PRUDENTIAL PLC ADS (REP 2 ORD SHARES) 2026 H1 Earnings Call

Please go ahead. Thank you very much, Alex, and good afternoon, good morning, everyone.

Welcome to Prudential plc's first half 2026 results analyst investor call. Before I turn over to our CEO, Anil, and Ben, our CFO, I have a couple of housekeeping points. A recording of today's call will be available from Tuesday next week. Our full results package is available on our website, and I will refer you to the disclaimers and safe harbor wordings in these documents, and they also apply to this call. Ben will start the call with opening remarks, followed by a Q&A. Also on the call today are Angel, Dennis, Rajiv, Naveen from our GEC members. Now let me pass over to Anil, our CEO, to start us off.

Thank you, Patrick. Good morning, good afternoon, and good evening, everyone, and thank you for joining us today. The strength and resilience of our multi-market, multi-channel platform across our insurance and asset management businesses allow us to deliver consistent, high quality growth. We have been focused on accelerating the conversion of new business profit into cash, thereby generating sustainable and growing shareholder returns. I am really pleased with the progress we have made in the last few years and our strong track record of delivery as we transform and modernize Prudential. We have repositioned our Hong Kong business by substantially growing the domestic franchise. It now generates 50% of the new business profit in this key segment. Improved our Chinese mainland operations through better product mix, risk management, and strong levels of capital.

Demonstrated the breadth of our diversification with ASEAN markets growing new business profit by 13% and our Indian and African businesses growing double digit APE. Alongside our insurance operations, our asset management business grew underlying profits by 20%. In addition, we are focused on our strong proprietary channels of agency and bank assurance, driving productivity and expanding our bank assurance footprint. We launched a multi-year transformation of our agency operations with productivity and quality recruitment being the key priorities. I am very pleased that we have reported progress in these areas in both our developed markets and our emerging ASEAN businesses. We have built out our market leading health and protection operations, helping our customers navigate the post-COVID medical inflation while delivering significant operating improvements.

Driving innovation, AI adoption, and high quality customer experience has been a focal point of our $1 billion investment program in technology, in distribution, health, and customer. We have also set clear priorities for capital allocation with a comprehensive and sustainable capital management framework. We are making good progress in delivering over $7 billion of returns to our shareholders from 2024 to 2027. Rounding off last year, we completed a highly successful IPO of our asset management operations in India, creating substantial value for our shareholders and are in the process of returning it. Most recently, you may have seen we are moving towards meeting the initial 15% free flow requirement. This will generate proceeds of approximately $0.3 billion, which will be added to our 2026 share buyback. Coming to our first half results, we continue to build on the track record of our delivery.

We have invested further in our high performing business in Malaysia through increasing ownership, and we have fundamentally repositioned our India business through taking control of the two complementary insurance platforms of life and health. In the first half of 2026, we grew new business profit by 8%, we grew earnings per share by 17%, and free surplus generation was up 15%, as well as we increased our first interim dividend per share by 15%. Our first half 2026 performance was well-rounded, and we remain very disciplined on both quality and our execution. I have three clear messages to our investors. First, we remain firmly focused on the delivery of our guidance for 2026 of double digit growth across our key financial metrics and on achieving our 2027 financial objectives. Second, we are progressing well in our transformation agenda, continuing to build capabilities and modernizing our operations and technology platform.

Third, we remain highly disciplined in allocating capital. We are investing for quality growth, driving attractive margins and sustainable growth in capital generation. With our multi-market, multi-channel model and our drive for quality growth, I am excited with our prospects in the growing markets of Asia and Africa. Now, I will hand it over to Ben, our CFO, to walk through the financial highlights.

Thanks, Anil, and hello, everyone. As Anil has mentioned, in the first half of 2026, we delivered double digit growth in EPS, DPS, gross OFSG, and 8% growth in new business profit. We remain firmly focused on high quality growth in new business with high IRRs and short payback periods, the compounding effects of which are driving strong capital generations and earnings. The new business margin expanded two percentage points to 40%, and further focus on improvements in agency performance and increasing the proportion of health and protection business within our new business mix provides us opportunities to continue to improve margins over the medium term. Our embedded value per share, ex goodwill, reached $15.27, or £11.50, and our return on embedded value is 15%, with scope to improve this further by two to three percentage points.

The management of our in-force book continues to improve, and we are pleased that our underlying variances are back in positive territory. This is an important milestone and reflects actions in strengthening claims management, growing revenue premiums, and containing costs. These improvements will allow us to continue to invest in our business on a normal course basis while delivering sustainable positive variances as we move forward. We continue to benefit from strong persistency, and in Hong Kong, that is 99%. We will largely complete our capability investment program in 2026 with an investment of between $300 million and $350 million. We are confident of returning to positive variances north of $200 million in 2027. In short, we are pleased with our capital generation trajectory. Gross OFSG is up 15% year-on-year, and net OFSG is up 41%.

We will continue to build on this momentum as we work towards and beyond our 2027 objective year. The group's capital position remains highly robust, and we have a conservative level of gearing. Our free surface ratio as of June 30th was 209%, or 200%, excluding the remaining net proceeds from the AMC IPO, consistent with the 175%-200% range we have set out. In January, we launched a combined $1.2 billion buyback to be completed by the end of 2026. As Anil indicated, with today's capital market actions, we add a further $0.3 billion of buyback to be completed by the year-end. We continue to expect to return a further $1.3 billion in 2027, all contributing to over $7 billion of capital being returned to shareholders between 2024 and 2027.

In summary, we delivered a significant improvement in financial performance in the first half of 2026 with quality growth across our key financial KPIs. Looking forward, we are firmly focused on delivering our 2026 guidance of double-digit growth in our KPIs and our 2027 financial objectives. Prudential has leading positions in the highly attractive markets of Asia and Africa. We are generating attractive margins and are positioning the business to deliver double-digit performance for many years to come. With that, I will pass back to Patrick.

Thank you, Ben and Anil. I will now hand over to Alex, our call operator, who will provide instructions and open the lines for questions. Please remember to give your name and organization that you represent when asking your question, and also please submit your questions online. In particular, if you are on a mobile phone, just for the benefit of everyone else to be able to hear properly, please do use the online service or dial into the VoIP. It is much clearer. So over to you, Alex.