“We are well placed to take advantage of opportunities to access more customers in new and innovative ways.” Mark Tucker, Chief Executive, Prudential Asia.

Prudential Asia has operations in seven countries in the region, having re-entered India in 1998 after a 42-year absence, with the very successful launch of our joint venture with ICICI in the mutual fund business. We also have representative offices in five cities in China and offices in Hanoi and Ho Chi Minh City in Vietnam. Prudential continues to be the largest UK life insurer in the region with over 14,000 agents, 1,350 staff and £1.7 billion funds under management.

1998 saw a continuation of the regional economic turmoil that began in July 1997, though the stock and currency markets regained some ground towards the end of 1998. There are some very good opportunities emerging from the liberalisation effects of the recent economic upheaval and Prudential is well positioned to take advantage of these.

Sales and Profit
Economic conditions impacted on sales as customers were less able to commit to medium and long-term savings plans. Annual premium sales were £79 million in 1998, down from the record levels of £120 million in 1997. Single insurance premium sales decreased to £42 million for the year compared to the exceptional level of £226 million in 1997, which had been fuelled by the one-off effect of the Central Provident Fund (CPF) liberalisation in Singapore.

Prudential’s experience across the region has generally been in line with that of the industry. Overall, we have generally maintained or increased our market shares. In Singapore the Company has now captured the second largest market share in new annual premium business. This is the highest ranking we have ever achieved in this market sector.

Statutory operating profit for 1998 of £23 million (before development costs of £10 million) is 15 per cent ahead of 1997. New business achieved profits, which show the value added by sales, once again exceeded £50 million.

New Developments
The Asian crisis has provided opportunities for Prudential to expand its presence in the region. A major review of the Asian retail financial services markets was undertaken during 1998 which, amongst other factors, took into consideration the changing regulatory and market environments. The initiatives arising from the review will unfold during the next few years, but some significant developments have already taken place.

We acted swiftly to take advantage of changes in the rules governing foreign ownership by increasing our shareholding to a majority stake in our Malaysian operation. Prudential is currently one of the top three life insurers in this sizeable market.

Prudential re-entered India through a majority shareholding in an asset management joint venture with ICICI, one of India’s best known financial institutions. Three new mutual funds were launched successfully soon after the completion of the agreement. The joint venture is now one of the fastest-growing companies in India.

In 1998 Prudential Asia signed an agreement with Standard Chartered Bank to sell bancassurance products to Standard Chartered’s customers in Singapore and Hong Kong.

Across the region we have also been looking at extending its distribution capability. This includes pioneering the bancassurance channel in Indonesia with joint venture partner, Bank Bali. Furthermore an agreement was signed in December 1998 with Standard Chartered Bank to sell life insurance products to Standard Chartered’s customers, initially in Singapore and Hong Kong.

Undoubtedly the economic environment in Asia will continue to be challenging in the short term, but we are nonetheless keen to seek out new opportunities which fit with our commitment to adding to shareholder value. As part of the business-building initiatives coming out of a major strategic review, we are assessing opportunities in North Asia, including Japan, South Korea and Taiwan.

Operating Profit Before Development Expenses (£m)		Weighted Premiums (£m)

For more information, please visit Prudential Asia’s website: www.prudentialasia.com