48,311
21,911
196,417
 
The items above represent the amount attributable to changes in policyholder liabilities and unallocated surplus of with-profits funds as a result of each of the components listed.
 
Premiums, surrenders and maturities / deaths represent the amounts impacting policyholder liabilities and may not represent the total cash paid / received (for example, premiums are net of any deductions to cover acquisition costs).
 


 
UK insurance operations
 
A reconciliation of the total policyholder liabilities and unallocated surplus of with-profits funds of UK insurance operations is as follows:
 

Other funds and subsidiaries






SAIF and PAC with-profits sub-fund
Unit-linked  liabilities
Annuity and other long-term business
Total

£m
£m
£m
£m
At 1 January 2008
103,772
18,977
15,541
138,290
Premiums
3,157
2,435
3,780
9,372
Surrenders
(2,336)
(1,838)
(107)
(4,281)
Maturities/Deaths
(6,309)
(666)
(1,349)
(8,324)
Net cash flows (note (a))
(5,488)
(69)
2,324
(3,233)
Shareholders transfers post tax
(284)
-
-
(284)
Switches
(360)
360
-
-
Assumption changes (shareholder-backed business) (note (c))
-
-
447
447
Investment-related items and other movements (note (b))
(13,049)
(2,952)
(777)
(16,778)
Foreign exchange translation differences
(2,483)
2
-
(2,481)
At 31 December 2008 / 1 January 2009
82,108
16,318
17,535
115,961
Premiums
3,271
1,860
1,736
6,867
Surrenders
(2,394)
(1,535)
(42)
(3,971)
Maturities/Deaths
(5,147)
(670)
(1,422)
(7,239)
Net cash flows (note (a))
(4,270)
(345)
272
(4,343)
Shareholders transfers post tax
(202)
-
-
(202)
Switches
(270)
270
-
-
Assumption changes (shareholder-backed business) (note (c))
-
-
(46)
(46)
Investment-related items and other movements (note (b))
9,365
2,849
1,904
14,118
Foreign exchange translation differences
764
(57)
-
707
At 31 December 2009
87,495
19,035
19,665
126,195





Notes
(a)     Net cash flows of negative £4,343 million have increased from negative £3,233 million in 2008, principally as a result of a decrease in premiums following the decision to limit bulk annuity transactions in the period.
 
(b)     Investment-related items and other movements of £14,118 million across fund types reflected the strong performance of UK equity markets in 2009, as well as the increase in value of debt securities and the reversal of unrealised losses on property investments recorded in 2008.
 
(c)     Assumption changes principally represent the net impact of changes to the deflation reserve, expense assumptions and modelling changes.


US insurance operations
 
Variable annuity
separate account liabilities
Fixed annuity, GIC and other business
Total

£m
£m
£m
At 1 January 2008
15,027
19,821
34,848
Premiums
2,637
4,091
6,728
Surrenders
(1,053)
(2,799)
(3,852)
Maturities/Deaths
(161)
(403)
(564)
Net cash flows (note (b))
1,423
889
2,312
Investment-related items and other movements (note (c))
(6,288)
1,736
(4,552)
Foreign exchange translation differences (note (a))
4,376
8,377
12,753
At 31 December 2008 / 1 January 2009
14,538
30,823
45,361
Premiums
4,667
4,510
9,177
Surrenders
(882)
(2,373)
(3,255)
Maturities/Deaths
(199)
(534)
(733)
Net cash flows (note (b))
3,586
1,603
5,189
Transfers from general to separate account
984
(984)
-
Investment-related items and other movements (note (c))
3,368
(382)
2,986
Foreign exchange translation differences (note (a))
(1,837)
(3,388)
(5,225)
At 31 December 2009
20,639
27,672
48,311
 
Note
(a)     Movements in the year have been translated at an average rate of 1.5656 (full year 2008: 1.8518). The closing balance has been translated at closing rate of 1.6149 (full year 2008: 1.4378). Differences upon retranslation are included in foreign exchange translation differences of £5,225 million.
 
(b)     Net cash flows for the year were £5,189 million compared with £2,312 million in 2008, driven largely by increased new business volumes for the variable annuity business.
 
(c)     Positive investment-related items and other movements in variable annuity separate account liabilities were impacted by the recovery of US equity markets during 2009. Negative movements in fixed annuity, GIC and other business of £382 million primarily represents a reduction in the liabilities for variable annuity guarantees following improvements in equity markets and increases in interest rates offset by interest credited to policyholder accounts.
 




Asian insurance operations
 

With-profits
business
Unit-linked  liabilities
Other
Total

£m
£m
£m
£m
At 1 January 2008
6,547
6,971
3,661
17,179
Premiums




New business (note (b))
391
1,252
233
1,876
In force
647
1,009
630
2,286

1,038
2,261
863
4,162
Surrenders
(354)
(614)
(223)
(1,191)
Maturities/Deaths
(181)
(14)
(159)
(354)
Net cash flows
503
1,633
481
2,617
Shareholders transfers post tax
(23)
-
-
(23)
Investment-related items and other movements (note (d))
(1,320)
(3,158)
185
(4,293)
Foreign exchange translation differences (note (a))
2,387
1,774
1,428
5,589
At 31 December 2008 / 1 January 2009
8,094
7,220
5,755
21,069
Premiums




New business (note (b))
46
643
517
1,206
In force
777
1,223
601
2,601

823
1,866
1,118
3,807
Surrenders
(361)
(666)
(174)
(1,201)
Maturities/Deaths
(253)
(19)
(70)
(342)
Net cash flows
209
1,181
874
2,264
Shareholders transfers post tax
(20)
-
-
(20)
Change in reserving basis in Malaysia (note (c))
-
(9)
(54)
(63)
Change in other reserving basis
-
-
(4)
(4)
Investment-related items and other movements (note (d))
1,431
2,661
150
4,242
Foreign exchange translation differences (note (a))
(853)
(612)
(604)
(2,069)
Disposal of Taiwan agency business (note (e))
-
(724)
(2,784)
(3,508)
At 31 December 2009
8,861
9,717
3,333
21,911





 
Notes
(a)     Movements in the year have been translated at the average exchange rate for the year ended 31 December 2009. The closing balance has been translated at the closing spot rates as at 31 December 2009. Differences upon retranslation are included in foreign exchange translation differences of negative £2,069 million.
 
(b)    
The increase in policyholder liabilities due to new business premium for the with-profits business fell by £345 million to £46 million. This is predominantly driven by a fall in sales of single premium with-profits policies in Hong Kong, following the withdrawal of the PruSaver product in 2009. The increase in policyholder liabilities due to new business premium for Asia unit-linked business was lower by £609 million in 2009, in line with decreases in single premium sales during the year.
 
(c)     The change in reserving basis in Malaysia of £63 million reflects the change made following the adoption of a risk based capital (RBC) approach to the local regulatory reporting in that country.
 
(d)     The positive investment related items and other movements for with-profits (£1,431 million) and unit-linked business (£2,661 million) are mainly driven from Asian equity market gains in the period.
 
(e)     The disposal of Taiwan agency business reflects the liabilities transferred at the date of disposal.


(ii)   
Duration of policyholder liabilities
 

2009

2008

UK insurance operations
US insurance operations
Asian insurance operations
Total

UK insurance operations
US insurance operations
Asian insurance operations
Total

(note (i))
(note (ii))
(note (iii))







£m
£m
£m
£m

£m
£m
£m
£m
Insurance contract liabilities
77,655
46,346
21,712
145,713

72,756
42,476
20,798
136,030
Investment contract liabilities with discretionary participation features
24,780
-
100
24,880

23,367
-
79
23,446
Investment contract liabilities without discretionary participation features
13,794
1,965
46
15,805

11,584
2,885
32
14,501

116,229
48,311
21,858
186,398

107,707
45,361
20,909
173,977
 
The tables above show the carrying value of the policyholder liabilities. Separately, the Group uses cash flow projections of expected benefit payments as part of the determination of the value of in-force business when preparing EEV basis results. The tables in the accompanying notes below also show the maturity profile of the cash flows used for that purpose for insurance contracts, as defined by IFRS, i.e. those containing significant insurance risk, and investment contracts, which do not.
The cash flow projections of expected benefit payments used in the maturity profile tables are from value of in-force business and exclude the value of future new business, including vesting of internal pension contracts. The maturity tables have been prepared on a discounted basis.
 
Notes
(i)      UK insurance operations
 

With-profits business

Annuity business

Other

Total

Insurance contracts
Investment contracts
Total

PAL
PRIL
Total

Insurance contracts
Investments contracts
Total


2009
£m
£m
£m

£m
£m
£m

£m
£m
£m

£m
Policyholders liabilities
40,780
24,780
65,560

11,969
14,292
26,261

10,614
13,794
24,408

116,229

%
%
%

%
%
%

%
%
%


Expected maturity:













0 to 5 years
50
29
41

32
31
32

34
35
35


5 to 10 years
26
25
26

25
23
24

25
22
23


10 to 15 years
13
19
15

18
17
17

18
19
18


15 to 20 years
6
14
9

11
12
12

11
11
11


20 to 25 years
3
9
6

7
8
7

7
6
6


over 25 years
2
4
3

7
9
8

5
7
7


 

With-profits business

Annuity business

Other

Total

Insurance contracts
Investment contracts
Total

PAL
PRIL
Total

Insurance
 contracts
Investments
 contracts
Total


2008
£m
£m
£m

£m
£m
£m

£m
£m
£m

£m
Policyholders liabilities
39,010
23,367
62,377

11,477
12,513
23,990

9,756
11,584
21,340

107,707

%
%
%

%
%
%

%
%
%


Expected maturity:













0 to 5 years
47
26
38

30
29
29

31
32
32


5 to 10 years
26
23
25

24
23
23

23
22
23


10 to 15 years
13
19
15

18
17
18

18
18
18


15 to 20 years
7
15
10

12
13
13

12
12
12


20 to 25 years
4
11
7

8
8
8

8
7
7


over 25 years
3
6
5

8
10
9

8
9
8


 
(a)  Benefit payments do not reflect the pattern of bonuses and shareholder transfers in respect of the with-profits business.
 
(b)  Investment contracts under Other comprise certain unit-linked and similar contracts accounted for under IAS 39 and IAS 18.
 
(c)  For business with no maturity term included within the contracts, for example with-profits investment bonds such as Prudence Bonds, an assumption is made as to likely duration based on prior experience.
 
(ii)     US insurance operations
 

2009


2008


Fixed annuity
 and other business (including GICs and similar contracts)
Variable
 annuity
Total

Fixed annuity and other business (including GICs and similar contracts)
Variable
 annuity
Total

£m
£m
£m

£m
£m
£m
Policyholder liabilities
27,672
20,639
48,311

30,823
14,538
45,361

%
%


%
%

Expected maturity:







0 to 5 years
52
50


49
46

5 to 10 years
27
28


26
28

10 to 15 years
10
12


11
14

15 to 20 years
5
6


6
7

20 to 25 years
3
2


3
3

Over 25 years
3
2


5
2

 
(iii)    Asian insurance operations
 

2009
2008

£m
£m
Policyholder liabilities
21,858
20,909
Expected maturity:
%
%
0 to 5 years
24
23
5 to 10 years
21
21
10 to 15 years
15
15
15 to 20 years
12
13
20 to 25 years
9
10
Over 25 years
19
18
 


V     Sensitivity analysis
 
Sensitivity of IFRS basis profit or loss and equity to market and other risks
 
Overview of risks by business unit
The financial assets and liabilities attaching to the Group's life assurance business are, to varying degrees, subject to market and insurance risk and other changes of experience assumptions that may have a material effect on IFRS basis profit or loss and equity.
Market risk is the risk that the fair value or future cash flows of a financial instrument or, in the case of liabilities of insurance contracts, their carrying value will fluctuate because of changes in market prices. Market risk comprises three types of risk, namely:
 
•        Currency risk: due to changes in foreign exchange rates;
•        interest rate risk: due to changes in market interest rates; and
•        other price risk: due to fluctuations in market prices (other than those arising from interest rate risk or currency risk).
 
Policyholder liabilities relating to the Group's life assurance businesses are also sensitive to the effects of other changes in experience, or expected future experience, such as for mortality, other insurance risk and lapse risk.
In addition, the profitability of the Group's life assurance businesses and asset management business, is indirectly affected by the performance of the assets covering policyholder liabilities and related capital.
 
Three key points are to be noted, namely:
 
•      The Group's with-profit and unit-linked funds absorb most market risk attaching to the fund's investments. Except for second order effects, for example on asset management fees and shareholders' share of cost of bonuses for with-profits business, shareholder results are not directly affected by market value movements on the assets of these funds;
•      the Group's shareholder results are most sensitive to market risks for assets of shareholder-backed business; and
•      the main exposures of the Group's IFRS basis results to market risk for life assurance operations on investments of shareholder-backed business are for debt securities.
 
The most significant items for which the IFRS basis shareholders' profit or loss and equity for the Group's life assurance business is sensitive to these variables are shown in the following tables. The distinction between direct and indirect exposure is not intended to indicate the relative size of the sensitivity.
 




 

Market and credit risk

Type of business
Investments/derivatives
Liabilities/unallocated
Other exposure
Insurance and lapse risk
UK insurance operations


With-profits business (including Prudential Annuities Limited)
Net neutral direct exposure (Indirect exposure only)
Investment performance subject to smoothing through declared bonuses
Persistency risk to future shareholder transfers
SAIF sub-fund
Net neutral direct exposure (Indirect exposure only)
Asset management fees earned by M&G

Unit-linked business      
Net neutral direct exposure (Indirect exposure only)
Investment performance through asset management fees
Persistency risk
               
Asset/liability mismatch risk 


Shareholder-backed annuity business
Credit risk
Interest rate risk for assets in excess of liabilities i.e. representing shareholder capital


Mortality experience and assumptions for longevity
US insurance operations


All business
Currency risk


Persistency risk
Variable annuity business
Net effect of market risk arising from incidence of guarantee features and variability of asset management fees offset by derivative hedging programme


Fixed indexed annuity business
Derivative hedge
programme to the extent not fully hedged against liability and fund performance
Incidence of equity participation features


Fixed indexed annuity, Fixed annuity and GIC business
Credit risk
Interest rate risk

Spread difference between earned rate and rate credited to policyholders
Lapse risk but the effects of extreme events are mitigated by the use of swaption contracts

These risks are reflected in volatile profit or loss and shareholders' equity for derivative value movements and impairment losses, and, in addition, for shareholders' equity for value movements on fixed income securities classified as 'available for sale' under IAS 39



Asian insurance operations




Mortality and morbidity risk
All business
Currency risk


Persistency risk
With-profits business      
Net neutral direct exposure (Indirect exposure only)
Investment performance subject to smoothing through declared bonuses

Unit-linked business
Net neutral direct exposure (Indirect exposure only)
Investment performance through asset management fees

Non-participating business

Interest rate and price risk

Long-term interest rates



 


IFRS shareholder results - Exposures for market and other risk
Key Group exposures
The IFRS operating profit based on longer-term investment returns for UK insurance operations has high potential sensitivity for changes to longevity assumptions affecting the carrying value of liabilities to policyholders for shareholder-backed annuity business. In addition, at the total IFRS profit level the result is sensitive to temporary value movements on assets backing IFRS equity.
 
For Jackson at the level of operating profit based on longer-term investment returns, the results are sensitive to market conditions to the extent of income earned on spread-based products and equity-based exposure not mitigated by the equity and interest derivative programmes. Further information is given below under the US operations section of market and credit risk.
 
Jackson's derivative programme is used to substantially mitigate equity market risk attaching to its equity-based products and interest rate risk associated with its spread-based products. Movements in interest rates and credit spreads materially affect the carrying value of derivatives which are used to manage the liabilities to policyholders and backing investment assets of fixed annuity and other general account business. Combined with the use of US GAAP measurement (as grandfathered under IFRS 4) for the asset and liabilities for the insurance contract liabilities, which is largely insensitive to current period market movements, the Jackson total profit (i.e. including short-term fluctuations in investment returns) is very sensitive to market movements. In addition to these effects the Jackson IFRS equity is sensitive to the impact of interest rate and credit spread movements on the value of fixed income securities. Movements in unrealised appreciation on these securities are included as movement in equity (i.e. outside the income statement).
 
For Asian operations, the operating profit based on longer-term investment returns is mainly affected by the impact of market levels on unit-linked business persistency, and other insurance risk.
 
At the total IFRS profit level the Asian result is affected by short-term value movements on the asset portfolio for non-linked shareholder-backed business.
 
M&G profits are affected primarily by movements in the growth in funds under management and of the effect any impairment on the loan book and fair value movements on debt securities held by Prudential Capital.
 
Market and credit risk
UK insurance operations
With-profits business
 
•      
With-profits business
Shareholder results of UK with-profits business are sensitive to market risk only through the indirect effect of investment performance on declared policyholder bonuses.
The investment assets of the PAC with-profits fund are subject to market risk. However, changes in their carrying value, net of related changes to asset-share liabilities of with-profit contracts, affect the level of unallocated surplus of the fund. As unallocated surplus is accounted for as a liability under IFRS, movements in its value do not affect shareholders' profit or equity.
The shareholder results of the UK with-profits fund correspond to the shareholders' share of the cost of bonuses declared on the with-profits business. This currently corresponds to one-ninth of the cost of bonuses declared.
Investment performance is a key driver of bonuses, and hence the shareholders' share of cost of bonuses. Due to the 'smoothed' basis of bonus declaration the sensitivity to investment performance in a single year is low. However, over multiple periods it is important.
 
•      Prudential Annuities Limited (PAL)
PAL's business is not with-profit, it writes annuity business. However, as PAL is owned by the PAC with-profits sub-fund, changes in the carrying value of PAL's assets and liabilities are reflected in the liability for unallocated surplus which as described above, changes to which do not affect shareholder results.
 
•      Scottish Amicable Insurance Fund (SAIF)
SAIF is a ring-fenced fund in which, apart from asset management fees, shareholders have no interest. Accordingly, the Group's IFRS profit and equity are insensitive to the direct effects of market risk attaching to SAIF's assets and liabilities.
 


UK insurance operations
Shareholder-backed business
The factors that may significantly affect the IFRS results of UK shareholder-backed business are the mortality experience and assumptions and credit risk attaching to the annuity business of Prudential Retirement Income Limited and the PAC
non-profit sub-fund.
 
•      Prudential Retirement Income Limited (PRIL)
The assets covering PRIL's liabilities are principally debt securities and other investments that are held to match the expected duration and payment characteristics of the policyholder liabilities. These liabilities are valued for IFRS reporting purposes by applying discount rates that reflect the market rates of return attaching to the covering assets.
Except to the extent of any asset/liability duration mismatch which is reviewed regularly, and exposure to credit risk, the sensitivity of the Group's results to market risk for movements in the carrying value of PRIL's liabilities and covering assets is broadly neutral on a net basis.
The main market risk sensitivity for PRIL arises from interest rate risk on the debt securities which substantially represent IFRS equity. This equity comprises the net assets held within the long-term fund of the company that cover regulatory basis liabilities that are not recognised for IFRS reporting purposes, for example contingency reserves, and shareholder capital held outside the long-term fund.
The principal items affecting the IFRS results for PRIL are mortality experience and assumptions and credit risk.
 
•      PAC non-profit sub-fund
The PAC non-profit sub-fund principally comprises annuity business previously written by Scottish Amicable Life, credit life, unit-linked and other non-participating business.
The financial assets covering the liabilities for those types of business are subject to market risk. However, for the annuity business the same considerations as described above for PRIL apply, whilst the liabilities of the unit-linked business change in line with the matching linked assets. Other liabilities of the PAC non-profit sub-fund are broadly insensitive to market risk.
 
•      Other shareholder-backed unit-linked business
Due to the matching of policyholder liabilities to attaching asset value movements the UK unit-linked business is not directly affected by market or credit risk. The principal factor affecting the IFRS results is investment performance through asset management fees.
 
US insurance operations
Jackson
The IFRS basis results of Jackson are highly sensitive to market risk on the assets covering liabilities other than variable annuity business segregated in the separate accounts.
 
Invested assets covering liabilities (other than the separate accounts) and related capital comprise principally debt securities classified as available-for-sale. Value movements for these securities are reflected as movements in shareholders' equity through the statement of comprehensive income. Other invested assets and derivatives are carried at fair value with the value movements reflected in the income statement.
 
By contrast, the IFRS insurance liabilities of business written by Jackson, by the application of grandfathered GAAP under IFRS 4, are measured on US GAAP bases which with the exception of certain items covered by the equity hedging programme, are generally insensitive to temporary changes in market conditions or the short-term returns on the attaching asset portfolios.
 
These differences in carrying value of debt securities, other invested assets, derivatives and insurance liabilities give rise to potentially significant volatility in the IFRS income statement and shareholders' equity. As with other shareholder-backed business the profit or loss for Jackson is presented by distinguishing the result for the year between an operating result based on longer-term investment returns and short-term fluctuations in investment returns. In this way the most significant direct effect of market changes that have taken place to the Jackson result are separately identified.
 
Excluding these short-term effects, the factors that most significantly affect the Jackson IFRS operating result based on long-term investment returns are:
 
•      Variable annuity business - net effect of market risk arising from the incidence and valuation of guarantee features and variability of asset management fees offset by derivative hedging performance. The net effect of market risk in Jackson's guarantees and derivatives included in operating result excludes the impact of changes in market implied volatility. Further movements in reserves for guarantees reflected in operating result are also based on a discount rate using a long-term average Corporate AA credit curve instead of the actual Corporate AA credit curve at the valuation date. The derivative hedging programme is designed to be economically effective and there can be some accounting mis-matches for those guarantee features which are not economically valued under grandfathered US GAAP, for example guaranteed minimum death benefits. These accounting mis-matches are magnified in periods of market dislocation.
•      fixed annuity business - the spread differential between the earned rate and the rate credited to policyholders; and
•      fixed index annuity business - the spread differential between the earned rate and the rate credited to policyholders and incidence of equity index participation features, net of the related hedging performance.
 
In addition, the total profit for Jackson is affected by the level of impairment losses on the debt securities portfolios, short-term value movements on derivatives held to manage the fixed annuity and other general account business, other temporary value movements on portfolio investments classified as fair value through profit and loss and those arising on revaluing the embedded derivative components of variable annuity liabilities for the effects of short-term movements in AA corporate bond rate curves and equity volatility levels.
 
Asian insurance operations
For Asian with-profits business the same features apply as described above for UK with-profits business. Similarly, as for other parts of the Group, for unit-linked business the main factor affecting IFRS basis results is investment performance through asset management fees.
 
The sensitivity of the IFRS basis results of the Group's Asian operations to market risk is primarily restricted to the non-participating business.
 
This sensitivity is primarily reflected through the volatility of asset returns coupled with the fact that the accounting carrying value of liabilities to policyholders are only partially sensitive to changed market conditions. As for UK shareholder-backed operations and Jackson, the IFRS profit is distinguished in the Group's segmental analysis so as to distinguish operating profits based on longer-term investment return and short-term fluctuations in investment returns.
 
Insurance and lapse risk
The features described above cover the main sensitivities of IFRS profit and loss and equity for market, insurance and credit risk. Lapse and longevity risk may also be a key determination of IFRS basis results with variable impacts.
 
In the UK, adverse persistency experience can affect the level of profitability from with-profits and unit-linked business. For with-profits business in any given year, the amount represented by the shareholders' share of cost of bonus may be only marginally affected. However, altered persistency trends may affect future expected shareholder transfers.
 
By contrast, Group IFRS operating profit is particularly sensitive to longevity outlook that result in changes of assumption for the UK shareholder-backed annuity business.
 
Jackson is sensitive to lapse risk. However, Jackson uses swaption derivatives to ameliorate the effect of a sharp rise in interest rates, which would be the most likely cause of a sudden change in policyholder behaviour.
 
In Asia adverse persistency experience can impact the IFRS profitability of certain business written in the region. This risk is managed at a business unit level through monthly monitoring of experience and the implementation of management actions as necessary. These actions could include product enhancements, increased management focus on premium collection as well as other customer retention efforts. The potential financial impact of lapses is often mitigated through the specific features of the products, e.g. surrender charges.
 
Impact of diversification on risk exposure
The Group enjoys significant diversification benefits. This arises because not all risk scenarios will happen at the same time and across all geographic regions. The Group tests the sensitivities of results to different correlation factors such as:
 
Correlation across geographic regions
•        Financial risk factors
•        Non-financial risk factors.
 
Correlation across risk factors
•        Longevity risk
•        Expenses
•        Persistency
•        Other risks.
 
The effect of Group diversification is to significantly reduce the aggregate standalone volatility risk to IFRS operating profit based on longer-term investment returns. The effect is almost wholly explained by the correlations across risk types, in particular longevity risk.


(i)
     UK insurance operations   
 
The risks to which the IFRS basis results of the UK insurance operations are sensitive are asset/liability matching, mortality experience and payment assumptions for shareholder-backed annuity business. Further details are described below.
 
With-profits business
SAIF
Shareholders have no interest in the profits of SAIF but are entitled to the asset management fees paid on the assets of the fund.
 
With-profits sub-fund business
For with-profits business (including non-participating business of PAL which is owned by the WPSF) adjustments to liabilities and any related tax effects are recognised in the income statement. However, except for any impact on the annual declaration of bonuses, shareholders' profit for with-profits business is unaffected. This is because IFRS basis profits for with-profits business, which are determined on the same basis as on preceding UK GAAP, solely reflect one-ninth of the cost of bonuses declared for the year.
 
The main factors that influence the determination of bonus rates are the return on the investments of the fund, the effect of inflation, taxation, the expenses of the fund chargeable to policyholders and the degree to which investment returns are smoothed. Mortality and other insurance risk are relatively minor factors.
     
Unallocated surplus represents the excess of assets over policyholder liabilities of the fund. As unallocated surplus of the WPSF is recorded as a liability, movements in its value do not affect shareholders' profits or equity.
     
The level of unallocated surplus is particularly sensitive to the level of investment returns on the portion of the life fund assets that represents the surplus.
 
Shareholder-backed annuity business
Profits from shareholder-backed annuity business are most sensitive to:
 
•     The extent to which the duration of the assets held closely matches the expected duration of the liabilities under the contracts. Assuming close matching, the impact of short-term asset value movements as a result of interest rate movements will broadly offset changes in the value of liabilities caused by movements in valuation rates of interest;
•     actual versus expected default rates on assets held;
•     the difference between long-term rates of return on corporate bonds and risk-free rates;
•     the variance between actual and expected mortality experience;
•     the extent to which expected future mortality experience gives rise to changes in the measurement of liabilities; and
•     changes in renewal expense levels.
 
A decrease in assumed mortality rates of one per cent would decrease gross profits by approximately £44 million
(2008: £35 million). A decrease in credit default assumptions of five basis points would increase gross profits by
£91 million (2008: £71 million). A decrease in renewal expenses (excluding asset management expenses) of five per cent
would increase gross profits by £17 million (2008: £15 million). The effect on profits would be approximately symmetrical for changes in assumptions that are directionally opposite to those explained above.
 
Unit-linked and other business
Unit-linked and other business represents a comparatively small proportion of the in-force business of the UK insurance operations.
 
Profits from unit-linked and similar contracts primarily arise from the excess of charges to policyholders, for management of assets under the Company's stewardship, over expenses incurred. The former is most sensitive to the net accretion of funds under management as a function of new business and lapse and timing of death. The accounting impact of the latter is dependent upon the amortisation of acquisition costs in line with the emergence of margins (for insurance contracts) and amortisation in line with service provision (for the investment management component of investment contracts). By virtue of the design features of most of the contracts which provide low levels of mortality cover, the profits are relatively insensitive to changes in mortality experience.
 
Shareholder exposure to interest rate risk and other market risk
By virtue of the fund structure, product features and basis of accounting, the policyholder liabilities of the UK insurance operations are, except for pension annuity business, not generally exposed to interest rate risk. For pension annuity business, liabilities are exposed to fair value interest rate risk. However, the net exposure to the PAC WPSF (for PAL) and shareholders (for liabilities of PRIL and the non-profit sub-fund) is very substantially ameliorated by virtue of the close matching of assets with appropriate duration. The level of matching from period to period can vary depending on management actions and economic factors so it is possible for a degree of mis-matching profits to arise.
 
The close matching by the Group of assets of appropriate duration to annuity liabilities is based on maintaining economic and regulatory capital. The measurement of liabilities under capital reporting requirements and IFRS is not the same with contingency reserves and some other margins for prudence within the assumptions required under the FSA regulatory solvency basis not included for IFRS reporting purposes. As a result IFRS equity is higher than regulatory capital and therefore more sensitive to interest rate risk.
 
The estimated sensitivity of the UK non-linked shareholder-backed business (principally pension annuities business) to a movement in interest rates is as follows.
 

2009 £m

2008 £m

A decrease
 of 2%
A decrease of 1%
An increase of 1%
An increase
of 2%

A decrease
of 2%
A decrease
of 1%
An increase
of 1%
An increase
of 2%
Carrying value of debt securities and derivatives
5,372
2,422
(2,020)
(3,731)

4,362
1,983
(1,676)
(3,108)
Policyholder liabilities
(5,125)
(2,304)
1,905
3,498

(3,974)
(1,798)
1,503
2,773
Related deferred tax effects
(69)
(33)
32
65

(109)
(52)
48
94
Net sensitivity of profit after tax and shareholders' equity
178
85
(83)
(168)

279
133
(125)
(241)
 
In addition the shareholder-backed portfolio of UK non-linked insurance operations covering liabilities and shareholders' equity includes equity securities and investment property. Excluding any second order effects on the measurement of the liabilities for future cash flows to the policyholder, a fall in their value would have given rise to the following effects on pre-tax profit, profit after tax, and shareholders' equity.
 

2009 £m

2008 £m

A decrease
of 20%
A decrease
of 10%

A decrease
of 40%
A decrease
of 20%
A decrease
of 10%
Pre-tax profit
(292)
(146)

(508)
(254)
(127)
Related deferred tax effects
82
41

142
71
35







Net sensitivity of profit after tax and shareholders' equity
(210)
(105)

(366)
(183)
(92)
 
A 10 or 20 per cent (2008: 10, 20 or 40 per cent) increase in their value would have an approximately equal and opposite effect on profit and shareholders' equity to the sensitivities shown above. The market risk sensitivities shown above reflect the impact of temporary market movements and, therefore, the primary effect of such movements would, in the Group's segmental analysis of profits, be included within the short-term fluctuations in investment returns.
 
 
(ii)
    US insurance operations
 
Currency fluctuations
Consistent with the Group's accounting policies, the profits of the Group's US operations are translated at average exchange rates and shareholders' equity at the closing rate for the reporting period. For 2009, the rates were US$1.57 (2008: US$1.85) and US$1.61 (2008: US$1.44) to £1 sterling, respectively. A 10 per cent increase or decrease in these rates would reduce or increase profit (loss) before tax attributable to shareholders, profit (loss) for the year and shareholders' equity attributable to US insurance operations respectively as follows:
 


A 10% increase in
exchange rates

A 10% decrease in
exchange rates

2009 
2008 
2009 
2008 

£m
£m
£m
£m
Profit (loss) before tax attributable to shareholders (note (i))
(44)
59
54
(72)
Profit (loss) for the year
(54)
51
65
(62)
Shareholders' equity attributable to US insurance operations
(274)
(158)
335
193





Note
(i)      Sensitivity on profit (loss) before tax i.e. aggregate of the operating profit based on longer-term investment returns and short-term fluctuations.
 
Other sensitivities
The principal determinants of variations in operating profit based on longer-term returns are:
 
•      growth in the size of assets under management covering the liabilities for the contracts in force;
•      variations in fees and other income, offset by variations in market value adjustment payments and, where necessary, strengthening of liabilities.
•      incidence of guarantees and the effectiveness of the related hedge programme.
•      spread returns for the difference between investment returns and rates credited to policyholders.
 
For the purpose of determining longer-term returns, adjustment is necessary for the normalisation of investment returns to remove the effects of short-term volatility in investment returns.
 
•      amortisation of deferred acquisition costs.
 
For term business, acquisition costs are deferred and amortised in line with expected premiums. For annuity business, acquisition costs are deferred and amortised in line with expected gross profits on the relevant contracts. For interest-sensitive business, the key assumption is the expected long-term spread between the earned rate and the rate credited to policyholders, which is based on an annual spread analysis. In addition, expected gross profits depend on mortality assumptions, assumed unit costs and terminations other than deaths (including the related charges) all of which are based on a combination of actual experience of Jackson, industry experience and future expectations.
A detailed analysis of actual experience is measured by internally developed mortality and persistency studies. For variable annuity business, the key assumption is the expected long-term level of equity market returns, which for 2009 and 2008 was 8.4 per cent per annum implemented using a mean reversion methodology. These returns affect the level of future expected profits through their effects on the fee income and the required level of provision for guaranteed minimum death benefit claims. The mean reversion methodology dampens the impact of equity market movements during a particular year, but does not fully eliminate the effects of movements in the equity markets.
In addition, the mean reversion methodology includes both a cap and a floor that determine the maximum impact that the methodology may have. Due to the significant market movements during 2008, Jackson exceeded the cap on future equity market returns, resulting in a higher level of sensitivity to market movements than would than would have been recognised had the cap not been met at the end of 2008. Given the low market return in 2008 this cap remained in place at 31 December 2009 and so the higher level of sensitivity remains.
 
Except to the extent of mortality experience, which primarily affects profits through variations in claim payments and GMDB reserves, the profits of Jackson are relatively insensitive to changes in insurance risk.
 
Exposure to equity risk
Jackson is exposed to equity risk through the options embedded in the fixed indexed liabilities and GMDB and GMWB guarantees included in certain VA benefits. This risk is managed using a comprehensive equity hedging programme to minimise the risk of a significant economic impact as a result of increases or decreases in equity market levels while taking advantage of naturally offsetting exposures in Jackson's operations. Jackson purchases external futures and options that hedge the risks inherent in these products, while also considering the impact of rising and falling separate account fees.
As a result of this hedging programme, if the equity markets were to increase further in the future, Jackson's free-standing derivatives would decrease in value. However, over time, this movement would be broadly offset by increased separate account fees and reserve decreases, net of the related changes to amortisation of deferred acquisition costs. Due to the nature of the free-standing and embedded derivatives, this hedge, while highly effective on an economic basis, may not completely mute the immediate impact of the market movements as the free-standing derivatives reset immediately while the hedged liabilities reset more slowly and fees are recognised prospectively. The opposite impacts would be observed if the equity markets were to decrease.
 
At 31 December 2009 based on the hedges in place at that time, it is estimated that an immediate decrease in the equity markets of 10 per cent would result in an accounting benefit, net of related DAC amortisation, before tax of up to £60 million, excluding the impact on future separate account fees. After related deferred tax there would have been an estimated increase in shareholders' equity at 31 December 2009 of up to £40 million. An immediate decrease in the equity markets of 20 per cent is estimated to result in an accounting credit, net of related DAC amortisation, before tax of up to £110 million, excluding the impact on future separate account fees. After related deferred tax there would have been an estimated increase in shareholders' equity at 31 December 2009 of up to £80 million. An immediate increase in the equity markets of 10 and 20 per cent is estimated to result in an approximately equal and opposite estimated effect on profit and shareholders' equity as that disclosed above for a decrease.
 
At 31 December 2008, based on the hedges in place at that time, it was estimated that an immediate decrease in the equity markets at 10 per cent would result in an accounting charge, net of related DAC amortisation, before tax of up to £20 million, excluding the impact on future separate account fees. After related deferred tax, it was estimated that there would have been an increase in shareholders' equity of up to £15 million. An immediate decrease in the equity markets of 20 and 40 per cent was estimated to result in an account charge, net of related DAC amortisation, before tax of up to £40 million and £90 million respectively, excluding the impact of future separate account fees. After related deferred tax there would have been an estimated reduction in shareholders' equity at 31 December 2008 of up to £30 million and £60 million respectively. The difference in the effects of a decrease in the equity markets at 31 December 2009 as compared to 2008 was due to a high number of GMDB and GMWB guarantees being 'in the money' at 31 December 2008. As a result, the adverse effects on provisions for policyholder liabilities from a decreasing equity market at 31 December 2008 more than offset the benefits from the hedging instruments held at that time.
 
The actual impact on financial results would vary contingent upon the volume of new product sales and lapses, changes to the derivative portfolio, correlation of market returns and various other factors including volatility, interest rates and elapsed time.
 
In addition, Jackson is also exposed to equity risk from its holding of equity securities, partnerships in investment pools and other financial derivatives.
 
A range of reasonably possible movements in the value of equity securities, partnerships in investment pools and other financial derivatives have been applied to Jackson's holdings at 31 December 2009 and 31 December 2008. The table below shows the sensitivity to a 10 and 20 per cent (2008: 10, 20 and 40 per cent) fall in value and the impact that this would have on pre-tax profit, net of related changes in amortisation of DAC, profit after tax and shareholders' equity.
 

2009 £m
2008 £m

A decrease
of 20%
A decrease
 of 10%
A decrease
 of 40%
A decrease
of 20%
A decrease
 of 10%
Pre-tax profit, net of related changes in amortisation of DAC
(117)
(58)
(255)
(141)
(98)
Related deferred tax effects
41
20
89
49
34
Net sensitivity of profit after tax and shareholders' equity
(76)
(38)
(166)
(92)
(64)
 
Exposure to interest rate risk
Notwithstanding the market risk exposure previously described, except in the circumstances of interest rate scenarios where the guarantee rates included in contract terms are higher than crediting rates that can be supported from assets held to cover liabilities, the accounting measurement of fixed annuity liabilities of Jackson products is not generally sensitive to interest rate risk. This position derives from the nature of the products and the US GAAP basis of measurement. The GMWB features attaching to variable annuity business represents embedded derivatives which are fair valued and so will be sensitive to changes in interest rate.
 
Debt securities and related derivatives are marked to fair value. Value movements on derivatives, again net of related changes to amortisation of DAC and deferred tax, are recorded within profit and loss. Fair value movements on debt securities, net of related changes to amortisation of DAC and deferred tax, are recorded within the statement of changes in equity. The estimated sensitivity of these items and policyholder liabilities to a one per cent and two per cent decrease and increase in interest rates at 31 December 2009 and is as follows:
 

2009 £m
2008 £m

A 2%
A 1%
A 1%
A 2%
A 2%
A 1%
A 1%
A 2%

decrease
decrease
increase
increase
decrease
 decrease
increase
increase
Profit and loss








Direct effect








Derivatives value change
(319)
(148)
159
370
(575)
(268)
283
639
Policyholder liabilities
(418)
(185)
170
334
(517)
(218)
182
350
Related effect on amortisation of DAC
364
162
(156)
(328)
498
215
(193)
(395)









Pre-tax profit effect








Operating profit based on longer-term investment returns
(144)
(62)
56
109
(128)
(59)
64
146
Short-term fluctuations in investment returns
(229)
(109)
117
267
(466)
(212)
208
448

(373)
(171)
173
376
(594)
(271)
272
594
Related effect on charge for deferred tax
131
60
(60)
(131)
206
94
(95)
(207)
Net profit effect
(242)
(111)
113
245
(388)
(177)
177
387









Other comprehensive income

















Direct effect on carrying value of debt securities
2,183
1,179
(1,179)
(2,183)
2,476
1,238
(1,238)
(2,476)
Related effect on amortisation of DAC
(764)
(413)
413
764
(619)
(310)
310
619
Related effect on movement in deferred tax
(497)
(268)
268
497
(650)
(325)
325
650
Net effect
922
498
(498)
(922)
1,207
603
(603)
(1,207)
Total net effect on IFRS equity
680
387
(385)
(677)
819
426
(426)
(820)
 
(iii)
   Asian insurance operations
 
Sensitivity of IFRS basis profit and equity and other risks
Currency translation
Consistent with the Group's accounting policies, the profits of the Asian operations at average exchange rates and shareholders' equity at the costing rate for the reporting period.
 
A 10 per cent increase or decrease in these rates would have reduced of increased profit before tax attributable to shareholders, profit for the year and shareholders' equity, excluding goodwill, attributable to Asian operations respectively as follows:
 


A 10%
 increase in
exchange rates

A 10%
 decrease in
exchange rates

2009 
2008 
2009 
2008 

£m
£m
£m
£m
Profit before tax attributable to shareholders (note(i))
(40)
(14)
49
18
Profit for the year
(35)
(6)
43
8
Shareholders' equity, excluding goodwill, attributable to Asian operations
(129)
(202)
158
246





 
Note
(i)      Sensitivity on profit before tax i.e. aggregate of the operating profit based on longer-term investment returns, short-term fluctuations in investment returns, and actuarial gains and losses on defined benefit pension schemes but excluding the loss on sale and results for Taiwan agency business.
 
Other risks
With-profits business
Similar principles to those explained for UK with-profits business apply to profit emergence for the Asian with-profits business.
Correspondingly, the profit emergence reflects bonus declaration and is relatively insensitive to period by period fluctuations in insurance risk or interest rate movements.
 
Unit-linked business
As for the UK insurance operations, the profits and shareholders' equity related to the Asian operations is primarily driven by charges relating to invested funds. For the Asian operations, substantially all of the contracts are classified as insurance contracts under IFRS 4, i.e. containing significant insurance risk. The sensitivity of profits and equity to changes in insurance risk is minor and, to interest rate risk, not material.
 
Other business
 
•    Interest rate risk for Taiwan
For 2008, the principal other business of Asian operations that was most sensitive to movements in interest rates was the whole of life business written in Taiwan. In June 2009 the Company completed the sale of its agency distribution business and associated liabilities and its agency force in Taiwan to China Life Insurance Company Ltd as explained in note G. For 2009 the assets and liabilities of the element of Taiwan business retained by the Company are relatively less sensitive to variances in interest rates, with a reasonably possible decrease in interest rates of 0.5 per cent leading to an increase in IFRS pre-tax profits of £24 million. After adjusting these results for deferred tax the reasonably possible effect on shareholders' equity is £19 million. A 0.5 per cent increase in interest rates is estimated to have an approximately equal and opposite effect on profit and shareholders' equity.
 


•    Interest rate risk for other business excluding Taiwan
Asian operations offer a range of insurance and investment products, predominately with-profits and non-participating term, whole life endowment and unit-linked. Excluding with-profit and unit-linked business along with Taiwan, the results of the Asian business are sensitive to the vagaries of routine movements in interest rates.
 
For the purposes of analysing sensitivity to variations in interest rates, it has been determined for the majority of territories that a movement of 1 per cent in the 10 year government bond rate can be considered reasonably possible. At 31 December 2009, 10 year government bond rates vary from territory to territory and range from 1.3 per cent to 11.45 per cent (2008: 1.17 per cent to 10.18 per cent). An exception to this arises in Japan where reasonably possible interest rate movements have been determined as 0.5 per cent respectively. (2008: Japan 0.5 per cent, Vietnam 1.5 per cent). These reasonably possible changes would have the following impact:
 

2009 £m
2008 £m


A decrease
 of 1%
(note (i))

A decrease
 of 1%
 (note (i))
Pre-tax profit

67

56
Related deferred tax (where applicable)

(17)

(11)
Net effect on profit and equity

50

45
 
Note
(i)      1 per cent sensitivity has been used in all territories except Japan (0.5 per cent) (2008: Japan 0.5 per cent, Vietnam: 1.5 per cent)
The pre-tax impacts, if they arose, would be recorded within the category short-term fluctuations in investments returns in the Group's segmental analysis of profit before tax.
 
At 31 December 2009, an increase in the rates of 1 per cent (Japan (0.5 per cent)) is estimated to have the effect of decreasing pre-tax profit by £87 million. After adjusting these results for deferred tax the reasonable possible effect on shareholders' equity is a decrease of £65 million.
 
Equity price risk
The non-linked shareholder business has limited exposure to equity and property investment (£278 million at 31 December 2009). Generally changes in equity and property investment values are not automatically matched by investments in policyholder liabilities. However for the Vietnam business, to the extent that equity investment appreciation is realised through sales of securities then policyholders' liabilities are adjusted to the extent that policyholders' participate.
 
The estimated sensitivity to a 10 and 20 per cent (2008: 10, 20 and 40 per cent) change in equity and property prices for shareholder-backed Asian other business, which would be reflected in the short-term fluctuation component of the Group's segmental analysis of profit before tax, at 31 December 2009 and 2008 would be as follows:
 

2009 £m
2008 £m

A decrease
of 20%
A decrease
 of 10%
A decrease
 of 40%
A decrease
of 20%
A decrease
 of 10%
Pre-tax profit
(58)
(29)
(176)
(88)
(44)
Related deferred tax (where applicable)
8
4
5
3
1
Net effect on profit and equity
(50)
(25)
(171)
(85)
(43)
 
A 10 or 20 per cent (2008: 10, 20 or 40 per cent) increase in their value is estimated to have an approximately equal and opposite effect on profit and shareholders' equity to the sensitivities shown above. The low tax rate effect, which is particularly evident in 2008 relates to the availability of losses in some of the territories.
 
Insurance Risk
Many of the territories in Asia are exposed to mortality/morbidity risk and provision is made within IFRS policyholder liabilities on a prudent regulatory basis to cover the potential exposure. If these prudent assumptions were strengthened by 5 per cent (estimated at one in ten year shock) then it is estimated that post tax IFRS profit would be impacted by approximately £9 million (with a corresponding change to IFRS shareholders' equity). Mortality/morbidity has a symmetrical effect on portfolio and so a weakening of mortality/morbidity assumptions would have an approximately equal and opposite impact.


(iv)
    Asset management operations
 
Currency translation
Consistent with the Group's accounting policies, the profits of the Asia and PPM America asset management operations are translated at average exchange rates and shareholders' equity at the closing rate for the reporting period. The rates for the most significant operations are given in note AC.
A 10 per cent increase in the relevant Asian exchange rates would have reduced reported profit before tax attributable to shareholders and shareholders' equity, excluding goodwill attributable to Asia and PPM America asset management operations, by £5 million (2008: £5 million) and £23 million (2008: £26 million) respectively.
Other sensitivities to other financial risks for asset management operations
The principal sensitivities to other financial risk of asset management operations are credit risk on the bridging loan portfolio of the Prudential Capital operation and the indirect effect of changes to market values of funds under management. Due to the nature of the asset management operations there is limited direct sensitivity to movements in interest rates. Total debt securities held at 31 December 2009 by asset management operations were £1,164 million (2008: £991 million), the majority of which are held by the Prudential Capital operation. Debt securities held by M&G and Prudential Capital are in general variable rate bonds and so market value is limited in sensitivity to interest rate movements and consequently any change in interest rates would not have a material impact on profit or shareholder's equity. Asset management operations do not hold significant investments in property or equities.
 
W    Related party transactions
 
Transactions between the Company and its subsidiaries are eliminated on consolidation.
 
In addition, the Company has transactions and outstanding balances with certain unit trusts, OEICs, collateralised debt obligations and similar entities which are not consolidated and where a Group company acts as manager. These entities are regarded as related parties for the purposes of IAS 24. The balances are included in the Group's statement of financial position at fair value or amortised cost in accordance with their IAS 39 classifications. The transactions are included in the income statement and include amounts paid on issue of shares or units, amounts received on cancellation of shares or units and paid in respect of the periodic charge and administration fee.
 
Executive officers and directors of the Company may from time to time purchase insurance, asset management or annuity products marketed by Group companies in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons.
 
Apart from the transactions with directors referred to below, no director had interests in shares, transactions or arrangements that require disclosure, other than those to be given in the directors' remuneration report in the Group's audited financial statements.
 
In 2009 and 2008, other transactions with directors were not deemed to be significant both by virtue of their size and in the context of the directors' financial positions. As indicated above, all of these transactions are on terms broadly equivalent to those that prevail in arm's length transactions.
 


X     Post balance sheet events
 
(i)    
Acquisition of UOB Life Assurance Limited
On 6 January 2010 the Group announced the acquisition from United Overseas Bank Limited (UOB) of its 100 per cent interest in UOB Life Assurance in Singapore for total cash consideration of SGD428 million (£192 million) subject to a post-completion adjustment to reflect the net asset value as at the completion date. This acquisition accompanied the announcement of a long-term strategic partnership with UOB. Through this partnership Prudential's life insurance products will be distributed through UOB's 414 bank branches across Singapore, Indonesia and Thailand.
 
The Group continues to complete its compilation of the acquisition balance sheet and further details will be provided in the Group's 2010 half year results announcement.
 
(ii)
    Japanese insurance subsidiary's suspension of writing new business
On 15 January 2010 the Group's Japanese insurance subsidiary announced its intention to suspend underwriting new policyholder contracts in Japan after 15 February 2010. The company re-enforced its commitment to servicing its existing policyholder base, which comprised over 170,000 contracts as at 30 September 2009. This decision will be reviewed on an on-going basis in the light of changes to the business environment.
 
This decision does not affect the Group's asset management operation in Japan, which ranks among the largest foreign asset managers.
 
(iii)  
Agreement to acquire AIA Group Limited
On 1 March 2010 the Group announced that it had reached agreement with American International Group (AIG) on terms for Prudential to acquire AIA Group Limited, a wholly owned subsidiary of AIG.
 


Additional Unaudited Financial Information
 
Y     Analysis of long-term insurance pre-tax IFRS operating profit by driver
 
This schedule classifies the Group's pre-tax operating earnings from long-term insurance operations into the underlying drivers of those profits, using the following categories:
 
(i)
     Investment spread - this represents the difference between net investment income (or premium income in the case of the UK annuities new business) and amounts credited to policyholder accounts.
 
(ii)
    Asset management fees - this represents profits driven by investment performance, being asset management fees that vary with the size of the underlying policyholder funds net of investment management expenses.
 
(iii)
   Net expense margin - represents expenses charged to the profit and loss account (excluding those borne by the with-profits fund and those products where earnings are purely protection driven) including amounts relating to movements in deferred acquisition costs, net of any fees or premium loadings related to expenses. Jackson DAC amortisation (net of hedging effects), which is intended to be part of the expense margin, has been separately highlighted in the table below.
 
(iv)
    Insurance margin - profits derived from the insurance risks of mortality, morbidity and persistency including fees earned on variable annuity guarantees.
 
(v)
     With-profits business - shareholders' transfer from the with-profits fund in the period.
 
(vi)
    Other represents a mixture of other income and expenses that are not directly allocated to the underlying drivers, including non-recurring items.
 
An analysis of Group pre-tax IFRS operating profit has also been provided and is based on the long-term insurance operation tables below with the following additions:
• The results of Group asset management operations have been included within asset management fees.
• UK general insurance commission of £51 million (2008: £44 million) has been included within the other income line.
• Group Head Office (GHO) expenses consist of other operating income and expenditure and UK restructuring costs.
 
IFRS operating profit
 
 

2009 £m


Long-term business
Non-long-term business
Group
total
2008

£m
£m
£m
£m
Investment spread
1,001
-
1,001
748
Asset management fees
458
297
755
751
Net expense margin
(388)
-
(388)
(389)
DAC amortisation (Jackson only)
(223)
-
(223)
(450)
Net Insurance margin
472
-
472
308
With-profits business
310
-
310
425
Non-recurrent release of reserves for Malaysia Life operation
63
-
63
-
Other
(218)
51
(167)
178
GHO expenses
-
(418)
(418)
(288)
Total
1,475
(70)
1,405
1,283
 


Analysis of pre-tax IFRS profit by driver by long-term business unit.
 

2009 £m

Asia
US
UK
Total
Investment spread
56
622
323
1,001
Asset management fees
80
324
54
458
Net expense margin
(65)
(227)
(96)
(388)
DAC amortisation (Jackson only)
-
(223)
-
(223)
Net Insurance margin
253
178
41
472
With-profits business
29
-
281
310
Non-recurrent release of reserves for Malaysia Life operations
63
-
-
63
Other (note(i))
(6)
(215)
3
(218)
Total
410
459
606
1,475
 

2008 £m

Asia
US
UK
Total
Investment spread
54
550
143
747
Asset management fees
54
292
57
403
Net expense margin
(79)
(192)
(114)
(385)
DAC amortisation (Jackson only)
-
(450)
-
(450)
Net Insurance margin
198
122
(12)
308
With-profits business
30
-
395
425
Other (note(i))
(26)
84
76
134
Total
231
406
545
1,182
 
Note
(i)      US "other" comprises principally of hedging costs/profits before the allowance for VA guarantee fees included within net insurance margin, together with other one-off items. Asia "other" includes development expenses of £6 million (2008: £26 million). UK other in 2008 represents the benefits of a number of one off items.
 
(ii)     Sale of Taiwan agency business
         In order to facilitate comparisons of operating profit based on longer-term investment returns that reflect the Group's retained operations, the results attributable to the Taiwan agency business for which the sale process was completed in June 2009 are included separately within the analysis of operating profit.
 


Z     Asian operations - analysis of operating profit by territory
 
Operating profit based on longer-term investment returns for Asian operations are analysed as follows:
 

2009
2008

£m
£m
China
4
(3)
Hong Kong
48
33
India
12
(6)
Indonesia
102
55
Japan
(18)
3
Korea
6
12
Malaysia


- underlying results
65
46
- Exceptional credit for Malaysia operations (note (i))
63
-
Philippines
2
5
Singapore
112
83
Taiwan bancassurance business (note (ii))
(7)
(4)
Thailand
(1)
(2)
Vietnam
30
37
Prudential Services Asia
(2)
(2)
Total insurance operations
(note (iii))
416
257
Development expenses
(6)
(26)
Total long-term business operating profit
(schedule (iii))
410
231
Asset management
55
52
Total Asian operations
(note (iii))
465
283
 
Notes
 
(i)         For the Malaysia life business, under the basis applied previously, 2008 IFRS basis liabilities were determined on the local regulatory basis using prescribed interest rates such that a high degree of prudence resulted. As of 1 January 2009, the local regulatory basis has been replaced by the Malaysian authority's risk-based capital (RBC) framework. In the light of this development; the Company has re-measured the liabilities by reference to the method applied under the new RBC framework, which is more realistic than the previous approach, but with an overlay constraint to the method such that negative reserves derived at an individual policyholder level are not included. This change has resulted in a one-off release from liabilities at 1 January 2009 of £63 million.
 
(ii)
        Sale of Taiwan agency business
In order to facilitate comparisons of operating profit based on longer-term investment returns that reflect the Group's retained operations, the results attributable to the Taiwan agency business for which the sale process was completed in June 2009 are included separately within the analysis of operating profit.
 
(iii)
       Analysis of operating profit between new and in-force business
The result for insurance operations comprises amounts in respect of new business and business in-force as follows:
 

2009
2008

£m
£m
New business strain
(78)
(97)
Business in force
494
354
Total
416
257

The IFRS new business strain corresponds to approximately 6 per cent of new business APE premiums for 2009 (2008: approximately 8 per cent of new business APE).
 
The strain represents the aggregate of the pre-tax regulatory basis strain to net worth and IFRS adjustments for deferral of acquisition costs and deferred income where appropriate.
 


AA  Shareholders' funds summary by business unit and net asset value per share
 
(i)    
Shareholders' fund summary
 

2009

2008

£m

£m
Asian operations



Insurance operations



Net assets of operation
1,382

2,056
Acquired goodwill
80

111
Total
1,462

2,167
Asset management



Net assets of operation
161

167
Acquired goodwill
61

61
Total
222

228
Total
1,684

2,395




US operations



Jackson (net of surplus note borrowings)
3,011

1,698
Broker-dealer, asset management and Curian operations:



Net assets of operation
95

98
Acquired goodwill
16

16
Total
111

114
Total
3,122

1,812




UK operations



Insurance operations:



Long-term business operations
1,902

1,655
Other
37

-
Total
1,939

1,655
M&G



Net assets of operation
173

147
Acquired goodwill
1,153

1,153
Total
1,326

1,300
Total
3,265

2,955




Other operations



Holding company net borrowings
(1,754)

(1,620)
Shareholders' share of deficit of the Prudential Staff Pension Scheme (net of tax) (note (a))
(16)

(31)
Other net liabilities
(30)

(453)
Total
(1,800)

(2,104)
Total of all operations
6,271

5,058
 
Note
(a)     The 2008 comparatives also included the shareholders' share of the deficit of Scottish Amicable Pension Scheme which is included within UK Insurance Operations from 2009.
 
(ii)
    Net asset value per share
 

2009
2008

£m
£m



Closing equity shareholders' funds
6,271
5,058
Net asset value per share attributable to equity shareholders (note (i)) 
248p
203p
Note
(i)      Based on the closing issued share capital as at December 2009 of 2,532 million shares (2008: 2,497 million shares).
 


AB  Funds under management
(i)    
Summary
 

2009
2008

£bn
£bn
Business area


Asian operations
23.7
21.9
US operations
49.6
46.3
UK operations
135.6
125.6
Internal funds under management
208.9
193.8
External funds (note (i))
80.9
55.5
Total funds under management
289.8
249.3
 
Note
(i)
     
External funds shown above for 2009 of £80.9 billion (2008: £55.5 billion) comprise £89.8 billion (2008: £62.3 billion) in respect of investment products, as published in the full year 2009 New Business schedules (see schedule 2B) less £8.9 billion (2008: £6.8 billion) that are classified within internal funds.
 
(ii)   
Internal funds under management - analysis by business area
 

Asian operations
US operations
UK operations
Total

2009
2008
2009
2008
2009
2008
2009
2008

£m
£m
£m
£m
£m
£m
£m
£m
Investment properties
0.0
0.1
0.1
0.1
11.0
12.2
11.1
12.4
Equity securities
11.4
8.1
21.0
15.1
37.0
38.9
69.4
62.1
Debt securities
10.0
11.1
22.8
24.3
69.1
59.8
101.9
95.2
Loans and receivables
1.2
1.7
4.3
5.1
3.3
3.7
8.8
10.5
Other investments
1.1
0.9
1.4
1.7
15.2
11.0
17.7
13.6
Total
23.7
21.9
49.6
46.3
135.6
125.6
208.9
193.8
 
Note
(i)      As included in the investments section of the consolidated statement of financial position at 31 December 2009 except for £0.2 billion (2008: £0.4 billion) investment properties which are held-for-sale or occupied by the Group and, accordingly under IFRS, are included in other statement of financial position captions.
 
AC  Foreign currency translation
 
(i)
     Rates of exchange
The profit and loss accounts of foreign subsidiaries are translated at average exchange rates for the year. Assets and liabilities of foreign subsidiaries are translated at closing exchange rates. Foreign currency borrowings that have been used to provide a hedge against Group equity investments in overseas subsidiaries are also translated at closing exchange rates. The impact of these translations is recorded as a component of the movement in shareholders' equity.

The following translation rates have been applied:
 

Closing
Average
Closing
Average
Local currency: £
2009
2009
2008
2008
Hong Kong
12.52
12.14
11.14
14.42
Indonesia
15,171.52
16,173.28
15,799.22
17,749.22
Japan
150.33
146.46
130.33
192.09
Malaysia
5.53
5.51
5.02
6.15
Singapore
2.27
2.27
2.07
2.61
Taiwan
51.65
51.65
47.28
58.24
USA
1.61
1.57
1.44
1.85
 


(ii)   
Effect of rate movements on results
 

As published
2009
Memorandum
2008

(note (i))
(note (i) and (ii))
EEV basis results
£m
£m
Asian operations:


New business
713
711
Business in force
392
668
Long-term operations
1,105
1,379
Asset management
55
61
Development expenses
(6)
(29)
Total Asia operations
1,154
1,411
US operations


New business
664
347
Business in force
569
346
Jackson
1,233
693
Broker-dealer, asset management and Curian operations
4
8
Total US operations
1,237
701
UK operations


New business
230
273
Business in force
640
764
Long-term business
870
1,037
General insurance commission
51
44
Total insurance
921
1,081
M&G
238
286
Total UK operations
1,159
1,367



Other income and expenditure
(433)
(309)
Restructuring costs
(27)
(32)
Operating profit from continuing operations on longer-term investment returns
3,090
3,138
Shareholders' funds
15,273
14,058
 


 

As published
2009
Memorandum
2008

(note (i))
(note (i) and (ii))
IFRS basis results
£m
£m
Asian operations:


Long-term operations
416
290
Asset management
55
61
Development expenses
(6)
(29)
Total Asia operations
465
322
US operations


Jackson
459
480
Broker-dealer, asset management and Curian operations
4
8
Total US operations
463
488
UK operations


Long-term business
606
545
General insurance commission
51
44
Total UK insurance operations
657
589
M&G
238
286
Total UK operations
895
875
Total segment profit
1,823
1,685



Other income and expenditure
(395)
(267)
Restructuring costs
(23)
(28)
Operating profit from continuing operations on longer-term investment returns
1,405
1,390
Shareholders' funds
6,271
4,810
 
Note
(i)      The 'as published' operating profit for 2009 and 'memorandum' operating profit have been calculated by applying average 2009 exchange rates (CER).
         The 'as published' shareholders' funds for 2009 and memorandum' shareholders' funds for 2008 have been calculated by applying closing period end 2009 exchange rates.
(ii)     The 2008 operating profit of Asian long-term operations excludes the results of the Taiwan agency business for which the sale process was completed in June 2009.




AD  New business summary
 
(i)    
Insurance products and investment products (note a)
 

Insurance products
gross premiums
 
Investment products
gross inflows
(note (b))
Total
 
 

2009 £m
2008 £m
2009 £m
2008 £m
2009 £m
2008 £m







Asian operations
2,019
2,422
71,176
46,957
73,195
49,379
US operations
8,909
6,941
6
36
8,915
6,977
UK operations
5,014
7,183
24,875
16,154
29,889
23,337
Group total
15,942
16,546
96,057
63,147
111,999
79,693
 
(ii)   
Insurance products new business retail and wholesale
 

2009 £m
2008 £m



New Business


Annual premium equivalent (APE) sales:


- Retail:


- Asia
1,261
1,216
- US
912
596
- UK
717
803
- Total retail
2,890
2,615
- Wholesale
6
264
- Total Group APE sales
2,896
2,879
 
(iii)  
Insurance products - new business premiums and contributions (note (a))
 

Single
Regular
Annual premium and contribution equivalents

2009 £m
2008 £m
2009 £m
2008 £m
2009 £m
2008 £m
Asian operations
(note (c))






China (Group's 50% interest)
72
63
38
32
45
38
Hong Kong
94
507
232
154
241
205
India (Group's 26% interest)
47
60
163
202
168
208
Indonesia
41
94
186
167
190
176
Japan
57
115
46
30
52
42
Korea
38
78
118
211
122
219
Malaysia
63
28
140
99
146
102
Singapore
297
341
98
78
128
112
Taiwan
(note (c))
104
36
97
55
107
58
Other
29
18
59
54
62
56
Total Asian operations (all retail)
842
1,340
1,177
1,082
1,261
1,216
US operations
(note(iv))






Fixed annuities
1,053
1,724
-
-
105
172
Fixed index annuities
1,433
501
-
-
143
50
Variable annuities
6,389
3,491
-
-
639
349
Life
10
7
24
24
25
25
Total US operations - retail
8,885
5,723
24
24
912
596
Guaranteed investment contracts
-
857
-
-
-
86
GIC - Medium Term Notes
-
337
-
-
-
34
Total US operations
8,885
6,917
24
24
912
716





















UK operations






Product summary






Internal vesting annuities
1,357
1,600
-
-
136
160
Direct and partnership annuities
590
703
-
-
59
70
Intermediated annuities
242
497
-
-
24
50
Total individual annuities
2,189
2,800
-
-
219
280
Income drawdown
91
75
-
-
9
8
Equity release
127
242
-
-
13
24
Individual pensions
198
115
7
3
27
14
Corporate pensions
81
221
86
88
94
110
Unit-linked bonds
122
109
-
-
12
11
With-profits bonds
1,264
869
-
-
126
87
Protection
-
-
17
6
17
6
Offshore products
317
551
3
4
35
59
PruHealth
-
-
11
16
11
16
Total retail retirement
4,389
4,982
124
117
563
615
Corporate pensions
111
227
105
116
116
139
Other products
79
132
17
21
25
34
DWP rebates
127
153
-
-
13
15
Total mature life and pensions
317
512
122
137
154
188
Total UK retail
4,706
5,494
246
254
717
803
Wholesale annuities
39
1,417
-
-
4
142
Credit life
23
18
-
-
2
2
Total UK operations
4,768
6,929
246
254
723
947
Channel summary






Direct and partnership
1,814
2,352
201
215
382
450
Intermediated
2,765
2,990
45
39
322
338
Wholesale
62
1,434
-
-
6
144
Sub-total
4,641
6,776
246
254
710
932
DWP rebates
127
153
-
-
13
15
Total UK operations
4,768
6,929
246
254
723
947
Group total
14,495
15,186
1,447
1,360
2,896
2,879
 
(iv)      
Investment products - funds under management (notes (b) and (d))
 



2009 £m



1 Jan 2009
Market
gross
inflows
Redemptions
Market exchange translation
and other
movements
31 Dec 2009
Asian operations
15,232
71,176
(69,177)
2,243
19,474
US operations
50
6
(66)
10
-
UK operations
46,997
24,875
(11,397)
9,831
70,306
Group total
62,279
96,057
(80,640)
12,084
89,780















2008 £m



1 Jan 2008
Market
gross
inflows
Redemptions
Market exchange translation
and other
movements
31 Dec 2008
Asian operations
17,393
46,957
(46,102)
(3,016)
15,232
US operations
55
36
(32)
(9)
50
UK operations
51,221
16,154
(12,747)
(7,631)
46,997
Group total
68,669
63,147
(58,881)
(10,656)
62,279
 


Notes
(a)     The tables shown above are provided as an indicative volume measure of transactions undertaken in the reporting period that have the potential to generate profits for shareholders. The amounts shown are not, and not intended to be, reflective of premium income recorded in the IFRS income statement.
         Annual Premium Equivalents (APEs) are calculated as the aggregate of regular new business amounts and one-tenth of single new business amounts. New business premiums for regular premium products are shown on an annualised basis. Department of Work and Pensions (DWP) rebate business is classified as single recurrent business. Internal vesting business is classified as new business where the contracts include an open market option.
         The format of the tables shown above is consistent with the distinction between insurance and investment products as applied for previous financial reporting periods. With the exception of some US institutional business, products categorised as 'insurance' refer to those classified as contracts of long-term insurance business for regulatory reporting purposes, i.e. falling within one of the classes of insurance specified in part II of Schedule 1 to the Regulated Activities Order under FSA regulations.
         The details shown above for insurance products include contributions for contracts that are classified under IFRS 4 'Insurance Contracts' as not containing significant insurance risk. These products are described as investment contracts or other financial instruments under IFRS. Contracts included in this category are primarily certain unit-linked and similar contracts written in UK insurance operations and Guaranteed Investment Contracts and similar funding agreements written in US operations.
(b)     Investment products referred to in the table for funds under management above are unit trust, mutual funds and similar types of retail fund management arrangements. These are unrelated to insurance products that are classified as 'investment contracts' under IFRS 4, as described in the preceding paragraph, although similar IFRS recognition and measurement principles apply to the acquisition costs and fees attaching to this type of business.
(c)     The tables above include new business for the Taiwan bank distribution operation. New business of the Taiwan Agency business, which was sold in June 2009 (as explained in note I1) are excluded from the tables. Comparative figures have been adjusted accordingly.
(d)     New business and market gross inflows and redemption have been translated at the average exchange rate for the year applicable. Funds under management at points in time are translated at the exchange rate applicable at those dates.
(e)     The 2008 comparatives shown in the tables above are at actual exchange rates (AER).
 


(v)
    New business at constant exchange rates
 

As published
2009
Memorandum
2008

(note (i))
(note (i) and (ii))

£m
£m
Annual premium equivalent insurance product sales
(note (ii))


Asian operations
1,261
1,350
US operations
912
846
UK operations
723
947
Total
2,896
3,143



Present value of new business premiums (PVNBP)


Asian operations
6,245
7,304
US operations
9,048
8,448
UK operations
5,902
8,081
Total
21,195
23,833



Gross investment product inflows


Asian operations
71,176
50,407
US operations
6
43
UK operations
24,875
16,154
Total
96,057
66,604



Total insurance and investment product flows


Insurance
15,942
18,148
Investment
96,057
66,604
Total
111,999
84,752
 
Notes
(i)
        
The 'as published' results for 2009 and memorandum' results for 2008 have been calculated by applying average 2009 exchange rates
(ii)
       
The annual premium equivalent sales for insurance products shown above include contributions for contracts that are classified as 'investment contracts' under IFRS 4 as they do not contain significant insurance risk. Additional details on the basis of preparation are shown in note AE.


 
AE    Detailed analysis of Prudential plc new business - 2009
Schedule 1A - Constant Exchange Rates
TOTAL INSURANCE AND INVESTMENT NEW BUSINESS

UK

US (1b)


Asia (1b)

Total














FY
 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY
 2009
FY 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m














Total Insurance Products
5,014
7,183
(30%)
8,909
8,212
8%
2,019
2,753
(27%)
15,942
18,148
(12%)
Total Investment Products Gross Inflows(2)
24,875
16,154
54%
6
43
(86%)
71,176
50,407
41%
96,057
66,604
44%

29,889
23,337
28%
8,915
8,255
8%
73,195
53,160
38%
111,999
84,752
32%













INSURANCE OPERATIONS

Single
Regular
Total
Annual Equivalents(3)














FY
2009
FY 2008
+/-(%)
FY 2009
FY
 2008
+/-(%)
FY
 2009
FY 2008
+/-(%)
FY 2009
FY
2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
1,357
1,600
(15%)
-   
-   
-  
1,357
1,600
(15%)
136
160
(15%)
Direct and Partnership Annuities
590
703
(16%)
-   
-   
-  
590
703
(16%)
59
70
(16%)
Intermediated Annuities
242
497
(51%)
-   
-   
-  
242
497
(51%)
24
50
(52%)
Total Individual Annuities
2,189
2,800
(22%)
-   
-   
-  
2,189
2,800
(22%)
219
280
(22%)













Income Drawdown
91
75
21%
-   
-   
-  
91
75
21%
9
8
13%
Equity Release
127
242
(48%)
-   
-   
-  
127
242
(48%)
13
24
(46%)
Individual Pensions
198
115
72%
7
3
133%
205
118
74%
27
14
93%
Corporate Pensions
81
221
(63%)
86
88
(2%)
167
309
(46%)
94
110
(15%)
Unit Linked Bonds
122
109
12%
-   
-   
-  
122
109
12%
12
11
9%
With-Profit Bonds
1,264
869
45%
-   
-   
-  
1,264
869
45%
126
87
45%
Protection
-   
-   
-  
17
6
183%
17
6
183%
17
6
183%
Offshore Products
317
551
(42%)
3
4
(25%)
320
555
(42%)
35
59
(41%)
Pru Health
(8)
-   
-   
-  
11
16
(31%)
11
16
(31%)
11
16
(31%)
Total Retail Retirement
4,389
4,982
(12%)
124
117
6%
4,513
5,099
(11%)
563
615
(8%)













Corporate Pensions
111
227
(51%)
105
116
(9%)
216
343
(37%)
116
139
(17%)
Other Products
79
132
(40%)
17
21
(19%)
96
153
(37%)
25
34
(26%)
DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
13
15
(13%)
Total Mature Life and Pensions
317
512
(38%)
122
137
(11%)
439
649
(32%)
154
188
(18%)













Total Retail
4,706
5,494
(14%)
246
254
(3%)
4,952
5,748
(14%)
717
803
(11%)













Wholesale Annuities
39
1,417
(97%)
-   
-   
-  
39
1,417
(97%)
4
142
(97%)













Credit Life
23
18
28%
-   
-   
-  
23
18
28%
2
2
0%













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
723
947
(24%)













Channel Summary












Direct and Partnership
1,814
2,352
(23%)
201
215
(7%)
2,015
2,567
(22%)
382
450
(15%)
Intermediated
2,765
2,990
(8%)
45
39
15%
2,810
3,029
(7%)
322
338
(5%)
Wholesale
62
1,434
(96%)
-   
-   
-  
62
1,434
(96%)
6
143
(96%)
Sub-Total
4,641
6,776
(32%)
246
254
(3%)
4,887
7,030
(30%)
710
932
(24%)













DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
13
15
(13%)













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
723
947
(24%)













US Insurance Operations(1b)












Fixed Annuities
1,053
2,039
(48%)
-   
-   
-  
1,053
2,039
(48%)
105
204
(49%)
Fixed Index Annuities
1,433
593
142%
-   
-   
-  
1,433
593
142%
143
59
142%
Variable Annuities
6,389
4,130
55%
-   
-   
-  
6,389
4,130
55%
639
413
55%
Life
10
9
11%
24
28
(14%)
34
37
(8%)
25
29
(14%)
Sub-Total Retail
8,885
6,771
31%
24
28
(14%)
8,909
6,799
31%
912
705
30%
Guaranteed Investment Contracts
-   
1,014
-  
-   
-   
-  
-   
1,014
-  
-   
101
-  
GIC - Medium Term Note
-   
399
-  
-   
-   
-  
-   
399
-  
-   
40
-  
Total US Insurance Operations
8,885
8,184
9%
24
28
(14%)
8,909
8,212
8%
912
846
8%













Asian Insurance Operations(1b)












China
72
76
(5%)
38
39
(3%)
110
115
(4%)
45
47
(4%)
Hong Kong
94
602
(84%)
232
183
27%
326
785
(58%)
241
243
(1%)
India
47
64
(27%)
163
213
(23%)
210
277
(24%)
168
219
(23%)
Indonesia
41
104
(61%)
186
184
1%
227
288
(21%)
190
194
(2%)
Japan
57
151
(62%)
46
39
18%
103
190
(46%)
52
54
(4%)
Korea
38
79
(52%)
118
213
(45%)
156
292
(47%)
122
221
(45%)
Malaysia
63
31
103%
140
111
26%
203
142
43%
146
114
28%
Singapore
297
392
(24%)
98
90
9%
395
482
(18%)
128
129
(1%)
Taiwan
104
41
154%
97
63
54%
201
104
93%
107
67
60%
Other
(4)
29
19
53%
59
59
0%
88
78
13%
62
61
2%
Total Asian Insurance Operations
842
1,559
(46%)
1,177
1,194
(1%)
2,019
2,753
(27%)
1,261
1,350
(7%)













Group Total
14,495
16,672
(13%)
1,447
1,476
(2%)
15,942
18,148
(12%)
2,896
3,143
(8%)
 


Schedule 1B - Actual Exchange Rates
PRUDENTIAL PLC - NEW BUSINESS - FULL YEAR 2009
 
TOTAL INSURANCE AND INVESTMENT NEW BUSINESS

UK
US(1a)
Asia(1a)
Total














FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m














Total Insurance Products
5,014
7,183
(30%)
8,909
6,941
28%
2,019
2,422
(17%)
15,942
16,546
(4%)
Total Investment Products Gross Inflows(2)
24,875
16,154
54%
6
36
(83%)
71,176
46,957
52%
96,057
63,147
52%

29,889
23,337
28%
8,915
6,977
28%
73,195
49,379
48%
111,999
79,693
41%
 
INSURANCE OPERATIONS

 
Single
 
Regular
Total
Annual Equivalents(3)














FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
1,357
1,600
(15%)
-   
-   
-  
1,357
1,600
(15%)
136
160
(15%)
Direct and Partnership Annuities
590
703
(16%)
-   
-   
-  
590
703
(16%)
59
70
(16%)
Intermediated Annuities
242
497
(51%)
-   
-   
-  
242
497
(51%)
24
50
(52%)
Total Individual Annuities
2,189
2,800
(22%)
-   
-   
-  
2,189
2,800
(22%)
219
280
(22%)













Income Drawdown
91
75
21%
-   
-   
-  
91
75
21%
9
8
13%
Equity Release
127
242
(48%)
-   
-   
-  
127
242
(48%)
13
24
(46%)
Individual Pensions
198
115
72%
7
3
133%
205
118
74%
27
14
93%
Corporate Pensions
81
221
(63%)
86
88
(2%)
167
309
(46%)
94
110
(15%)
Unit Linked Bonds
122
109
12%
-   
-   
-  
122
109
12%
12
11
9%
With-Profit Bonds
1,264
869
45%
-   
-   
-  
1,264
869
45%
126
87
45%
Protection
-   
-   
-  
17
6
183%
17
6
183%
17
6
183%
Offshore Products
317
551
(42%)
3
4
(25%)
320
555
(42%)
35
59
(41%)
Pru Health(8)
-   
-   
-  
11
16
(31%)
11
16
(31%)
11
16
(31%)
Total Retail Retirement
4,389
4,982
(12%)
124
117
6%
4,513
5,099
(11%)
563
615
(8%)













Corporate Pensions
111
227
(51%)
105
116
(9%)
216
343
(37%)
116
139
(17%)
Other Products
79
132
(40%)
17
21
(19%)
96
153
(37%)
25
34
(26%)
DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
13
15
(13%)
Total Mature Life and Pensions
317
512
(38%)
122
137
(11%)
439
649
(32%)
154
188
(18%)













Total Retail
4,706
5,494
(14%)
246
254
(3%)
4,952
5,748
(14%)
717
803
(11%)













Wholesale Annuities
39
1,417
(97%)
-   
-   
-  
39
1,417
(97%)
4
142
(97%)













Credit Life
23
18
28%
-   
-   
-  
23
18
28%
2
2
0%













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
723
947
(24%)













Channel Summary












Direct and Partnership
1,814
2,352
(23%)
201
215
(7%)
2,015
2,567
(22%)
382
450
(15%)
Intermediated
2,765
2,990
(8%)
45
39
15%
2,810
3,029
(7%)
322
338
(5%)
Wholesale
62
1,434
(96%)
-   
-   
-  
62
1,434
(96%)
6
144
(96%)
Sub-Total
4,641
6,776
(32%)
246
254
(3%)
4,887
7,030
(30%)
710
932
(24%)













DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
13
15
(13%)













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
723
947
(24%)













US Insurance Operations(1a)












Fixed Annuities
1,053
1,724
(39%)
-   
-   
-  
1,053
1,724
(39%)
105
172
(39%)
Fixed Index Annuities
1,433
501
186%
-   
-   
-  
1,433
501
186%
143
50
186%
Variable Annuities
6,389
3,491
83%
-   
-   
-  
6,389
3,491
83%
639
349
83%
Life
10
7
43%
24
24
0%
34
31
10%
25
25
0%
Sub-Total Retail
8,885
5,723
55%
24
24
0%
8,909
5,747
55%
912
596
53%
Guaranteed Investment Contracts
-   
857
-  
-   
-   
-  
-   
857
-  
-   
86
-  
GIC - Medium Term Note
-   
337
-  
-   
-   
-  
-   
337
-  
-   
34
-  
Total US Insurance Operations
8,885
6,917
28%
24
24
0%
8,909
6,941
28%
912
716
27%








































































































Asian Insurance Operations(1a)












China
72
63
14%
38
32
19%
110
95
16%
45
38
18%
Hong Kong
94
507
(81%)
232
154
51%
326
661
(51%)
241
205
18%
India
47
60
(22%)
163
202
(19%)
210
262
(20%)
168
208
(19%)
Indonesia
41
94
(56%)
186
167
11%
227
261
(13%)
190
176
8%
Japan
57
115
(50%)
46
30
53%
103
145
(29%)
52
42
24%
Korea
38
78
(51%)
118
211
(44%)
156
289
(46%)
122
219
(44%)
Malaysia
63
28
125%
140
99
41%
203
127
60%
146
102
43%
Singapore
297
341
(13%)
98
78
26%
395
419
(6%)
128
112
14%
Taiwan
104
36
189%
97
55
76%
201
91
121%
107
58
84%
Other
(4)
29
18
61%
59
54
9%
88
72
22%
62
56
11%
Total Asian Insurance Operations
842
1,340
(37%)
1,177
1,082
9%
2,019
2,422
(17%)
1,261
1,216
4%


























Group Total
14,495
15,186
(5%)
1,447
1,360
6%
15,942
16,546
(4%)
2,896
2,879
1%
 


Schedule 2A - Constant Exchange Rates
PRUDENTIAL PLC - NEW BUSINESS - FULL YEAR 2009
 
INVESTMENT OPERATIONS
 






Opening
Closing
Variance


Gross
 Inflows
Redemptions
Net Inflows

FUM
FUM
%
2009
£m
£m
£m

£m
£m


M&G








Retail
13,568
(6,052)
7,516

19,142
31,059
62%

Institutional
(5)
11,307
(5,345)
5,962

27,855
39,247
41%

Total M&G
24,875
(11,397)
13,478

46,997
70,306
50%










Asia








India
552
(880)
(328)

1,461
1,852
27%

Taiwan
1,169
(1,019)
150

1,058
1,655
56%

Korea
647
(809)
(162)

1,808
1,843
2%

Japan
1,109
(903)
206

2,783
4,203
51%

Other Mutual Fund Operations
1,754
(1,437)
317

2,470
3,569
44%

Total Asian Equity/Bond/Other
5,231
(5,048)
183

9,580
13,122
37%










MMF








India
59,688
(58,022)
1,666

1,456
3,009
107%

Taiwan
2,260
(2,559)
(299)

1,300
1,006
(23%)

Korea
2,600
(2,584)
16

456
447
(2%)

Other Mutual Fund Operations
980
(920)
60

375
440
17%

Total Asian MMF
65,528
(64,085)
1,443

3,587
4,902
37%



















Total Asia Retail Mutual Funds
70,759
(69,133)
1,626

13,167
18,024
37%










Third Party Institutional Mandates
417
(44)
373

715
1,450
103%



















Total Asian Investment Operations
71,176
(69,177)
1,999

13,882
19,474
40%










US








Retail
6
(66)
(60)

45
-   
(100%)

Total US
6
(66)
(60)

45
-   
(100%)



















Total Investment Products
96,057
(80,640)
15,417

60,924
89,780
47%









 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Gross
 Inflows
Redemptions
Net Inflows
2008
£m
£m
£m

M&G




Retail
9,040
(6,945)
2,095

Institutional
(5)
7,114
(5,802)
1,312

Total M&G
16,154
(12,747)
3,407






Asia




India
1,024
(1,164)
(140)

Taiwan
1,119
(1,068)
51

Korea
1,429
(1,332)
97

Japan
1,403
(1,124)
279

Other Mutual Fund Operations
1,888
(1,334)
554

Total Asia Equity/Bond/Other
6,863
(6,022)
841






MMF




India
35,853
(36,039)
(186)

Taiwan
4,563
(4,071)
492

Korea
1,954
(1,977)
(23)

Other Mutual Fund Operations
879
(819)
60

Total Asian MMF
43,249
(42,906)
343






Total Asia Retail Mutual Funds
50,112
(48,928)
1,184






Third Party Institutional Mandates
295
(435)
(140)






Total Asian Investment Operations
50,407
(49,363)
1,044






US




Retail
43
(38)
5

Total US
43
(38)
5











Total Investment Products
66,604
(62,148)
4,456












Gross Inflows
Redemptions
Net Inflows
2009 Movement Relative to 2008
%
%
%

M&G




Retail
50%
13%
259%

Institutional
(5)
59%
8%
354%

Total M&G
54%
11%
296%






Asia




India
(46%)
24%
(134%)

Taiwan
4%
5%
194%

Korea
(55%)
39%
(267%)

Japan
(21%)
20%
(26%)

Other Mutual Fund Operations
(7%)
(8%)
(43%)

Total Asia Equity/Bond/Other
(24%)
16%
(78%)

MMF




India
66%
(61%)
996%

Taiwan
(50%)
37%
(161%)

Korea
33%
(31%)
170%

Other Mutual Fund Operations
11%
(12%)
0%

Total Asian MMF
52%
(49%)
321%






Total Asian Retail Mutual Funds
41%
(41%)
37%






Third Party Institutional Mandates
41%
90%
366%






Total Asian Investment Operations
41%
(40%)
91%






US




Retail
(86%)
(74%)
(1,300%)

Total US
(86%)
(74%)
(1,300%)






Total Investment Products
44%
(30%)
246%





































2009 Q4
2008 Q4



YTD
YTD
+/- (%)


£m
£m












US(7)




Curian Capital




External funds under administration
2,260
1,618
40%


Schedule 2B - Actual Exchange Rates
PRUDENTIAL PLC - NEW BUSINESS - FULL YEAR 2009
 
INVESTMENT OPERATIONS
 







Market &
Net



Opening



Other
Currency
Movement
Closing


FUM
Gross Inflows
Redemptions
Net Inflows
Movements
Movements
In FUM
FUM
2009
£m
£m
£m
£m
£m
£m
£m
£m

M&G









Retail
19,142
13,568
(6,052)
7,516
(626)
5,027
11,917
31,059

Institutional
(5)
27,855
11,307
(5,342)
5,962
(158)
5,588
11,392
39,247

Total M&G
46,997
24,875
(11,397)
13,478
(784)
10,615
23,309
70,306











Asia









India
1,567
552
(880)
(328)
233
380
285
1,852

Taiwan
1,156
1,169
(1,019)
150
-   
349
499
1,655

Korea
1,878
647
(809)
(162)
(398)
525
(35)
1,843

Japan
3,211
1,109
(903)
206
-   
786
992
4,203

Other Mutual Fund Operations
2,758
1,754
(1,437)
317
(1)
495
811
3,569

Total Asian Equity/Bond/Other
10,570
5,231
(5,048)
183
(166)
2,535
2,552
13,122











MMF









India
1,562
59,688
(58,022)
1,666
(274)
55
1,447
3,009

Taiwan
1,421
2,260
(2,559)
(299)
-   
(116)
(415)
1,006

Korea
474
2,600
(2,584)
16
(41)
(2)
(27)
447

Other Mutual Fund Operations
416
980
(920)
60
-   
(36)
24
440

Total Asian MMF
3,873
65,528
(64,085)
1,443
(315)
(99)
1,029
4,902





















Total Asia Retail Mutual Funds
14,443
70,759
(69,133)
1,626
(481)
2,436
3,581
18,024





















Third Party Institutional Mandates
789
417
(44)
373
-   
288
661
1,450





















Total Asian Investment Operations
15,232
71,176
(69,177)
1,999
(481)
2,724
4,242
19,474











US









Retail
50
6
(66)
(60)
2
8
(50)
-    

Total US
50
6
(66)
(60)
2
8
(50)
-    





















Total Investment Products
62,279
96,057
(80,640)
15,417
(1,263)
13,347
27,501
89,780

















Market &
Net



Opening



Other
Currency
Movement
Closing


FUM
Gross Inflows
Redemptions
Net Inflows
Movements
Movements
In FUM
FUM
2008
£m
£m
£m
£m
£m
£m
£m
£m

M&G









Retail
22,320
9,040
(6,945)
2,095
-   
(5,273)
(3,178)
19,142

Institutional
(5)
28,901
7,114
(5,802)
1,312
91
(2,449)
(1,046)
27,855

Total M&G
51,221
16,154
(12,747)
3,407
91
(7,722)
(4,224)
46,997











Asia









India
2,225
968
(1,100)
(132)
(104)
(422)
(658)
1,567

Taiwan
1,476
992
(947)
45
-   
(365)
(320)
1,156

Korea
2,946
1,413
(1,317)
96
(177)
(987)
(1,068)
1,878

Japan
4,313
1,070
(857)
213
-   
(1,315)
(1,102)
3,211

Other Mutual Fund Operations
2,537
1,602
(1,145)
457
(13)
(223)
221
2,758

Total Asia Equity/Bond/Other
13,497
6,045
(5,366)
679
(294)
(3,312)
(2,927)
10,570











MMF









India
1,416
33,896
(34,072)
(176)
16
306
146
1,562

Taiwan
632
4,047
(3,610)
437
-   
352
789
1,421

Korea
480
1,933
(1,955)
(22)
(21)
37
(6)
474

Other Mutual Fund Operations
252
780
(727)
53
-   
111
164
416

Total Asian MMF
2,780
40,656
(40,364)
292
(5)
806
1,093
3,873





















Total Asia Retail Mutual Funds
16,277
46,701
(45,730)
971
(299)
(2,506)
(1,834)
14,443































Third Party Institutional Mandates
1,116
256
(372)
(116)
-   
(211)
(327)
789





















Total Asian Investment Operations
17,393
46,957
(46,102)
855
(299)
(2,717)
(2,161)
15,232











US









Retail
55
36
(32)
4
4
(13)
(5)
50

Total US
55
36
(32)
4
4
(13)
(5)
50





















Total Investment Products
68,669
63,147
(58,881)
4,266
(204)
(10,452)
(6,390)
62,279

















Market &
Net



Opening



Other
Currency
Movement
Closing


FUM
Gross Inflows
Redemptions
Net Inflows
Movements
Movements
In FUM
FUM
2009 Movement Relative to 2008
%
%
%
%
%
%
%
%

M&G









Retail
(14%)
50%
13%
259%
-  
195%
475%
62%

Institutional
(5)
(4%)
59%
8%
354%
(274%)
328%
1,189%
41%

Total M&G
(8%)
54%
11%
296%
(962%)
237%
652%
50%











Asia









India
(30%)
(43%)
20%
(148%)
324%
190%
143%
18%

Taiwan
(22%)
18%
(8%)
233%
-  
196%
256%
43%

Korea
(36%)
(54%)
39%
(269%)
(125%)
153%
97%
(2%)

Japan
(26%)
4%
(5%)
(3%)
-  
160%
190%
31%

Other Mutual Fund Operations
9%
9%
(26%)
(31%)
92%
322%
267%
29%

Total Asia Equity/Bond/Other
(22%)
(13%)
6%
(73%)
44%
177%
187%
24%











MMF









India
10%
76%
(70%)
1,047%
(1,813%)
(82%)
891%
93%

Taiwan
125%
(44%)
29%
(168%)
-  
(133%)
(153%)
(29%)

Korea
(1%)
35%
(32%)
173%
(95%)
(105%)
(350%)
(6%)

Other Mutual Fund Operations
65%
26%
(27%)
13%
-  
(132%)
(85%)
6%

Total Asian MMF
39%
61%
(59%)
394%
(6,200%)
(112%)
(6%)
27%











Total Asian Retail Mutual Funds
(11%)
52%
(51%)
67%
(61%)
197%
295%
25%











Third Party Institutional Mandates
(29%)
63%
88%
422%
-  
236%
302%
84%





















Total Asian Investment Operations
(12%)
52%
(50%)
134%
(61%)
200%
296%
28%











US









Retail
(9%)
(83%)
(106%)
(1,600%)
(50%)
162%
(900%)
-  

Total US
(9%)
(83%)
(106%)
(1,600%)
(50%)
162%
(900%)
-  





















Total Investment Products
(9%)
52%
(37%)
261%
(519%)
228%
530%
44%
















2009 Q4
2008 Q4

US





YTD
YTD
+/- (%)






£m
£m

Curian Capital








External Funds Under Administration





2,260
1,818
24%









 


Schedule 3 - Actual Exchange Rates
 
PRUDENTIAL PLC - NEW BUSINESS - QUARTER 4 2009 VERSUS QUARTER 4 2008
 
INSURANCE OPERATIONS
 

Single
Regular
Total
Annual Equivalents(3)

Q4 2009
Q4 2008
+/-(%)
Q4 2009
Q4 2008
+/-(%)
Q4 2009
Q4 2008
+/-(%)
Q4 2009
Q4 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
334
471
(29%)
-   
-   
-  
334
471
(29%)
33
47
(30%)
Direct and Partnership Annuities
166
153
8%
-   
-   
-  
166
153
8%
17
15
13%
Intermediated Annuities
46
96
(52%)
-   
-   
-  
46
96
(52%)
5
10
(50%)
Total Individual Annuities
546
720
(24%)
-   
-   
-  
546
720
(24%)
55
72
(24%)













Income Drawdown
21
21
0%
-   
-   
-  
21
21
0%
2
2
0%
Equity Release
43
54
(20%)
-   
-   
-  
43
54
(20%)
4
5
(20%)
Individual Pensions
53
63
(16%)
2
1
100%
55
64
(14%)
7
7
0%
Corporate Pensions
26
67
(61%)
25
24
4%
51
91
(44%)
28
31
(10%)
Unit Linked Bonds
39
21
86%
-   
-   
-  
39
21
86%
4
2
100%
With-Profit Bonds
295
218
35%
-   
-   
-  
295
218
35%
30
22
36%
Protection
-   
-   
-  
5
2
150%
5
2
150%
5
2
150%
Offshore Products
110
104
6%
-   
1
-  
110
105
5%
11
11
0%
Pru Health
(8)
-   
-   
-  
2
2
0%
2
2
0%
2
2
0%













Total Retail Retirement
1,133
1,268
(11%)
34
30
13%
1,167
1,298
(10%)
147
157
(6%)













Corporate Pensions
23
-   
-  
25
28
(11%)
48
28
71%
27
28
(4%)
Other Products
20
19
5%
4
4
0%
24
23
4%
6
6
0%
DWP Rebates
47
50
(6%)
-   
-   
-  
47
50
(6%)
5
5
0%
Total Mature Life and Pensions
90
69
30%
29
32
(9%)
119
101
18%
38
39
(3%)


























Total Retail
1,223
1,337
(9%)
63
62
2%
1,286
1,399
(8%)
185
196
(6%)













Wholesale Annuities
27
47
(43%)
-   
-   
-  
27
47
(43%)
3
5
(40%)













Credit Life
6
7
(14%)
-   
-   
-  
6
7
(14%)
1
1
0%


























Total UK Insurance Operations
1,256
1,391
(10%)
63
62
2%
1,319
1,453
(9%)
189
201
(6%)













Channel Summary












Direct and Partnership
467
623
(25%)
52
54
(4%)
519
677
(23%)
99
116
(15%)
Intermediated
709
664
7%
11
8
38%
720
672
7%
82
74
11%
Wholesale
33
54
(39%)
-   
-   
-  
33
54
(39%)
3
5
(40%)
Sub-Total
1,209
1,341
(10%)
63
62
2%
1,272
1,403
(9%)
184
196
(6%)













DWP Rebates
47
50
(6%)
-   
-   
-  
47
50
(6%)
5
5
0%













Total UK Insurance Operations
1,256
1,391
(10%)
63
62
2%
1,319
1,453
(9%)
189
201
(6%)













US Insurance Operations(1a) (7)












Fixed Annuities
212
583
(64%)
-   
-   
-  
212
583
(64%)
21
58
(64%)
Fixed Index Annuities
378
184
105%
-   
-   
-  
378
184
105%
38
18
111%
Variable Annuities
2,068
895
131%
-   
-   
-  
2,068
895
131%
207
90
130%
Life
3
1
200%
6
6
0%
9
7
29%
6
6
0%
Sub-Total Retail
2,661
1,663
60%
6
6
0%
2,667
1,669
60%
272
172
58%
Guaranteed Investment Contracts
-   
42
-  
-   
-   
-  
-   
42
-  
-   
4
-  
GIC - Medium Term Note
-   
16
-  
-   
-   
-  
-   
16
-  
-   
2
-  
Total US Insurance Operations
2,661
1,721
55%
6
6
0%
2,667
1,727
54%
272
178
53%














































































Asian Insurance Operations(1a)












China
14
16
(13%)
10
9
11%
24
25
(4%)
11
11
0%
Hong Kong
30
47
(36%)
88
41
115%
118
88
34%
91
46
98%
India
10
7
43%
51
34
50%
61
41
49%
52
35
49%
Indonesia
17
9
89%
62
46
35%
79
55
44%
64
47
36%
Japan
7
21
(67%)
11
6
83%
18
27
(33%)
12
8
50%
Korea
10
15
(33%)
25
35
(29%)
35
50
(30%)
26
37
(30%)
Malaysia
13
6
117%
61
35
74%
74
41
80%
62
36
72%
Singapore
135
35
286%
34
22
55%
169
57
196%
48
26
85%
Taiwan
34
3
1,033%
27
29
(7%)
61
32
91%
30
29
3%
Other
(4)
12
4
200%
18
14
29%
30
18
67%
19
14
36%
Total Asian Insurance Operations
282
163
73%
387
271
43%
669
434
54%
415
287
45%


























Group Total
4,199
3,275
28%
456
339
35%
4,655
3,614
29%
876
667
31%
 
INVESTMENT OPERATIONS

Opening FUM
Gross Inflows
Redemptions
Net Inflows
Other Movements
Market &
Currency Movements
Net Movement In FUM

Closing
FUM

£m
£m
£m
£m
£m
£m
£m

£m










M&G
(5)
Q4 2009
66,235
6,434
(4,093)
2,341
(53)
1,783
4,071

70,306

Q4 2008
49,994
4,040
(4,775)
(735)
110
(2,372)
(2,997)

46,997

+/-(%)
32%
59%
14%
419%
(148%)
175%
236%

50%
Asia Retail Mutual Funds
Q4 2009
17,773
18,130
(18,394)
(264)
(28)
543
251

18,024

Q4 2008
13,594
12,529
(12,618)
(89)
(6)
944
849

14,443

+/-(%)
31%
45%
(46%)
(197%)
(367%)
(42%)
(70%)

25%
Asia Third Party
Q4 2009
1,008
378
(6)
372
-   
70
442

1,450

Q4 2008
755
16
(24)
(8)
-   
42
34

789

+/-(%)
34%
2,263%
75%
4,750%
-  
67%
1,200%

84%
US Retail Mutual Funds
Q4 2009
-   
-   
1
1
-   
(1)
-   

-    

Q4 2008
58
4
(8)
(4)
2
(6)
(8)

50

+/-(%)
(100%)
-  
113%
125%
-  
83%
-  

(100%)






















Total Investment Products
Q4 2009
85,016
24,942
(22,492)
2,450
(81)
2,395
4,764

89,780

Q4 2008
64,401
16,589
(17,425)
(836)
106
(1,392)
(2,122)

62,279

+/-(%)
32%
50%
(29%)
393%
(176%)
272%
325%

44%
 


Schedule 4 - Actual Exchange Rates
 
PRUDENTIAL PLC - NEW BUSINESS - QUARTER 4 2009 VERSUS QUARTER 3 2009
 
INSURANCE OPERATIONS
 

Single
Regular
Total
Annual Equivalents(3)

Q4 2009
Q3 2009
+/-(%)
Q4 2009
Q 3 2009
+/-(%)
Q4 2009
Q 3 2009
+/-(%)
Q4 2009
Q3 2009
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
334
297
12%
-   
-   
-  
334
297
12%
33
30
10%
Direct and Partnership Annuities
166
151
10%
-   
-   
-  
166
151
10%
17
15
13%
Intermediated Annuities
46
56
(18%)
-   
-   
-  
46
56
(18%)
5
6
(17%)
Total Individual Annuities
546
504
8%
-   
-   
-  
546
504
8%
55
50
10%













Income Drawdown
21
24
(13%)
-   
-   
-  
21
24
(13%)
2
2
0%
Equity Release
43
30
43%
-   
-   
-  
43
30
43%
4
3
33%
Individual Pensions
53
47
13%
2
2
0%
55
49
12%
7
7
0%
Corporate Pensions
26
8
225%
25
17
47%
51
25
104%
28
18
56%
Unit Linked Bonds
39
34
15%
-   
-   
-  
39
34
15%
4
3
33%
With-Profit Bonds
295
285
4%
-   
-   
-  
295
285
4%
30
29
3%
Protection
-   
-   
-  
5
5
0%
5
5
0%
5
5
0%
Offshore Products
110
80
38%
-   
1
-  
110
81
36%
11
9
22%
Pru Health
(8)
-   
-   
-  
2
3
(33%)
2
3
(33%)
2
3
(33%)













Total Retail Retirement
1,133
1,012
12%
34
28
21%
1,167
1,040
12%
147
129
14%













Corporate Pensions
23
20
15%
25
21
19%
48
41
17%
27
23
17%
Other Products
20
20
0%
4
3
33%
24
23
4%
6
5
20%
DWP Rebates
47
-   
-  
-   
-   
-  
47
-   
-  
5
-   
-  
Total Mature Life and Pensions
90
40
125%
29
24
21%
119
64
86%
38
28
36%


























Total Retail
1,223
1,052
16%
63
52
21%
1,286
1,104
16%
185
157
18%













Wholesale Annuities
27
4
575%
-   
-   
-  
27
4
575%
3
-   
-  













Credit Life
6
5
20%
-   
-   
-  
6
5
20%
1
1
0%


























Total UK Insurance Operations
1,256
1,061
18%
63
52
21%
1,319
1,113
19%
189
158
20%













Channel Summary












Direct and Partnership
467
398
17%
52
41
27%
519
439
18%
99
81
22%
Intermediated
709
654
8%
11
11
0%
720
665
8%
82
76
8%
Wholesale
33
9
267%
-   
-   
-  
33
9
267%
3
1
200%
Sub-Total
1,209
1,061
14%
63
52
21%
1,272
1,113
14%
184
158
16%













DWP Rebates
47
-   
-  
-   
-   
-  
47
-   
-  
5
-   
-  













Total UK Insurance Operations
1,256
1,061
18%
63
52
21%
1,319
1,113
19%
189
158
20%













US Insurance Operations(1a) (7)












Fixed Annuities
212
140
51%
-   
-   
-  
212
140
51%
21
14
50%
Fixed Index Annuities
378
480
(21%)
-   
-   
-  
378
480
(21%)
38
48
(21%)
Variable Annuities
2,068
1,804
15%
-   
-   
-  
2,068
1,804
15%
207
180
15%
Life
3
2
50%
6
6
0%
9
8
13%
6
6
0%
Sub-Total Retail
2,661
2,426
10%
6
6
0%
2,667
2,432
10%
272
249
9%
Guaranteed Investment Contracts
-   
-   
-  
-   
-   
-  
-   
-   
-  
-   
-   
-  
GIC - Medium Term Note
-   
-   
-  
-   
-   
-  
-   
-   
-  
-   
-   
-  
Total US Insurance Operations
2,661
2,426
10%
6
6
0%
2,667
2,432
10%
272
249
9%



















































 
 













Asian Insurance Operations(1a)
(7)

























China
14
15
(7%)
10
11
(9%)
24
26
(8%)
11
13
(15%)
Hong Kong
30
33
(9%)
88
52
69%
118
85
39%
91
55
65%
India
10
5
100%
51
39
31%
61
44
39%
52
40
30%
Indonesia
17
11
55%
62
42
48%
79
53
49%
64
43
49%
Japan
7
12
(42%)
11
10
10%
18
22
(18%)
12
11
9%
Korea
10
8
25%
25
29
(14%)
35
37
(5%)
26
30
(13%)
Malaysia
13
17
(24%)
61
30
103%
74
47
57%
62
32
94%
Singapore
135
47
187%
34
24
42%
169
71
138%
48
29
66%
Taiwan
34
38
(11%)
27
22
23%
61
60
2%
30
26
15%
Other
(4)
12
9
33%
18
14
29%
30
23
30%
19
15
27%
Total Asian Insurance Operations
282
195
45%
387
273
42%
669
468
43%
415
293
42%


























Group Total
4,199
3,682
14%
456
331
38%
4,655
4,013
16%
876
700
25%
 
INVESTMENT OPERATIONS

Opening FUM
Gross Inflows
Redemptions
Net Inflows
Other Movements
Market &Currency Movements
Net Movement In FUM
Closing FUM

£m
£m
£m
£m
£m
£m
£m
£m









M&G(5)
Q4 2009
66,235
6,434
(4,093)
2,341
(53)
1,783
4,071
70,306

Q3 2009
55,921
5,810
(3,298)
2,512
(113)
7,915
10,314
66,235

+/-(%)
18%
11%
(24%)
(7%)
53%
(77%)
(61%)
6%
Asia Retail Mutual Funds
Q4 2009
17,773
18,130
(18,394)
(264)
(28)
543
251
18,024

Q3 2009
15,518
20,579
(20,142)
437
(1)
1,819
2,255
17,773

+/-(%)
15%
(12%)
9%
(160%)
(2,700%)
(70%)
(89%)
1%
Asia Third Party
Q4 2009
1,008
378
(6)
372
-   
70
442
1,450

Q3 2009
859
5
(7)
(2)
-   
151
149
1,008

+/-(%)
17%
7,460%
14%
18,700%
-  
(54%)
197%
44%
US Retail Mutual Funds
Q4 2009
-   
-   
1
1
-   
(1)
-   
-    

Q3 2009
38
-   
(49)
(49)
1
10
(38)
-    

+/-(%)
-  
-  
102%
102%
-  
-  
-  
-  




















Total Investment Products
Q4 2009
85,016
24,942
(22,492)
2,450
(81)
2,395
4,764
89,780

Q3 2009
72,336
26,394
(23,496)
2,898
(113)
9,895
12,680
85,016

+/-(%)
18%
(6%)
4%
(15%)
28%
(76%)
(62%)
6%
 


Schedule 5 - Constant Exchange Rates
PRUDENTIAL PLC - NEW BUSINESS - FULL YEAR 2009
 
TOTAL INSURANCE AND INVESTMENT NEW BUSINESS
 

UK
US(1b)
Asia(1b)
Total














FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m














Total Insurance Products
5,014
7,183
(30%)
8,909
8,212
8%
2,019
2,753
(27%)
15,942
18,148
(12%)
Total Investment Products Gross Inflows(2)
24,875
16,154
54%
6
43
(86%)
71,176
50,407
41%
96,057
66,604
44%

29,889
23,337
28%
8,915
8,255
8%
73,195
53,160
38%
111,999
84,752
32%
 
INSURANCE OPERATIONS

Single
Regular
Total
PVNBP














FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
1,357
1,600
(15%)
-   
-   
-  
1,357
1,600
(15%)
1,357
1,600
(15%)
Direct and Partnership Annuities
590
703
(16%)
-   
-   
-  
590
703
(16%)
590
703
(16%)
Intermediated Annuities
242
497
(51%)
-   
-   
-  
242
497
(51%)
242
497
(51%)
Total Individual Annuities
2,189
2,800
(22%)
-   
-   
-  
2,189
2,800
(22%)
2,189
2,800
(22%)













Income Drawdown
91
75
21%
-   
-   
-  
91
75
21%
91
75
21%
Equity Release
127
242
(48%)
-   
-   
-  
127
242
(48%)
127
242
(48%)
Individual Pensions
198
115
72%
7
3
133%
205
118
74%
218
124
76%
Corporate Pensions
81
221
(63%)
86
88
(2%)
167
309
(46%)
547
645
(15%)
Unit Linked Bonds
122
109
12%
-   
-   
-  
122
109
12%
122
109
12%
With-Profit Bonds
1,264
869
45%
-   
-   
-  
1,264
869
45%
1,264
869
45%
Protection
-   
-   
-  
17
6
183%
17
6
183%
110
38
189%
Offshore Products
317
551
(42%)
3
4
(25%)
320
555
(42%)
336
573
(41%)
Pru Health
(8)
-   
-   
-  
11
16
(31%)
11
16
(31%)
111
146
(24%)
Total Retail Retirement
4,389
4,982
(12%)
124
117
6%
4,513
5,099
(11%)
5,115
5,621
(9%)













Corporate Pensions
111
227
(51%)
105
116
(9%)
216
343
(37%)
460
653
(30%)
Other Products
79
132
(40%)
17
21
(19%)
96
153
(37%)
138
219
(37%)
DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
127
153
(17%)
Total Mature Life and Pensions
317
512
(38%)
122
137
(11%)
439
649
(32%)
725
1,025
(29%)













Total Retail
4,706
5,494
(14%)
246
254
(3%)
4,952
5,748
(14%)
5,840
6,646
(12%)













Wholesale Annuities
39
1,417
(97%)
-   
-   
-  
39
1,417
(97%)
39
1,417
(97%)













Credit Life
23
18
28%
-   
-   
-  
23
18
28%
23
18
28%













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
5,902
8,081
(27%)













Channel Summary












Direct and Partnership
1,814
2,352
(23%)
201
215
(7%)
2,015
2,567
(22%)
2,667
3,268
(18%)
Intermediated
2,765
2,990
(8%)
45
39
15%
2,810
3,029
(7%)
3,046
3,227
(6%)
Wholesale
62
1,434
(96%)
-   
-   
-  
62
1,434
(96%)
62
1,434
(96%)
Sub-Total
4,641
6,776
(32%)
246
254
(3%)
4,887
7,030
(30%)
5,775
7,929
(27%)













DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
127
153
(17%)













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
5,902
8,081
(27%)



























































































 
 






































US Insurance Operations(1b)












Fixed Annuities
1,053
2,039
(48%)
-   
-   
-  
1,053
2,039
(48%)
1,053
2,039
(48%)
Fixed Index Annuities
1,433
593
142%
-   
-   
-  
1,433
593
142%
1,433
593
142%
Variable Annuities
6,389
4,130
55%
-   
-   
-  
6,389
4,130
55%
6,389
4,130
55%
Life
10
9
11%
24
28
(14%)
34
37
(8%)
173
273
(37%)
Sub-Total Retail
8,885
6,771
31%
24
28
(14%)
8,909
6,799
31%
9,048
7,035
29%
Guaranteed Investment Contracts
-   
1,014
-  
-   
-   
-  
-   
1,014
-  
-   
1,014
-  
GIC - Medium Term Note
-   
399
-  
-   
-   
-  
-   
399
-  
-   
399
-  
Total US Insurance Operations
8,885
8,184
9%
24
28
(14%)
8,909
8,212
8%
9,048
8,448
7%













Asian Insurance Operations(1b)












China
72
76
(5%)
38
39
(3%)
110
115
(4%)
253
277
(9%)
Hong Kong
94
602
(84%)
232
183
27%
326
785
(58%)
1,414
1,915
(26%)
India
47
64
(27%)
163
213
(23%)
210
277
(24%)
581
790
(26%)
Indonesia
41
104
(61%)
186
184
1%
227
288
(21%)
671
713
(6%)
Japan
57
151
(62%)
46
39
18%
103
190
(46%)
263
284
(7%)
Korea
38
79
(52%)
118
213
(45%)
156
292
(47%)
568
1,109
(49%)
Malaysia
63
31
103%
140
111
26%
203
142
43%
814
636
28%
Singapore
297
392
(24%)
98
90
9%
395
482
(18%)
1,033
1,104
(6%)
Taiwan
104
41
154%
97
63
54%
201
104
93%
427
268
59%
Other
(4)
29
19
53%
59
59
0%
88
78
13%
221
208
6%
Total Asian Insurance Operations
842
1,559
(46%)
1,177
1,194
(1%)
2,019
2,753
(27%)
6,245
7,304
(14%)


























Group Total
14,495
16,672
(13%)
1,447
1,476
(2%)
15,942
18,148
(12%)
21,195
23,833
(11%)
 


Schedule 6 - Actual Exchange Rates
 
PRUDENTIAL PLC - NEW BUSINESS - FULL YEAR 2009
 
TOTAL INSURANCE AND INVESTMENT NEW BUSINESS
 

UK

US(1a)


Asia(1a)

Total














FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m














Total Insurance Products
5,014
7,183
(30%)
8,909
6,941
28%
2,019
2,422
(17%)
15,942
16,546
(4%)
Total Investment Products Gross Inflows(2)
24,875
16,154
54%
6
36
(83%)
71,176
46,957
52%
96,057
63,147
52%

29,889
23,337
28%
8,915
6,977
28%
73,195
49,379
48%
111,999
79,693
41%













INSURANCE OPERATIONS

Single
Regular
Total
PVNBP














FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)
FY 2009
FY 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
1,357
1,600
(15%)
-   
-   
-  
1,357
1,600
(15%)
1,357
1,600
(15%)
Direct and Partnership Annuities
590
703
(16%)
-   
-   
-  
590
703
(16%)
590
703
(16%)
Intermediated Annuities
242
497
(51%)
-   
-   
-  
242
497
(51%)
242
497
(51%)
Total Individual Annuities
2,189
2,800
(22%)
-   
-   
-  
2,189
2,800
(22%)
2,189
2,800
(22%)













Income Drawdown
91
75
21%
-   
-   
-  
91
75
21%
91
75
21%
Equity Release
127
242
(48%)
-   
-   
-  
127
242
(48%)
127
242
(48%)
Individual Pensions
198
115
72%
7
3
133%
205
118
74%
218
124
76%
Corporate Pensions
81
221
(63%)
86
88
(2%)
167
309
(46%)
547
645
(15%)
Unit Linked Bonds
122
109
12%
-   
-   
-  
122
109
12%
122
109
12%
With-Profit Bonds
1,264
869
45%
-   
-   
-  
1,264
869
45%
1,264
869
45%
Protection
-   
-   
-  
17
6
183%
17
6
183%
110
38
189%
Offshore Products
317
551
(42%)
3
4
(25%)
320
555
(42%)
336
573
(41%)
Pru Health
(8)
-   
-   
-  
11
16
(31%)
11
16
(31%)
111
146
(24%)
Total Retail Retirement
4,389
4,982
(12%)
124
117
6%
4,513
5,099
(11%)
5,115
5,621
(9%)













Corporate Pensions
111
227
(51%)
105
116
(9%)
216
343
(37%)
460
653
(30%)
Other Products
79
132
(40%)
17
21
(19%)
96
153
(37%)
138
219
(37%)
DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
127
153
(17%)
Total Mature Life and Pensions
317
512
(38%)
122
137
(11%)
439
649
(32%)
725
1,025
(29%)













Total Retail
4,706
5,494
(14%)
246
254
(3%)
4,952
5,748
(14%)
5,840
6,646
(12%)













Wholesale Annuities
39
1,417
(97%)
-   
-   
-  
39
1,417
(97%)
39
1,417
(97%)













Credit Life
23
18
28%
-   
-   
-  
23
18
28%
23
18
28%













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
5,902
8,081
(27%)













Channel Summary












Direct and Partnership
1,814
2,352
(23%)
201
215
(7%)
2,015
2,567
(22%)
2,667
3,268
(18%)
Intermediated
2,765
2,990
(8%)
45
39
15%
2,810
3,029
(7%)
3,046
3,227
(6%)
Wholesale
62
1,434
(96%)
-   
-   
-  
62
1,434
(96%)
62
1,434
(96%)
Sub-Total
4,641
6,776
(32%)
246
254
(3%)
4,887
7,030
(30%)
5,775
7,929
(27%)













DWP Rebates
127
153
(17%)
-   
-   
-  
127
153
(17%)
127
153
(17%)













Total UK Insurance Operations
4,768
6,929
(31%)
246
254
(3%)
5,014
7,183
(30%)
5,902
8,081
(27%)













US Insurance Operations(1a)












Fixed Annuities
1,053
1,724
(39%)
-   
-   
-  
1,053
1,724
(39%)
1,053
1,724
(39%)
Fixed Index Annuities
1,433
501
186%
-   
-   
-  
1,433
501
186%
1,433
501
186%
Variable Annuities
6,389
3,491
83%
-   
-   
-  
6,389
3,491
83%
6,389
3,491
83%
Life
10
7
43%
24
24
0%
34
31
10%
173
230
(25%)
Sub-Total Retail
8,885
5,723
55%
24
24
0%
8,909
5,747
55%
9,048
5,946
52%
Guaranteed Investment Contracts
-   
857
-  
-   
-   
-  
-   
857
-  
-   
857
-  
GIC - Medium Term Note
-   
337
-  
-   
-   
-  
-   
337
-  
-   
337
-  
Total US Insurance Operations(1a)
8,885
6,917
28%
24
24
0%
8,909
6,941
28%
9,048
7,140
27%













Asian Insurance Operations(1a)












China
72
63
14%
38
32
19%
110
95
16%
253
230
10%
Hong Kong
94
507
(81%)
232
154
51%
326
661
(51%)
1,414
1,612
(12%)
India
47
60
(22%)
163
202
(19%)
210
262
(20%)
581
747
(22%)
Indonesia
41
94
(56%)
186
167
11%
227
261
(13%)
671
649
3%
Japan
57
115
(50%)
46
30
53%
103
145
(29%)
263
217
21%
Korea
38
78
(51%)
118
211
(44%)
156
289
(46%)
568
1,097
(48%)
Malaysia
63
28
125%
140
99
41%
203
127
60%
814
570
43%
Singapore
297
341
(13%)
98
78
26%
395
419
(6%)
1,033
961
7%
Taiwan
104
36
189%
97
55
76%
201
91
121%
427
237
80%
Other
(4)
29
18
61%
59
54
9%
88
72
22%
221
188
18%
Total Asian Insurance Operations
842
1,340
(37%)
1,177
1,082
9%
2,019
2,422
(17%)
6,245
6,508
(4%)


























Group Total
14,495
15,186
(5%)
1,447
1,360
6%
15,942
16,546
(4%)
21,195
21,729
(2%)
 


Schedule 7 - Actual Exchange Rates
 
PRUDENTIAL PLC - NEW BUSINESS - QUARTER 4 2009 VERSUS QUARTER 4 2008
 
INSURANCE OPERATIONS
 

Single
Regular
Total
PVNBP

Q4 2009
Q4 2008
+/-(%)
Q4 2009
Q4 2008
+/-(%)
Q4 2009
Q4 2008
+/-(%)
Q4 2009
Q4 2008
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
334
471
(29%)
-   
-   
-  
334
471
(29%)
334
471
(29%)
Direct and Partnership Annuities
166
153
8%
-   
-   
-  
166
153
8%
166
153
8%
Intermediated Annuities
46
96
(52%)
-   
-   
-  
46
96
(52%)
46
96
(52%)
Total Individual Annuities
546
720
(24%)
-   
-   
-  
546
720
(24%)
546
720
(24%)













Income Drawdown
21
21
0%
-   
-   
-  
21
21
0%
21
21
0%
Equity Release
43
54
(20%)
-   
-   
-  
43
54
(20%)
43
54
(20%)
Individual Pensions
53
63
(16%)
2
1
100%
55
64
(14%)
59
67
(12%)
Corporate Pensions
26
67
(61%)
25
24
4%
51
91
(44%)
161
190
(15%)
Unit Linked Bonds
39
21
86%
-   
-   
-  
39
21
86%
39
21
86%
With-Profit Bonds
295
218
35%
-   
-   
-  
295
218
35%
295
218
35%
Protection
-   
-   
-  
5
2
150%
5
2
150%
34
12
183%
Offshore Products
110
104
6%
-   
1
-  
110
105
5%
114
110
4%
Pru Health
-   
-   
-  
2
2
0%
2
2
0%
29
17
71%













Total Retail Retirement
1,133
1,268
(11%)
34
30
13%
1,167
1,298
(10%)
1,341
1,430
(6%)













Corporate Pensions
23
-   
-  
25
28
(11%)
48
28
71%
75
132
(43%)
Other Products
20
19
5%
4
4
0%
24
23
4%
34
53
(36%)
DWP Rebates
47
50
(6%)
-   
-   
-  
47
50
(6%)
47
50
(6%)
Total Mature Life and Pensions
90
69
30%
29
32
(9%)
119
101
18%
156
235
(34%)


























Total Retail
1,223
1,337
(9%)
63
62
2%
1,286
1,399
(8%)
1,497
1,665
(10%)













Wholesale Annuities
27
47
(43%)
-   
-   
-  
27
47
(43%)
27
47
(43%)













Credit Life
6
7
(14%)
-   
-   
-  
6
7
(14%)
6
7
(14%)


























Total UK Insurance Operations
1,256
1,391
(10%)
63
62
2%
1,319
1,453
(9%)
1,530
1,719
(11%)













Channel Summary












Direct and Partnership
467
623
(25%)
52
54
(4%)
519
677
(23%)
659
887
(26%)
Intermediated
709
664
7%
11
8
38%
720
672
7%
791
730
8%
Wholesale
33
54
(39%)
-   
-   
-  
33
54
(39%)
33
54
(39%)
Sub-Total
1,209
1,341
(10%)
63
62
2%
1,272
1,403
(9%)
1,483
1,671
(11%)













DWP Rebates
47
50
(6%)
-   
-   
-  
47
50
(6%)
47
50
(6%)













Total UK Insurance Operations
1,256
1,391
(10%)
63
62
2%
1,319
1,453
(9%)
1,530
1,719
(11%)













US Insurance Operations(1a) (7)












Fixed Annuities
212
583
(64%)
-   
-   
-  
212
583
(64%)
212
583
(64%)
Fixed Index Annuities
378
184
105%
-   
-   
-  
378
184
105%
378
184
105%
Variable Annuities
2,068
895
131%
-   
-   
-  
2,068
895
131%
2,068
895
131%
Life
3
1
200%
6
6
0%
9
7
29%
30
85
(65%)
Sub-Total Retail
2,661
1,663
60%
6
6
0%
2,667
1,669
60%
2,688
1,747
54%
Guaranteed Investment Contracts
-   
42
-  
-   
-   
-  
-   
42
-  
-   
42
-  
GIC - Medium Term Note
-   
16
-  
-   
-   
-  
-   
16
-  
-   
16
-  
Total US Insurance Operations
2,661
1,721
55%
6
6
0%
2,667
1,727
54%
2,688
1,805
49%














































































Asian Insurance Operations(1a) (7)












China
14
16
(13%)
10
9
11%
24
25
(4%)
60
66
(9%)
Hong Kong
30
47
(36%)
88
41
115%
118
88
34%
483
450
7%
India
10
7
43%
51
34
50%
61
41
49%
172
141
22%
Indonesia
17
9
89%
62
46
35%
79
55
44%
240
154
56%
Japan
7
21
(67%)
11
6
83%
18
27
(30%)
51
12
325%
Korea
10
15
(33%)
25
35
(29%)
35
50
(30%)
114
220
(48%)
Malaysia
13
6
117%
61
35
74%
74
41
80%
340
193
76%
Singapore
135
35
286%
34
22
55%
169
57
196%
380
208
83%
Taiwan
34
3
1,033%
27
29
(7%)
61
32
91%
136
116
17%
Other
(4)
12
4
200%
18
14
29%
30
18
67%
70
48
46%
Total Asian Insurance Operations
282
163
73%
387
271
43%
669
434
54%
2,046
1,608
27%


























Group Total
4,199
3,275
28%
456
339
35%
4,655
3,614
29%
6,264
5,132
22%
 
INVESTMENT OPERATIONS
 










Opening FUM
Gross Inflows
Redemptions
Net Inflows
Other Movements
Market & Currency Movements
Net Movement In FUM
Closing FUM

£m
£m
£m
£m
£m
£m
£m
£m









M&G(5)
Q4 2009
66,235
6,434
(4,093)
2,341
(53)
1,783
4,071
70,306

Q4 2008
49,994
4,040
(4,775)
(735)
110
(2,372)
(2,997)
46,997

+/-(%)
32%
59
14%
419%
(148%)
175%
236%
50%
Asia Retail Mutual Funds
Q4 2009
17,773
18,130
(18,394)
(264)
(28)
543
251
18,024

Q4 2008
13,594
12,529
(12,618)
(89)
(6)
944
849
14,443

+/-(%)
31%
45%
(46%)
(197%)
(367%)
(42%)
(70%)
25%
Asia Third Party
Q4 2009
1,008
378
(6)
372
-   
70
442
1,450

Q4 2008
755
16
(24)
(8)
-   
42
34
789

+/-(%)
34%
2,263%
75%
4,750%
-  
67%
1,200%
84%
US Retail Mutual Funds
Q4 2009
-   
-   
1
1
-   
(1)
-   
-    

Q4 2008
58
4
(8)
(4)
2
(6)
(8)
50

+/-(%)
(100%)
-  
113%
125%
-  
83%
-  
(100%)




















Total Investment Products
Q4 2009
85,016
24,942
(22,492)
2,450
(81)
2,395
4,764
89,780

Q4 2008
64,401
16,589
(17,425)
(836)
106
(1,392)
(2,122)
62,279

+/-(%)
32%
50%
(29%)
393%
(176%)
272%
325%
44%
 


Schedule 8 - Actual Exchange Rates
 
PRUDENTIAL PLC - NEW BUSINESS - QUARTER 4 2009 VERSUS QUARTER 3 2009
 
INSURANCE OPERATIONS
 

Single
Regular
Total
PVNBP

Q4 2009
Q 3 2009
+/-(%)
Q4 2009
Q 3 2009
+/-(%)
Q4 2009
Q 3 2009
+/-(%)
Q4 2009
Q 3 2009
+/-(%)

£m
£m

£m
£m

£m
£m

£m
£m

UK Insurance Operations












Product Summary












Internal Vesting annuities
334
297
12%
-   
-   
-  
334
297
12%
334
297
12%
Direct and Partnership Annuities
166
151
10%
-   
-   
-  
166
151
10%
166
151
10%
Intermediated Annuities
46
56
(18%)
-   
-   
-  
46
56
(18%)
46
56
(18%)
Total Individual Annuities
546
504
8%
-   
-   
-  
546
504
8%
546
504
8%













Income Drawdown
21
24
(13%)
-   
-   
-  
21
24
(13%)
21
24
(13%)
Equity Release
43
30
43%
-   
-   
-  
43
30
43%
43
30
43%
Individual Pensions
53
47
13%
2
2
0%
55
49
12%
59
52
13%
Corporate Pensions
26
8
225%
25
17
47%
51
25
104%
161
100
61%
Unit Linked Bonds
39
34
15%
-   
-   
-  
39
34
15%
39
34
15%
With-Profit Bonds
295
285
4%
-   
-   
-  
295
285
4%
295
285
4%
Protection
-   
-   
-  
5
5
0%
5
5
0%
34
31
10%
Offshore Products
110
80
38%
-   
1
-  
110
81
36%
114
85
34%
Pru Health
-   
-   
-  
2
3
(33%)
2
3
(33%)
29
26
12%













Total Retail Retirement
1,133
1,012
12%
34
28
21%
1,167
1,040
12%
1,341
1,171
15%













Corporate Pensions
23
20
15%
25
21
19%
48
41
17%
75
100
(25%)
Other Products
20
20
0%
4
3
33%
24
23
4%
34
30
13%
DWP Rebates
47
-   
-  
-   
-   
-  
47
-   
-  
47
-   
-  
Total Mature Life and Pensions
90
40
125%
29
24
21%
119
64
86%
156
130
20%


























Total Retail
1,223
1,052
16%
63
52
21%
1,286
1,104
16%
1,497
1,301
15%













Wholesale Annuities
27
4
575%
-   
-   
-  
27
4
575%
27
4
575%













Credit Life
6
5
20%
-   
-   
-  
6
5
20%
6
5
20%


























Total UK Insurance Operations
1,256
1,061
18%
63
52
21%
1,319
1,113
19%
1,530
1,310
17%













Channel Summary












Direct and Partnership
467
398
17%
52
41
27%
519
439
18%
659
586
12%
Intermediated
709
654
8%
11
11
0%
720
665
8%
791
715
11%
Wholesale
33
9
267%
-   
-   
-  
33
9
267%
33
9
267%
Sub-Total
1,209
1,061
14%
63
52
21%
1,272
1,113
14%
1,483
1,310
13%













DWP Rebates
47
-   
-  
-   
-   
-  
47
-   
-  
47
-   
-  













Total UK Insurance Operations
1,256
1,061
18%
63
52
21%
1,319
1,113
19%
1,530
1,310
17%













US Insurance Operations












Fixed Annuities
212
140
51%
-   
-   
-  
212
140
51%
212
140
51%
Fixed Index Annuities
378
480
(21%)
-   
-   
-  
378
480
(21%)
378
480
(21%)
Variable Annuities
2,068
1,804
15%
-   
-   
-  
2,068
1,804
15%
2,068
1,804
15%
Life
3
2
50%
6
6
0%
9
8
13%
30
47
(36%)
Sub-Total Retail
2,661
2,426
10%
6
6
0%
2,667
2,432
10%
2,688
2,471
9%
Guaranteed Investment Contracts
-   
-   
-  
-   
-   
-  
-   
-   
-  
-   
-   
-  
GIC - Medium Term Note
-   
-   
-  
-   
-   
-  
-   
-   
-  
-   
-   
-  
Total US Insurance Operations
2,661
2,426
10%
6
6
0%
2,667
2,432
10%
2,688
2,471
9%



























































































Asian Insurance Operations
(1a) (7)












China
14
15
(7%)
10
11
(9%)
24
26
(8%)
60
68
(12%)
Hong Kong
30
33
(9%)
88
52
69%
118
85
39%
483
349
38%
India
10
5
100%
51
39
31%
61
44
39%
172
137
26%
Indonesia
17
11
55%
62
42
48%
79
53
49%
240
149
61%
Japan
7
12
(42%)
11
10
10%
18
22
(18%)
51
57
(11%)
Korea
10
8
25%
25
29
(14%)
35
37
(5%)
114
140
(19%)
Malaysia
13
17
(24%)
61
30
103%
74
47
57%
340
179
90%
Singapore
135
47
187%
34
24
42%
169
71
138%
380
244
56%
Taiwan
34
38
(11%)
27
22
23%
61
60
2%
136
113
20%
Other
12
9
33%
18
14
29%
30
23
30%
70
57
23%
Total Asian Insurance Operations
282
195
45%
387
273
42%
669
468
43%
2,046
1,493
37%


























Group Total
4,199
3,682
14%
456
331
38%
4,655
4,013
16%
6,264
5,274
19%
 
INVESTMENT OPERATIONS










Opening FUM
Gross Inflows
Redemptions
Net Inflows
Other Movements
Market &Currency Movements
Net Movement In FUM
Closing FUM

£m
£m
£m
£m
£m
£m
£m
£m









M&G(5)
Q4 2009
66,235
6,434
(4,093)
2,341
(53)
1,783
4,071
70,306

Q3 2009
55,921
5,810
(3,298)
2,512
(113)
7,915
10,314
66,235

+/-(%)
18%
11%
(24%)
(7%)
53%
(77%)
(61%)
6%
Asia Retail Mutual Funds
Q4 2009
17,773
18,130
(18,394)
(264)
(28)
543
251
18,024

Q3 2009
15,518
20,579
(20,142)
437
(1)
1,819
2,255
17,773

+/-(%)
15%
(12%)
9%
(160%)
(2,700%)
(70%)
(89%)
1%
Asia Third Party
Q4 2009
1,008
378
(6)
372
-   
70
442
1,450

Q3 2009
859
5
(7)
(2)
-   
151
149
1,008

+/-(%)
17%
7,460%
14%
18,700%
-  
(54%)
197%
44%
US Retail Mutual Funds
Q4 2009
-   
-   
1
1
-   
(1)
-   
-    

Q3 2009
38
-   
(49)
(49)
1
10
(38)
-    

+/-(%)
-  
-  
102%
102%
-  
-  
-  
-  




















Total Investment Products
Q4 2009
85,016
24,942
(22,492)
2,450
(81)
2,395
4,764
89,780

Q3 2009
72,336
26,394
(23,496)
2,898
(113)
9,895
12,680
85,016

+/-(%)
18%
(6%)
4%
(15%)
28%
(76%)
(62%)
6%
 


PRUDENTIAL PLC - NEW BUSINESS SCHEDULES
BASIS OF PREPARATION
 
The new business schedules are provided as an indicative volume measure of transactions undertaken in the reporting period that have the potential to generate profits for shareholders. The amounts shown are not, and not intended to be, reflective of premium income recorded in the IFRS income statement.
 
The format of the schedules is consistent with the distinction between insurance and investment products as applied for previous financial reporting periods. Products categorised as "insurance" refer to those classified as contracts of long-term insurance business for regulatory reporting purposes, i.e. falling within one of the classes of insurance specified in part II of Schedule 1 to the Regulated Activities Order under FSA regulations.
 
The details shown for insurance products include contributions for contracts that are classified under IFRS 4 "Insurance Contracts" as not containing significant insurance risk. These products are described as investment contracts or other financial instruments under IFRS. Contracts included in this category are primarily certain unit-linked and similar contracts written in UK Insurance Operations, and Guaranteed Investment Contracts and similar funding agreements written in US Operations.
 
New business premiums for regular premium products are shown on an annualised basis. Department of Work and Pensions rebate business is classified as single recurrent business. Internal vesting business is classified as new business where the contracts include an open market option. 
 
Investment products referred to in the tables for funds under management are unit trusts, mutual funds and similar types of retail fund management arrangements. These are unrelated to insurance products that are classified as investment contracts under IFRS 4, as described in the preceding paragraph, although similar IFRS recognition and measurement principles apply to the acquisition costs and fees attaching to this type of business.
 
New business in India is included at Prudential's 26 per cent interest in the India life operation. 
 
New business in China is included at Prudential's 50 per cent interest in the China life operation. 
 
Mandatory Provident Fund (MPF) product sales in Hong Kong are included at Prudential's 36 per cent interest in Hong Kong MPF operation.
 
Notes to Schedules 1 - 8
 
(1a) Insurance and investment new business for overseas operations has been calculated using average exchange rates. The applicable rate for Jackson is 1.57 (2008: 1.85).
 
 (1b) Insurance and investment new business for overseas operations has been calculated using constant exchange rates. The applicable rate for Jackson is 1.57.
 
 (2) Represents cash received from sale of investment products.
 
(3) Annual Equivalents, calculated as regular new business contributions plus 10 per cent single new business contributions, are subject to roundings. PVNBPs are calculated as equalling single premiums plus the present value of expected premiums of new regular premium business. In determining the present value, allowance is made for lapses and other assumptions applied in determining the EEV new business profit.
 
(4) In Asia, 'Other' insurance operations include Thailand, the Philippines and Vietnam.
 
(5) Balance includes segregated and pooled pension funds, private finance assets and other institutional clients. Other movements reflect the net flows arising from the cash component of a tactical asset allocation fund managed by PPM South Africa.
 
(6) Balance Sheet figures have been calculated at the closing exchange rate. Prior year balance is shown on a constant exchange rate.
 
(7) Sales are converted using the year to date average exchange rate applicable at the time. The sterling results for individual quarters represent the difference between the year to date reported sterling results at successive quarters and will include foreign exchange movements from earlier periods.
 
(8) Pru Health sales exclude £6m (£3m 50% share) of Trust business.


 


SIGNATURES
 


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Date  01 March, 2010

 

 

PRUDENTIAL PUBLIC LIMITED COMPANY
   
 

By: /s/ 
   
 

 

Susan Henderson
 

Deputy Group Secretary