COMPANY PROFILE -Prudential
Business Sector :Insurance
Operating Geography :UK, Europe
About Prudential :
Prudential is a Britain based international financial services firm headquartered in London. It was founded in 1848 as The Prudential Mutual Assurance Investment and Loan Association which loaned to working class of London. It offers solutions for income post retirement, asset management services, means for long term savings , annuities & protection products in Asia, Latin America, US ( Jackson Life Insurance Company), UK & Africa . Eastspring Management, M& G & Prudential Capital carry its asset management operations worldwide. Its market cap was $53.7 billion in May 2017. Their insurance customer base is around 24 million . It has £635 billion worth assets under management. It has 23,507 employees worldwide as of 2018. Prudential ranks #68 in Forbes' Global 200
Prudential Revenue :
71.84 billion GBP (FY Dec 2016)
Competitive Analysis of Prudential
The SWOT analysis report of Prudential presents the internal analysis and external analysis of the company with insightful details of the current market position and future growth strategy of this international insurance player. The SWOT analysis essays the detailed business case of Prudential covering strengths, weaknesses, opportunities and threats. Prudential’s competitive advantage lies in the strong foothold that it has in the international markets. In domestic markets too, Prudential shows a strong brand image which consumers can easily connect to. The market share enjoyed by the company can moreover be improved by cashing in on the opportunities provided by the emerging markets of Asia. The Company thus needs to apply a well planned business strategy for embracing opportunity and expanding business.
Strengths | Weaknesses |
1. Strong Footing in international markets
2. Healthy Financials
3. Specific products & services in Asia aiding in higher market penetration
4. Strong brand position in domestic markets
5. Growth in new Life insurance products sales
| 1. Decrease in spread income
2. Increase in costs
|
Opportunities | Threats |
1. Potential in the under penetrated Asian markets
2. Large and growing retirement asset pools with increasing wealth
| 1. Perils of cyber crime
2. Liquidity Risk
|
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Detailed SWOT Analysis of Prudential
Strength
1. Strong Footing in international markets: Prudential reported 22% growth in US on actual exchange basis due to increased fee income on the higher variable annuity account balances. China & Hong Kong’s operating profits grew from 17% in 2016 to 23% in 2017. IFRS operating profits grew by 29% in Indonesia & 20% in Singapore on actual exchange basis. Overall, Asia’s operating profit grew to £953 million which was 31% more on actual exchange rate basis. Life insurance and asset management products offered by Eastspring Investments also showed strong growth. The group also holds a good market share in US retirement market.
2. Healthy Financials: IFRS operating profit accruing from M&G recorded 10% growth to £248 million & 20% growth in Eastspring Investments to £83 million. This increased IFRS operating profit is due to the high fee revenues. The underlying free surplus generated was up by 14% which reflects strong in force book of business & good returns from the new businesses which have a small payback time. Life and asset management businesses’ underlying free surplus rose by 6% to £1,845 million. Shareholders’ Solvency II capital surplus was a significant £12.9 billion as on 30 June 2017.
3. Specific products & services in Asia aiding in higher market penetration: Prudential offers products that meet the needs for saving, health and protection as per the demands of the Asian population. They offer broad based portfolio to avail of opportunities in local markets to different asset classes . In Hong Kong , they have emerged as the front runner in critical illness protection segment & have introduced new lump sum health insurance policy . Long term joint venture partnership with CITIC in China has helped Prudential expand its consumer base & has thus made China third largest contributor to new business sales in Asia. Eastspring also won its second Asia Fund House of the Year award in just three years.
4. Strong brand position in domestic markets: HY 2017 showed growth in net inflows which was driven by their strong footing in the competitive products & their distribution and service. Asset value grew in UK because of the benign investment sentiments . Highest growth in new business profits was recorded by UK. Portfolio efficiency ameliorated which resulted in combined profits of £188 million as compared to £140 million in 2016. The total operating profit from UK market was of £497 million in HY2017.
5. Growth in new Life insurance products sales: The addition of long term, high quality new business to Asia is increasing the scale of Prudential's in force portfolio . It is therefore, driving the present growth and security in current and future earnings and cash generation in the continent. New business profit was 33 per cent on an actual exchange rate basis with some countries recording double digit percentage growth & even higher in eight countries in HY 2017. Prudential's new business profit in UK life operations rose by 29 per cent which was driven by the popular PruFund investment option. Thus, economic returns from the new business portfolio are growing.
Weakness
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Opportunity
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Threat
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The PESTLE / PESTEL analysis essays in detail the significant factors which impact the macro-environment of the insurance industry for the international financial services firm Prudential, diversified across geographies and business portfolios. Challenges faced in various political, environmental, social, economic, technological, legal and environmental aspects impacting sustenance and growth of Prudential must be overcome in order to stay profitable in the dynamically changing environment of the insurance industry. Threats of cyber crimes and shifting interest rates pose a risk factor for the company making current strategy analysis a necessity. Find below the competitive analysis of the external environment for Prudential presented in a matrix followed by the complete Pestle Analysis report:
Political | Economical |
1. Possible shift of funds from UK post-Brexit | 1. Favourable currency movements
2. Volatility in interest rate affecting operations |
Social | Technological |
1. Increased savings and post retirement services demand by ageing population
2. Growing working age population in Asia | 1. Jackson's Cycle harvesting to reduce costs
2. Digital Technology helping in making services affordable
3. Launch of PRUcare mobile app |
Legal | Environmental |
1. New regulatory Developments in US to affect earnings | 1. Reduction in Greenhouse Gas Emissions(GHG)
2. Several Measures undertaken for Energy efficiency |
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Detailed Pestle Analysis of Prudential
Political
Economic
1. Favourable currency movements: The uncertainty in UK markets due to general elections strengthened sterling against majority of the currencies in Prudential's major international markets but still was lower than 2016's rates. This translated into positive effects from non -sterling operations. In 2017, all of Prudential's key performance metrics showed growth which were driven by favourable currency effects. In 2017 investment segment's growth was supported by stability in currency markets which was more prominent than 2016 currency rates. Foreign currency translation impacts in HY2017 was £0.5 billion and £0.9 billion in 2016. M&G's investments is subject to currency markets as well. Thus, currency movements have significant on Prudential's operations worldwide.
2. Volatility in interest rate affecting operations: Volatility in equity prices, interest rates, foreign exchange rates and property prices adversely affects fees valuation from fee-earning products as they are sensitive to these factors. Incorrect valuation of investments affects insurance and asset management business. Due to underlying guarantees in fee of its products sensitivity to interest rates, the business with profits is affected. The cost of guarantees in these products is affected especially in US markets as a dip in interest rates increases the cost of guarantees.
Social
1. Increased savings and post retirement services demand by ageing population: A large proportion of population in US will in the next 10 years. This creates more opportunities to expand its post retirement income based products. Similarly, headcount of elderly is growing in China.. be reaching retirement age . It can further increase the sale of its post retirement services. This also drives the growth prospects in asset accumulation and retirement income products for the aging baby boomers globally.
2. Growing working age population in Asia: A growing cohort of the Asian population is entering the working age population which helps Prudential in increasing its pan regional insurance customer bases . Their retention rate is 90% . In 2016 , renewal premium grew by 20% to £9.1 billion. It also increases the scale of their operations in insurance & asset management segments. Through Eastspring , it is meeting the increased demand for the retail mutual funds markets . This will further push up revenue from Asian market.
Technological
This section is available only in the Complete report on purchase.
Legal
This section is available only in the Complete report on purchase.
Environmental
This section is available only in the Complete report on purchase.
On purchase the Prudential SWOT and PESTLE Analysis PDF report will reach you within minutes. At rare times, a slight delay not exceeding 1 hour might be caused.
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
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Prudential SWOT and PESTLE analysis has been conducted by Kanupriya Sheopuri and reviewed by senior analysts from Barakaat Consulting - an Ezzi IT and Business Consulting venture.
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