<News Alert> 9M23 VNB increased 48% y-o-y, beat expectations of c. 40% y-o-y
- Prudential 9M23 VNB growth beat, with an increase of 48% y-o-y by excluding economic impacts, mainly driven by robust APE growth and improved VNB margin due to favorable product mix shift
- APE increased 40% y-o-y to $4.4b, led by HK with increased sales to both MCV and domestic customers
- Robust APE growth also saw in Indonesia, while sales were under pressure in China and Vietnam due to strict regulatory rules and weak consumer sentiment
- We maintain BUY with TP under review
Prudential 9M23 VNB growth beat, with an increase of 48% y-o-y by excluding economic impact. Prudential delivered robust VNB growth in 9M23, with an increase of 48% y-o-y excluding economic impact or 37% y-o-y to US$2.1b on constant exchange rate (CER) basis. The promising growth was mainly driven by robust annualized premium equivalent (APE) sales and improved VNB margin due to favorable product mix shift. The proportion of health and protection products remained elevated, accounting for 37% of total VNB in 9M23.
Robust APE sales growth mainly led by HK, Indonesia also saw resilient growth. HK APE sales grew strongly to both domestic and Chinese Mainland visitors (MCV) customers with APE sales to MCV being 1.3x of that in 2019, surpassing the pre-pandemic level. The appetite for saving products remained elevated in 3Q, and the average ticket size started to normalize. Health and protection sales contributed to more than 1/3 of VNB with growth in both agency and bancassurance channel. Prudential’s China joint venture CPL and Vietnam delivered a declined APE sales in 9M23, impacted by stricter regulatory rules on bancassurance channel and weak consumer sentiment. Based on robust VNB growth in FY23F and onward, we maintain BUY with TP under review.
* VNB, APE y-o-y based on constant exchange rate (CER) basis
** VNB excluding economic impact refers to calculating VNB using the same economic assumptions as the previous year to exclude impact of changes in the economic assumptions, particularly volatile interest rates