Morningstar | PRU Updated Forecasts and Estimates from 30 Nov 2018
Prudential is a strong operator in two of its three core markets. Asia is its long-term growth focus and the United States is the largest producer of operating profit, providing the highest operating return on equity. The business has asset-management units in each of these geographies and has recently exited U.K. bulk annuities and ceased writing new U.K. individual annuities business.Its U.S. business, Jackson National Life, focuses almost exclusively on variable annuities. This business has been built by strong management and execution discipline that have enabled it to take advantage of weakened competitor positions when adverse underwriting has appeared. This has been propelled by the business’ unique product offering, which has enabled it to not only serve distributors well, but also meet the needs of customers. In this vein, the business offers a simple variable annuity chassis enabling policyholders to pick and choose their riders to build a policy that suits their individual needs. Though Prudential has seen some pressure on variable annuity sales, we expect these to somewhat normalise as the longer-term trend for fee-based accounts of transaction-driven commissions drives advisor business models in line with regulation.In Asia, the business focuses on health and protection with a unit-linked chassis. We expect Prudential will focus on China, and on building into more cities in the Philippines and Vietnam. This will be driven by PCA’s partnership with Citic in China. While we have some concerns regarding changes to credit card payments in Hong Kong and what this means for mainland Chinese customers purchasing in the region, we think this is a short-term influence that will normalise as the business extends its mainland reach.The U.K. is a much smaller part of Prudential and is now an investment bond and pensions offering that is complemented by M&G asset management. This unit has GBP 265 billion in fixed income and equities across continental Europe and U.K. for retail and institutional investors. This is a largely undifferentiated business that generates little more than 15% of operating profit.Prudential is a parent holding company. Co., together with its subsidiaries, is an international financial services group with its principal operations in Asia, the U.S. and the U.K. In Asia, Co. has operations in Hong Kong, Indonesia, Malaysia, Singapore and other markets. In the U.S., Co.'s principal subsidiary is Jackson National Life Insurance Company. In the U.K., Co. operates through its subsidiaries, primarily The Prudential Assurance Company Limited and M&G Investment Management Limited. Co. provides a range of retail financial products and services and asset management services throughout these territories.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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