00:00How sensitive is Prudential's balance sheet to hire for longer?
00:04Not particularly sensitive. I mean, we think about decades rather than quarters.
00:10So the excitement over sort of the signals that markets give from time to time in reaction to announcements
00:16is something you keep an eye on. But you are managing over a very long period of time
00:21in terms of the money that's been entrusted to you by insurance and investment management clients.
00:27So no change to capital planning on the back of hire for longer, which many people didn't expect
00:31when we kicked off the year, or even like last year, for instance.
00:34I think we've had so many signals that interest rates are going to stay low forever,
00:37they're going to stay high forever. I don't think anybody knows.
00:39There are so many uncertainties in terms of geopolitics, in terms of the trade flows
00:46between the West and the East China and the United States.
00:48I think anyone who knows what's going to happen is incredibly talented and has a crystal ball
00:54that I'm not aware of. But I do think, you know, we're getting, you know, when we look
00:59at the sources of inflation, they're very much in a very small segment of the market
01:03in terms of all the money that's going into AI. And then you've got the impact of the Iran
01:08situation, which is impacting hydrocarbons, impacting food because of fertilizer and all
01:14sorts of other things. And these things are hopefully temporary, because we're going to hopefully
01:19see that situation end. We're hopefully going to see the investment boom in AI come to an end
01:26and then see how that plays through. So I think, again, if you take a long-term view,
01:30you have to look at the underlying growth of the global economy, which is still positive,
01:36but still is going to be a great deal less than some of the excitement that people are projecting.
01:39So still a challenging environment. How are you looking at capital deployment?
01:43How are you looking at investing in the next 24 months for the company?
01:47Again, we think of it in decades.
01:49So where in Asia do you think you'll be putting your money?
01:52Well, we're putting money in the markets and where we're collecting insurance funds because
01:57we invest in the markets that our customers are in because that's out of those funds we
02:01have to pay them the returns that they expect on their policies.
02:06So it's still big on China, still big on...
02:09Still, I mean, I think the big trends are power generation, climate change, energy transition.
02:17Manufacturing capacity being built up to support a more technological, advanced world.
02:23All of these things are trends that are being invested in.
02:25Where people choose to site their particular plants, their data sensors or whatever,
02:30will depend on access to power, access to renewable energy and so on and so forth.
02:36So it's very difficult to say you're going to choose this country or that country to invest the money.
02:41But you are investing thematically across the region.
02:44But still, Prudential is doubling down on China.
02:47I mean, how do you take into account a slowing economy and also a very interventionist government
02:54when it comes to regulations?
02:56I think all governments are becoming more interventionist.
02:59I mean, it's very clear that the Chinese government has an ambition to boost domestic consumption.
03:04And indeed, the world is waiting for it, hoping for it, encouraging it to boost domestic consumption,
03:11to move away from an economy that's dominated by exports.
03:15And I think China recognises it needs to do something to boost domestic consumption,
03:20to get a more balanced economy, because the pressure it's putting on its trading partners
03:24in continually increasing its exports is problematic.
03:29On the other hand, it has an extraordinary position in the technologies of tomorrow,
03:34whether it's electric vehicles, data centres, power generation and so on, robotics.
03:42It's incredible to see this scale advantage from just having that size of an economy.
03:47So no change in terms of your appetite for China, correct?
03:51No.
03:51And in terms of India, why is a prudential more aggressive in that market, given the potential of growth?
03:59Well, I think we've made a very strong statement in terms of agreeing to buy, invest in Bharti,
04:07effectively create an insurance operation that we have a majority control over,
04:13because while we have a very successful partnership with ICICI Bank,
04:18we are very much a minority shareholder,
04:20and therefore we want something that we can have more direct influence in.
04:23So we're investing the thick end of half a million dollars in investing in that stake,
04:27and hopefully we'll get the necessary permissions later on this year to enable us to start to grow that business.
04:34But over the long term, but that we are talking now in decades,
04:36over the long term, you can't ignore it, is probably the second market to China
04:40in terms of the need for broader insurance products.
04:44So Douglas, I'm just going to break some headline here,
04:46because on the back of that coordinated intervention between the U.S. and Japan,
04:51we're seeing Japan's five-year yield rising five basis points to 2.075,
04:56which is the highest since its 2000 debut.
05:01So we're seeing a reaction in the market on the back of the coordinated intervention.
05:06What's your take on the Japanese market?
05:09It's been an enigma for a while, actually.
05:13I mean, I can see why there would be concerns over the strength of the yen,
05:18and it's good to see America and Japan working together on that.
05:22But it's been a very hot market for a long time now.
05:27But we're not very big in Japan.
05:28And I just want to follow up on India, because prior to that breaking line,
05:34following the Bharti Life investment regulators are now expected to require
05:38potential to reduce its shareholding to under 10% from the current 22%.
05:44Where are you with that? What's your take on that?
05:46Well, we're waiting to see what the regulators demand.
05:48We anticipated that and disclosed that when we announced the deal.
05:53So we will seek to do that in a proportionate way in conjunction with our partner
05:57to make sure that we don't do anything disruptive to the market.
06:00But I think we signaled at the time that, having made the investment in Bharti,
06:04we would progressively, in line with regulatory guidance,
06:08and in conjunction with our partner, take down our stake in our joint venture.
06:14As we said, Alia, it is a challenging environment for a lot of businesses.
06:17What's the growth strategy for Prudential going forward?
06:21The growth strategy is very simple,
06:23which is to address the underinsured need across Asia.
06:27And to some extent, Africa, but predominantly in Asia.
06:30It's a very underinsured population.
06:33And as demographics of the world, the demographic...
06:36Is there a risk of being too concentrated on Asia and the need to diversify?
06:40I think to be concentrated on one of the most attractive,
06:44fastest growing markets with the least degree of penetration,
06:48if you had to be concentrated, that's where you'd want to be concentrated.
06:51It is a staggering number of people in Asia
06:53when you add up all the countries that we're in.
06:56And therefore, as there is an emerging middle class,
06:58an emerging need for greater health protection,
07:03investment accumulation to deal with retirement.
07:05And in a world where the birth rate is declining in many, many parts of the world,
07:09and therefore, the younger generations are going to have to take,
07:12have to understand they're going to have to take,
07:14more responsibility for their future planning
07:17in terms of asset accumulation, health and other kind of protection,
07:21because there's also going to be a burden on the public systems
07:25for an aged population.
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