Internal rate of return (IRR) The IRR is equivalent to the discount rate at which the present EEV value of the post-tax cash flows expected to be earned over the lifetime of the business written in shareholder-backed life funds is equal to the total invested capital to support the writing of the business. The capital included in the calculation of the IRR is equal to the amount required to pay acquisition costs and set up reserves, less premiums received, plus encumbered capital. The impact of the time value of options and guarantees is included in the calculation.
Liquidity premium This comprises the premium that is required to compensate for the lower liquidity of corporate bonds relative to swaps, and the mark to market risk premium that is required to compensate for the potential volatility in corporate bond spreads (and hence market values) at the time of sale.
Mortality rate Rate of death, varying by such parameters as age, gender, and health, used in pricing and computing liabilities for future policyholders of life and annuity products, which contain mortality risks.
Non-participating business A life insurance policy where the policyholder is not entitled to a share of the Company’s profits and surplus, but receives certain guaranteed benefits. Also known as non-profit in the UK. Examples include pure risk policies (eg, fixed annuities, term insurance, critical illness) and unit-linked insurance contracts.
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Surrender The termination of a life insurance policy or annuity contract at the request of the policyholder after which the policyholder receives the cash surrender value, if any, of the contract.
Time value of options and guarantees The value of financial options and guarantees comprises two parts: the intrinsic value and the time value. The intrinsic value is given by a deterministic valuation on best estimate assumptions. The time value is the additional value arising from the variability of economic outcomes in the future.
Communication with shareholders Being a major institutional investor, Prudential is very aware of the importance of maintaining a good relationship with its shareholders. A programme of regular meetings with major shareholders took place over the course of the year and the Chairman provided feedback to the Board on topics raised with him by major shareholders. In addition, analysts’ and brokers’ reports were circulated to Board members where requested.
Annual General Meeting The 2015 Annual General Meeting (‘AGM’) will be held in the Churchill Auditorium at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE on 14 May 2015 at 11.00am.
Prudential will continue its practice of calling a poll on all resolutions, and the voting results, including all proxies lodged prior to the meeting, will be displayed at the meeting and subsequently published on the Company’s website.
Rights and obligations The rights and obligations attaching to the Company’s shares are set out in full in the Articles of Association. There are currently no voting restrictions on the ordinary shares, all of which are fully paid, and each share carries one vote on a poll. If votes are cast on a show of hands, each shareholder present in person or by proxy – or in the case of a corporation, each of its duly authorised corporate representatives – has one vote, except that if a proxy is appointed by more than one member, the proxy has one vote for and one vote against if instructed by one or more members to vote for the resolution, and by one or more members to vote against the resolution.
Where, under an employee share plan, participants are the beneficial owners of the shares but not the registered owners, the voting rights are normally exercisable by the registered owner in accordance with the relevant plan rules. Trustees may vote at their discretion, but do not vote on any unawarded shares held as surplus assets.
As at 9 March 2015, Trustees held 0.43 per cent of the issued share capital under the various plans in operation. Rights to dividends under the various schemes are set out in the Remuneration policy on the Company’s website.
All directors are required to hold a minimum number of shares under guidelines approved by the Board, which they would also be expected to retain as described on pages 100 and 112 of the Directors’ Remuneration report.
Major shareholders The following notifications have been disclosed under the FCA’s Disclosure and Transparency Rules in respect of notifiable interests exceeding three per cent in the voting rights of the issued share capital.
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Details of shares issued during 2014 and 2013 are given in note C10 on page 246.
Authority to purchase own shares The directors also require authority from shareholders in relation to the purchase of the Company’s own shares. Prudential seeks authority by special resolution on an annual basis for the buyback of its own shares in accordance with the relevant provisions of the Companies Act 2006 and other related guidance. This authority has not been used since it was last granted at the Annual General Meeting in 2014. This existing authority is due to expire at the end of this year’s Annual General Meeting and a special resolution to renew the authority will be put to shareholders at the Annual General Meeting on 14 May 2015.
Cash dividend alternative The Company operates a Dividend Re‑investment Plan (DRIP). Shareholders who have elected for the DRIP will automatically receive shares for all future dividends in respect of which a DRIP alternative is offered. The election may be cancelled at any time by the shareholder. Further details of the DRIP and the timetable are available on the Company’s website at www.prudential.co.uk/ prudential‑plc/investors
Share dealing services The Company’s Registrars, Equiniti, offer a postal dealing facility for buying and selling Prudential plc ordinary shares; please see the Equiniti address opposite or telephone 0871 384 2248. They also offer a telephone and internet dealing service, Shareview, which provides a simple and convenient way of selling Prudential plc shares. For telephone sales, call 0871 384 2020 between 8.30am and 4.30pm, Monday to Friday; and for internet sales, log on to www.shareview.co.uk/dealing
Tel: +1 800 990 1135 or from outside the US +1 651 453 2128 or log on to www.adr.com
Prudential Corporation Asia 13th Floor One International Finance Centre 1 Harbour View Street Central Hong Kong www.prudentialcorporation‑asia.com
Forward-looking statements This document may contain ‘forward‑ looking statements’ with respect to certain of Prudential’s plans and its goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements that are not historical facts, including statements about Prudential’s beliefs and expectations, and including, without limitation, 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 Prudential’s 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, future market conditions, including fluctuations in interest rates and exchange rates and the potential for a sustained low‑interest rate environment, and the performance of financial markets generally; the policies and actions of regulatory authorities, including, for example, new government initiatives related to the financial crisis and the effect of the European Union’s ‘Solvency II’ requirements on Prudential’s capital maintenance requirements; the impact of continuing designation as a Global Systemically Important Insurer or ‘G‑SII’; the impact of competition, economic growth, inflation, and deflation; experience in particular with regard to 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 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 actions and disputes.
Further discussion of these and other important factors that could cause Prudential’s actual future financial condition or performance or other indicated results to differ, possibly materially, from those anticipated in Prudential’s forward‑looking statements can be found under the ‘Risk factors’ heading in this Annual Report and the ‘Risk factors’ heading of Prudential’s most recent annual report on Form 20‑F filed with the US Securities and Exchange Commission, as well as under the ‘Risk factors’ heading of any subsequent Prudential Half Year Report. Prudential’s most recent Annual Report, Form 20‑F and any subsequent Half Year Report will be available on its website at www.prudential.co.uk
Any forward‑looking statements contained in this document 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 document 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 and Transparency Rules, the Hong Kong Listing Rules, the SGX‑ST Listing Rules or other applicable laws and regulations.
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