RCS - Prudential PLC - Prudential & CITIC provide growth capital for CPL

PrudentialAnnouncement

20/12/2023 07:15

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RNS Number : 4395X  Prudential PLC  20 December 2023

20 December 2023

 

Prudential and CITIC to PROVIDE growth capital FOR CPL

 

Prudential plc ("Prudential") today announced that CITIC-Prudential Life
Insurance Company Limited ("CPL"), a 50/50 joint venture between Prudential
Corporation Holdings Limited ("PCHL"), an indirect wholly-owned subsidiary of
Prudential, and CITIC Financial Holdings Co., Ltd. ("CITIC"), has announced
that CPL's shareholders have approved an increase of its registered capital by
RMB2.5 billion (US$351 million) ("Capital Increase").  Under the terms of the
Capital Increase, each of CPL's shareholders, PCHL and CITIC, will contribute
RMB1.25 billion (US$176 million) in cash. As a result, the registered capital
of CPL will increase from RMB2.36 billion to RMB4.86 billion (US$331 million
to US$682 million), while the equity stakes of the shareholders remain
unchanged at 50/50. The Capital Increase is subject to relevant regulatory
approvals.

 

Upon completion of the Capital Increase, the proforma China Risk-Oriented
Solvency System (C-ROSS) core and comprehensive solvency ratios as at 30
September 2023 are estimated to have been 121% and 215% respectively, well
above regulatory requirements.

 

The Capital Increase underscores the common belief of both shareholders in the
attractive long-term prospects of life insurance business in the Chinese
Mainland and their strong ongoing commitment to CPL. Prudential's share of the
Capital Increase will be funded out of its reported free surplus of US$8.3
billion (as at 30 June 2023) which the Group will look to further deploy for
future growth opportunities.

 

Anil Wadhwani, Chief Executive Officer said: "As disclosed in our strategic
update in August 2023, we are building a sustainable growth platform through
targeted investment in structural growth markets. CPL plays a pivotal role in
our overall strategy and growth, and we will continue to focus on delivering
our customer-led and multi-channel distribution strategy in the Chinese
Mainland. This includes the development of whole life protection products and
retirement solutions to address customers' needs at different life stages, as
well as further enhancing our professional high-quality agency force and
expanding the bancassurance network. We are confident that the continued focus
on quality establishes a good foundation for future growth, and we remain
excited about the significant potential of the business."

 

Please access the following link for CPL's disclosure on the Capital Increase:

https://www.citic-prudential.com.cn/UploadFiles/file/202312201122209635934-
(https://www.citic-prudential.com.cn/UploadFiles/file/202312201122209635934-%E6%83%85%E5%86%B5%E7%9A%84%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E5%85%AC%E5%91%8A.pdf)
情况的信息披露公告
(https://www.citic-prudential.com.cn/UploadFiles/file/202312201122209635934-%E6%83%85%E5%86%B5%E7%9A%84%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E5%85%AC%E5%91%8A.pdf)
.pdf
(https://www.citic-prudential.com.cn/UploadFiles/file/202312201122209635934-%E6%83%85%E5%86%B5%E7%9A%84%E4%BF%A1%E6%81%AF%E6%8A%AB%E9%9C%B2%E5%85%AC%E5%91%8A.pdf)

 

This announcement is made on a voluntary basis.

 

Contact

 Media                           Investors/Analysts
 Sonia Tsang     +852 5580 7525  Patrick Bowes       +852 9611 2981
 Sophie Sophaon  +852 6286 0229  William Elderkin    +44 (0)20 3977 9215
                                 Darwin Lam          +852 2918 6348

 

Note to Editors:

Exchange rates of US$1 = RMB 7.1215, which is the closing exchange rate as of
15 December 2023, have been used throughout this document for illustrative
purposes.

About Prudential plc

Prudential plc provides life and health insurance and asset management in 24
markets across Asia and Africa. Prudential's mission is to be the most trusted
partner and protector for this generation and generations to come, by
providing simple and accessible financial and health solutions. The business
has dual primary listings on the Stock Exchange of Hong Kong (2378) and the
London Stock Exchange (PRU). It also has a secondary listing on the Singapore
Stock Exchange (K6S) and a listing on the New York Stock Exchange (PUK) in the
form of American Depositary Receipts. It is a constituent of the Hang Seng
Composite Index and is also included for trading in the Shenzhen-Hong Kong
Stock Connect programme and the Shanghai-Hong Kong Stock Connect programme.

 

Prudential is not affiliated in any manner with Prudential Financial, Inc. a
company whose principal place of business is in the United States of America,
nor with The Prudential Assurance Company Limited, a subsidiary of M&G
plc, a company incorporated in the United Kingdom.

 

https://www.prudentialplc.com/ (https://www.prudentialplc.com/)

 

About CPL

CPL is a 50/50 life insurance joint venture between PCHL and CITIC in the
Chinese Mainland. As at 30 June 2023, it had an extensive footprint with 23
branches and operations in 100 cities. It distributes products through
multiple distribution channels with around 15,000 tied agents, 61 bank
partners and access to over 6,600 bank branches. As at 30 September 2023,
CPL's C-ROSS core and comprehensive solvency ratios were 109% and 203%
respectively. C-ROSS is the solvency regime that governs the insurance
industry in the Chinese Mainland.

 

Forward-looking statements

This announcement contains 'forward-looking statements' with respect to
certain of Prudential's (and its wholly and jointly owned businesses') plans
and its goals and expectations relating to future financial condition,
performance, results, strategy and objectives. Statements that are not
historical facts, including statements about Prudential's (and its wholly and
jointly owned businesses') beliefs and expectations and including, without
limitation, commitments, ambitions and targets, including those related to ESG
matters, and statements containing the words 'may', 'will', 'should',
'continue', 'aims', 'estimates', 'projects', 'believes', 'intends', 'expects',
'plans', 'seeks' and 'anticipates', and words of similar meaning, are
forward-looking statements. These statements are based on plans, estimates and
projections as at the time they are made, and therefore undue reliance should
not be placed on them. By their nature, all forward-looking statements involve
risk and uncertainty.

 

A number of important factors could cause actual future financial condition or
performance or other indicated results to differ materially from those
indicated in any forward-looking statement. Such factors include, but are not
limited to:

 

·      current and future market conditions, including fluctuations in
interest rates and exchange rates, inflation (including resulting interest
rate rises), sustained high or low interest rate environments, the performance
of financial and credit markets generally and the impact of economic
uncertainty, slowdown or contraction (including as a result of the
Russia-Ukraine conflict, the conflict in the Middle East and related or other
geopolitical tensions and conflicts), which may also impact policyholder
behaviour and reduce product affordability;

·      asset valuation impacts from the transition to a lower carbon
economy;

·      derivative instruments not effectively mitigating any exposures;

·      global political uncertainties, including the potential for
increased friction in cross-border trade and the exercise of laws, regulations
and executive powers to restrict trade, financial transactions, capital
movements and/or investment;

·      the longer-term impacts of Covid-19, including macro-economic
impacts on financial market volatility and global economic activity and
impacts on sales, claims (including related to treatments deferred during the
pandemic), assumptions and increased product lapses;

·      the policies and actions of regulatory authorities, including, in
particular, the policies and actions of the Hong Kong Insurance Authority, as
Prudential's Group-wide supervisor, as well as the degree and pace of
regulatory changes and new government initiatives generally;

·      the impact on Prudential of systemic risk and other group
supervision policy standards adopted by the International Association of
Insurance Supervisors, given Prudential's designation as an Internationally
Active Insurance Group;

·      the physical, social, morbidity/health and financial impacts of
climate change and global health crises, which may impact Prudential's
business, investments, operations and its duties owed to customers;

·      legal, policy and regulatory developments in response to climate
change and broader sustainability-related issues, including the development of
regulations and standards and interpretations such as those relating to ESG
reporting, disclosures and product labelling and their interpretations (which
may conflict and create misrepresentation risks);

·      the collective ability of governments, policymakers, the Group,
industry and other stakeholders to implement and adhere to commitments on
mitigation of climate change and broader sustainability-related issues
effectively (including not appropriately considering the interests of all
Prudential's stakeholders or failing to maintain high standards of corporate
governance and responsible business practices);

·      the impact of competition and fast-paced technological change;

·      the effect on Prudential's business and results from, in
particular, mortality and morbidity trends, lapse rates and policy renewal
rates;

·      the timing, impact and other uncertainties of future acquisitions
or combinations within relevant industries;

·      the impact of internal transformation projects and other
strategic actions failing to meet their objectives or adversely impacting the
Group's employees;

·      the availability and effectiveness of reinsurance for
Prudential's businesses;

·      the risk that Prudential's operational resilience (or that of its
suppliers and partners) may prove to be inadequate, including in relation to
operational disruption due to external events;

·      disruption to the availability, confidentiality or integrity of
Prudential's information technology, digital systems and data (or those of its
suppliers and partners) including the Pulse platform;

·      the increased non-financial and financial risks and uncertainties
associated with operating joint ventures with independent partners,
particularly where joint ventures are not controlled by Prudential;

·      the impact of changes in capital, solvency standards, accounting
standards or relevant regulatory frameworks, and tax and other legislation and
regulations in the jurisdictions in which Prudential and its affiliates
operate; and

·      the impact of legal and regulatory actions, investigations and
disputes.

 

These factors are not exhaustive. Prudential operates in a continually
changing business environment with new risks emerging from time to time that
it may be unable to predict or that it currently does not expect to have a
material adverse effect on its business. In addition, these and other
important factors may, for example, result in changes to assumptions used for
determining results of operations or re-estimations of reserves for future
policy benefits. Further discussion of these and other important factors that
could cause actual future financial condition or performance to differ,
possibly materially, from those anticipated in Prudential's forward-looking
statements can be found under the 'Risk Factors' heading of Prudential's Half
year 2023 Report and 2022 Annual Report. Such reports are available on
Prudential's website at www.prudentialplc.com.

 

Any forward-looking statements contained in this announcement speak only as of
the date on which they are made. Prudential expressly disclaims any obligation
to update any of the forward-looking statements contained in this announcement
or any other forward-looking statements it may make, whether as a result of
future events, new information or otherwise except as required pursuant to the
UK Prospectus Rules, the UK Listing Rules, the UK Disclosure Guidance and
Transparency Rules, the Hong Kong Listing Rules, the SGX-ST Listing Rules or
other applicable laws and regulations.

 

Prudential may also make or disclose written and/or oral forward-looking
statements in reports filed with or furnished to the US Securities and
Exchange Commission, the UK Financial Conduct Authority, the Hong Kong Stock
Exchange and other regulatory authorities, as well as in its annual report and
accounts to shareholders, periodic financial reports to shareholders, proxy
statements, offering circulars, registration statements, prospectuses,
prospectus supplements, press releases and other written materials and in oral
statements made by directors, officers or employees of Prudential to third
parties, including financial analysts. All such forward-looking statements are
qualified in their entirety by reference to the factors discussed under the
'Risk Factors' heading of Prudential's Half year 2023 Report and 2022 Annual
Report.

 

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