Prudential plc — 2022 Form 20-F
Reporting period: Fiscal year ended 31 December 2022; filed 23 March 2023. This is an annual report, not a standalone fourth-quarter filing. Prudential focuses on life insurance and asset management in Asia and Africa.
Financial performance and position
| Metric | 2022 | Prior period |
|---|---|---|
| IFRS profit after tax from continuing operations | $1.007bn | $2.214bn in 2021 |
| Adjusted operating profit | $3.375bn | $3.233bn in 2021; up 6% at constant exchange rates |
| APE new-business sales | $4.393bn | $4.194bn in 2021; up 9% at constant exchange rates |
| Earned premiums, net of reinsurance | $21.401bn | $22.373bn in 2021 |
| Total revenue, net of reinsurance | $(8.219)bn | $26.500bn in 2021 |
| Net cash from operating activities | $1.078bn | $0.278bn in 2021 |
| Shareholders’ equity | $16.960bn | $17.088bn at 2021 year-end |
Total revenue and IFRS profit were sharply affected by investment losses as interest rates rose and equity markets fell. Investment return was $(30.159)bn, versus a positive $3.486bn in 2021; much of the loss related to policyholder-backed with-profits and unit-linked funds and did not directly affect shareholder profit.
Margins and segments: The filing emphasizes adjusted operating profit rather than a single Group operating margin. Adjusted operating profit was $1.036bn in Hong Kong, $343m in Indonesia, $364m in Malaysia, $678m in Singapore, $1.057bn in growth markets and other, and $260m at Eastspring. Eastspring’s funds under management or advice were $221.4bn at year-end, down 14% at actual exchange rates.
Debt and liquidity: Core structural borrowings were $4.261bn, with net core structural borrowings of $1.204bn after $3.057bn of holding-company cash and short-term investments. Moody’s total leverage was estimated at 21%, or 20% after the January 2023 bond redemption, against a medium-term target of about 20–25%. The Group had $2.6bn of undrawn committed facilities, expiring in 2026. Group cash and cash equivalents were $5.514bn, down from $7.170bn; this is distinct from holding-company cash.
Capital: Estimated shareholder GWS capital surplus over the prescribed requirement was $15.6bn, with 307% coverage; total Group surplus was $18.1bn, with 202% coverage. Shareholder surplus declined from $17.5bn in 2021, primarily due to adverse market movements. The reported 2022 capital figures exclude the effect of the January 2023 debt redemption.
Dividends: Total 2022 cash dividend was 18.78 cents per share, up 9% from 17.23 cents in 2021. The second interim dividend was 13.04 cents per share.
Material changes versus 2021
- Continuing-operations profit after tax fell 55% on an actual exchange-rate basis, mainly because market-driven investment losses outweighed higher underlying segment profitability and lower interest costs.
- APE sales grew 9% at constant exchange rates despite Covid-related disruption in the first half. The recovery varied by market; Malaysia and Hong Kong sales fell, while China, Singapore and several growth markets increased.
- Operating cash flow increased to $1.078bn. Holding-company cash flow before dividends and other movements was $648m, compared with $639m in 2021.
- The Group adopted Hong Kong’s risk-based capital regime and China’s C-ROSS II. Hong Kong reserving-basis refinements increased 2022 profit before tax by $945m, partly offsetting market losses.
- Shareholders’ equity was broadly stable, while total assets declined to $165.9bn from $199.1bn.
Outlook, commentary and risks
Management reported year-on-year sales growth in the first two months of 2023 and expected opportunities from easing Covid restrictions and reopening cross-border travel between Hong Kong and the Chinese Mainland. This is commentary, not formal numerical guidance. Management described the balance sheet and capital position as resilient and said the Group completed a programme targeting $70m of annual central cost savings from 2023.
IFRS 17 and IFRS 9 became effective for the Group on 1 January 2023, with first IFRS 17 external reporting planned for half-year 2023. Management estimated an increase in opening shareholders’ equity of $1.8–$2.7bn from the IFRS 4 basis, but 2022 comparative results under IFRS 17 were not yet complete. The Group said IFRS 17 changes the timing of profit recognition, not total profit over a policy’s life, and does not affect capital generation, strategy or dividend policy.
Principal risks include market and interest-rate volatility, credit and liquidity risk, foreign exchange movements, inflation and affordability, mortality and morbidity experience, policy lapses, competition, regulatory change, climate and ESG risks, transformation execution, cyber and data security, third-party dependencies, and litigation. The Group reported no cyber or data breach with a material operational impact to date. It also disclosed nine contracts involving persons subject to US sanctions; the contracts were entered into by non-US affiliates under applicable local laws, and Prudential stated it does not intend further dealings with those individuals.
KPMG issued an unqualified audit opinion and concluded internal control over financial reporting was effective. The company intends to recommend EY as auditor from 2023, subject to shareholder approval.
Key facts investors should verify
- Review the drivers and shareholder impact of the $(30.159)bn investment return, distinguishing policyholder-backed market movements from shareholder exposures and adjusted operating profit.
- Check the final IFRS 17 transition balance sheet and restated 2022 comparatives when published; the current equity impact is an estimate.
- Reconcile capital and leverage figures for the January 2023 debt redemption, the 2022 second interim dividend, and regulatory capital changes.
- Assess whether sales recovery, especially in Hong Kong and the Chinese Mainland, supports sustainable new-business profit and cash generation.
- Review sensitivity to interest rates, credit spreads, equity markets, medical claims inflation, persistency and currency translation, as well as regulatory and third-party risks.