Providing financial strength, stability and support

This is just for UK advisers – it’s not for use with clients

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A strong proposition

Prudential has been looking after the financial interests of it’s customers since 1848.

In 1999, Prudential Group acquired M&G, a pioneer of unit trusts in the UK and a leading provider of investment products.

In October 2019, M&G demerged from Prudential plc and listed on the London Stock Exchange as a new independent company, M&G plc. Prudential is part of M&G plc.

M&G plc is a savings and investment company with a long-term outlook, bringing the M&G Investments business together under one roof with the UK and European parts of Prudential.

These are exciting times for M&G plc, but at the forefront of this is our relationship with you.

Our commitment to helping customers improve their financial futures remains as strong as ever.

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An international savings and investments business

Caring for customers for over 170 years

1848 A new company is formed: ‘The Prudential

Mutual Assurance Investment and Loan

Association’

1999 M&G joins the Prudential family

2004 Prudential launch their first

PruFund fund, the PruFund Growth fund

2012 Expanding east with M&G office

opening in Singapore

2017 announcement that Prudential and M&G are merging

2019 Listing and a new name –

M&G plc

1931 The first mutual fund: the M&G First British Fixed Trust

2001 M&G opens it’s first office in Europe

2009 Prudential add the PruFund Cautious

fund to their range

2018 Investing for good, with launch of M&G Positive

Impact Fund

2018 Demerger from Prudential plc

announced

For more than 170 years, Prudential’s purpose has been to help millions of people manage and grow their savings so they can live the life they want.

Today, we serve more than 5 million savers in the UK through our Prudential business, and many more retail and institutional investors around the world, under the M&G Investments brand.

M&G plc is focused on delivering great customer and client outcomes through active, high value-added solutions.

Heritage: £134bn

Savin

gs an

d Ass

et M

anag

em

ent: £216bn

Total Asset under managementand Administration (AUMA)1

£352 billion*1 Includes £1.6bn of corporate assets

Savings and Asset ManagementWe offer a broad range of savings and investment solutions to retail customers and institutional clients. For retail savers in the UK, we offer propositions powered by our With-Profits Fund, including our market leading PruFund. We also have a family of UK-domiciled mutual funds and Luxemborg-domiciled SICAV funds for retail investors.To institutional clients, we provide investment strategies covering both private and public assets through a variety of formats, from pooled funds to segregated mandates.

HeritageWe manage the traditional life savings and retirement plans of retail customers.While open to top-ups, this part of our business is closed to new customers.The Heritage segment includes our annuity business, which provides policyholders with an income for life.Our Heritage business also includes the £85 billion* book of traditional with-profits business, the inspiration for our market-leading PruFund proposition.

Operating segments

* as at 31 December 2019

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So what makes M&G financially strong?

Assets under Management£352 billion assets under Management and Administration (AuMA)

Our brandOne Company Two Brands

Our ratings

A-S&P Global Ratings

A2Moody’s

AA-FitchRatings

A-S&P Global Ratings

Aa3Moody’s

AA-FitchRatings

Source: S&P, Moody’s & Fitch websites as at 8 June 2020.

£6.4 billion £143 billion net client inflows into PruFund

£53.8 billion PruFund AuMA With-Profits Fund AuMA

All figures as at 31 December 2019

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How we compare with other companies Prudential is rated A – (Stable) for financial strength by Standard & Poors. This is one of the highest ratings currently given to any UK life assurance company.

With-Profits FundFor more than a century, Prudential has been helping savers in the UK to smooth out the ups and downs of their investments through our With-Profits Fund.

At £143 billion* of AuMA, our With-Profits Fund is the largest and financially strongest with-profits funds in the UK. Our fund size and strength allows us to invest in a wide range of asset types and individual companies. This portfolio of global assets aims to provide customers with steady, reliable returns over time.

The reliability of the Fund’s return is underpinned by three aspects of with-profits: the performance of the investments, the management of risk that comes with a diversified portfolio of assets and the smoothing process.

Today, new customers in the UK can invest in the With-Profits Fund through PruFund, our £54 billion* range of investment propositions.

* as at 31 December 2019.

Company Standard & Poor’s Moody’sPrudential Assurance Co. Ltd A – (Stable) Aa3(Stable)1

AEGON (Scottish Equitable plc.) A+ (Stable) A3 (Stable)

Aviva L&P UK Ltd/Aviva plc AA-(Stable) Aa3 (Stable)

Canada Life Assurance Co. AA (Stable) Aa3 (Stable)

Legal & General Assurance Society Ltd AA – (Stable) Aa3 (Stable)

Liverpool Victoria Friendly Society Ltd BBB+ (stable) Not Rated

Royal London Mutual Ins. Society Ltd A (Stable)# A2 (Stable)

Scottish Widows plc. A (Negative) A2 (Stable)

Standard Life Assurance Ltd/SLA A-(Stable)#2 A3(Stable)2

Zurich Insurance Co. Ltd AA – (Positive) Aa3 (Stable)

Source: S&P, Moody’s & Fitch websites as at 8 June 2020.# refers to Long Term Issuer Default Rating. 1 M&G plc rated A2 (Stable), 2 Standard Life Aberdeen.

£143bn AuMA

Smoothing explained

An established process which aims to protect customers from the extreme short-term ups and downs of direct stock market investment, to give a more stable rate of growth than they would get, if directly exposed to the daily changes in the fund’s underlying investment performance. See our Step by step guide to smoothing.

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Independent of the various underlying asset management businesses within M&G plc, T&IO’s job is to focus on providing asset allocation expertise although in practice, their remit is far wider.

One of the largest and best resourced multi-asset teams in the UK, T&IO manages over £178 billion across a growing range of highly competitive multi-asset investment solutions and annuities on behalf of Prudential UK and Europe.

T&IO has great strength in depth with access to a team that includes investment professionals with expertise in capital market research, investment strategy design, liability management, derivatives and portfolio management.

T&IO in numbers

Source: All figures on this page are from T&IO, as at 31 December 2019.

M&G Treasury & Investment Office (T&IO) – experts in diversified investments

£117bnManagers of Prudential’s With-Profits Fund, the largest in the UK with

under management

Manage assets underlying PruFund Growth and PruFund Cautious

Access to over 800 investment professionals around the world

£6.5bn

38Over £12.1 billion in the property portfolio within the With-Profits Fund of alternative assets

under management

people involved in investment activities

£178bn234commercial property assets held in the With-Profits Fund

Invested in funds with interest in

of assets under management

69 out of 70 Over £53bn of PruFund assets under managementperiods the With-Profits Fund

produced a positive 5 year rolling return since 1946

over 10,000 11strong Manager Oversight team who select and monitor underlying portfolio managers

actuaries and investment strategists responsible for the complex in-house financial modelling that underpins all strategic asset allocation

trades placed by portfolio managers each year

over 400onshore and offshore wind turbines

833Up

todifferent asset types can be held within PruFunds

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What we can provide

Diversification The benefit of spreading risk through a range of assets can be a fundamental investment starting point for many. As a global company we offer expertise in investing in assets around the world.

Asset allocation expertise Our specialist and dedicated asset allocation knowledge can offer the solution for you to “outsource” this time consuming and resource heavy work.

Governance

A key focus for the regulator. Having the time to review and understand each part of the investment management process, on a regular and comprehensive basis for funds that invest globally, can be very difficult. We offer funds that include governance controls from either internal or independent third party experts.

Risk managed solutionsWorking within risk targets, for example with our Risk Managed Active range and the Risk Managed Passive range. Aiming to maximise potential returns within those parameters, means a fund manager does not ”chase” performance and provides funds that stay true to their original risk profile.

Asset liability managementFunds, such as With-Profits, come with controls and independent reviews in respect of their financial strength and how liabilities are managed. The fund manager can then work within these parameters, whilst the investor knows these are being monitored for them.

Additional product features Not all clients are the same, and a range of choices (such as smoothing mechanisms, guarantees and other product features) gives more choice in meeting different client’s needs.

M&G Investment Management Ltd (MAGIM)M&G Investment Management Ltd (MAGIM), part of the M&G Group, are the investment managers for the Risk Managed Active range and Risk Managed Passive range. They make the relevant adjustments to the portfolios based on T&IO recommendations.

For more information on our funds or T&IO, or for additional Governance or Due Diligence support, please visit pruadviser.co.uk or speak to your Prudential Account Manager.

Risk MappingWe have a range of independent and third party risk mapping reports available for our Risk Managed and PruFund range of funds. These will help you understand more about the investment process behind these funds – the asset allocation, risk level and performance of each fund and how they can be assessed in terms of suitability and selection.

Defaqto – Risk Managed Multi-Asset Funds (October 2019)

Finametrica – PruFolio fund range risk mapping report

Synaptic – PruFolio/PruFund Risk Mapping Fact Sheet 1-10 (Q1 2020)

Square Mile Report – PruFund range (Feb 2020)

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Our customers and clients Two strong customer brands

We are an international savings and investments business serving:

More than

5 million retail customers

We manage and administer their assets through mutual funds.

More than

800 institutional customers

We are growing our institutional franchise from being UK-focused to having an established international footprint.

Founded in 1848, Prudential manages long-term savings, investments and retirement solutions for our customers in the UK and Europe.

Established in 1931, M&G Investments is an international asset manager serving individual and institutional investors.

StirlingEdinburgh

DublinLondon

ParisLuxembourg

ZürichMadrid

StockholmAmsterdam

FrankfurtWarsaw

Milan

Seoul

Hong KongMumbai

Singapore

Tokyo

Sydney

New York

Miami

Cape Town

28 markets22 locations

Figures as at 31 December 2019.

M&G plc across the world

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Prudential International benefits from the financial and investment strength provided by the M&G Group and provides financial solutions to customers who want to combine the benefits of investment in an offshore environment, with the reassurance of a name they can trust.

Solvency matters. Here’s how we stack up:

Solvency II which was implemented on 1 January 2016 is an EU legislative programme implemented to harmonise the regulatory regime of all 28 Member States. It requires insurance companies to hold Own Funds not less than its Solvency Capital Requirements (CR). As at the end of December 2019, our Solvency Cover was 155%.

Under previous solvency regimes, we have also consistently maintained our solvency over and above the limits required. These are stringent regulations and should provide comfort in the professional nature of Dublin-based insurers.

For more information please refer to the AILO** investor protection guide, ‘Client guide to Cross-Border Investment Bonds’ and ‘The UK Adviser’s guide to using cross-border bonds for investment flexibility’ and ‘A summary of the life insurance policyholder protection measures in Guernsey, Isle of Man, Ireland, Luxembourg and the UK for professional advisers’. These can be found at AILO.org

And for offshore investment solutions – Prudential International

Source: Prudential International, 31 December 2019.

Cover for Solvency Capital Requirement (SCR):

155%£173

.9 m

illion

Own Funds

CR

£270

.1 m

illion

Our Dublin base – a further safeguardDublin is a location with a strict legal and regulatory environment. The company is subject to European Law, having to comply with all European directives and regulations and to meet European solvency margins. As part of the M&G Group, we have additional group standards to comply with over and above Irish requirements

Financial Services Compensation Scheme (FSCS)Policies issued on or after 1 December 2001For eligible policyholders habitually resident in the UK, the FSCS would apply for policies taken out on or after 1 December 2001. The maximum amount of compensation is 100% of the claim, with no upper limit for the claim amount.

Policies issued prior to 1 December 2001Policyholders of policies issued prior to 1 December 2001 may be eligible if the policy is considered a ‘UK policy’ under the Policyholder Protection Act 1975. Under the Act, the only requirement for a policy to be designated as such is that the insurer who provided the policy was considered as carrying on insurance business in the UK. Therefore policyholders holding a UK policy issued before 2001, may be eligible to make a claim before the FSCS however since such a policy would have been taken out before the FSCS regime commenced, they should check their eligibility directly with the FSCS.

More information on the FSCS can be found on page 10.

** Prudential International is a member of the Association of International Life Offices (AILO) This is a trade organisation of international life assurance companies which aims to encourage professionalism and high standards amongst its members through the provision of market, regulatory and tax information and liaison with regulators and local trade associations.

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The Financial Services Compensation Scheme (FSCS)

In general terms Prudential Assurance Company Limited (PACL) and other UK authorised and regulated firms in the M&G Group are subject to the FSCS, and so our customers may be able to make a claim under the FSCS if Prudential is unable to meet its financial obligations. However, they may have limited protection according to the product they have selected, the funds they have invested in and the circumstances of their particular claim.

Where PACL invests in another entity, and this entity is in default or expected to go into default, because the policyholder is not the direct investor, they would not be able to claim under the FSCS. This is true for investment into reinsured funds and external funds (as explained later under “fund selection & FSCS protection”).

Are there limits to the compensation payable by the FSCS?Yes. The FSCS operates different levels of compensation. The scope and amount of cover available depends on the type of policy involved and the funds selected. The normal limits in terms of products are as follows.

• For long-term insurance (e.g. workplace pensions, personal pensions, annuities, endowments and investment bonds) 100% of the claim with no upper limit for the claim amount.*

• For investments (e.g. Unit Trusts, Open Ended Investment Companies and Stocks & Shares ISAs) 100% but limited to £50,000 per person, per firm in default (the limit increased to £85,000 from 1 April 2019, for all claims in relation to failures on or after that date).

• For home finance (e.g. mortgage advice and arranging) 100% limited to £50,000 per person, per firm in default (from the 1 April 2019 the limit increased to £85,000, for all claims in relation to failures on or after that date).

• The FSCS would pay compensation up to the limit of £85,000 per person, per authorised deposit Group (bank, building society and credit unions). Since 3 July 2015, the FSCS provides a £1 million protection limit for temporary high balances held with your bank, building society or credit union if it fails.

It’s important to note that the FSCS will not apply for any Prudential International Bonds sold outside the UK.

* This includes the PruFund range of funds available on Prudential ISA. The OEIC funds on Prudential ISA have a £85,000 per person, per firm in default.

Fund selection & FSCS

Prudential Assurance Company Limited and other UK authorised and regulated firms in M&G plc are covered by the FSCS. This provides a level of comfort in the event that Prudential is unable to meet its financial obligations.

Further informationThe Terms & Conditions for the policy or investment may have more information on limits in the scope of FSCS cover. More information is available from FSCS at: fscs.org.uk

Different products offer different investment options – internal funds or external funds. Investment in Prudential’s internal funds are fully protected by the FSCS in the event of a default of Prudential Assurance Company Limited (PACL), up to the product limits.

Investment into external funds is not protected under the FSCS.

”Prudential” is a trading name of Prudential Distribution Limited. Prudential Distribution Limited is registered in Scotland. Registered Office at Craigforth, Stirling FK9 4UE. Registered number SC212640. Authorised and regulated by the Financial Conduct Authority.

pruadviser.co.uk

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