#1M &G Investor & Analyst Presentation 27 September 2019#2M&G plc Investor & Analyst Presentation Disclaimer This presentation is made by M&G plc ("M&G"). For the purposes of this notice, 'presentation' shall mean and include the document that follows and any oral presentation, any question-and-answer session and any other written or oral material delivered or distributed by M&G in connection with it. This presentation is for informational purposes only and does not constitute a prospectus or offering memorandum or an offer or solicitation in respect of any securities and is not intended to provide the basis for any evaluation of any securities of M&G and should not be considered as a recommendation that any person should purchase any such securities in any jurisdiction. 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Note: Throughout this presentation totals in tables and charts might not sum as a result of rounding 2#3Agenda Session Business overview and strategy Finance and capital management Coffee break Q&A Lunch Time Presenter 10.00 - 10.30 10.30 11.15 - John Foley Clare Bousfield 11.15-11.30 - 11.30 12.15 John and Clare 12.15-13.30 3#4M &G Business overview and strategy John Foley Chief Executive -#5What we will cover today How we create value for shareholders 1 Recap on our business Customer and Distribution Transformation 2 Sources of competitive advantage Depth of investment capabilities Investment Finance and Engine Capital Uniqueness of PruFund offering Scale of Private Assets franchise Reach of distribution footprint 3 Growth opportunities Our principles for growth 1 Disciplined 2 Capital-efficient 3 Profitable 4 Responsible 4 Attractive financials f 5#6M &G 1. Recap on our business 6#7Who we are A unique business mix an Asset Manager and Asset Owner... ... focused on delivering great customer outcomes through active, high-value added solutions. Our History 2017 M&GPRUDENTIAL 1931 M&G 1848 INVESTMENTS PRUDENTIAL 1. Assets under Management and Administration Customer and Distribution Investment Engine Finance and Capital CARE Customers c. 5.5 million retail customers more than 800 institutional clients Geographies AUMA¹ 20 distribution offices... ...serving 28 markets £341bn (H1 2019) 7#8What drives our business Managed for profitable growth Sustainable value creation Includes all open products Unique proposition expanding beyond PruFund Continued strong inflows despite volatile market Embedded growth of PruFund earnings Comprehensive offering in active asset mgmt. Established track record of product innovation Playing at scale across Europe Savings & Asset Management Heritage £210bn £131bn Retail Savings (incl. PruFund)¹ Traditional With-Profits With-Profits Fund Retail Asset Management Leading solutions and private assets offering Diversified capabilities built over 20+ years Attractive and resilient management fees² Institutional Asset Management Shareholder Annuities Corporate Pensions and Other Managed for capital and efficiency Sticky assets, earnings and cashflows Closed to new customers Integral to the WPF³ providing investment scale | Stable earnings contribution for 10+ years4 Stable earnings and capital generation Potential upside from management actions Financial play providing strategic optionality Mostly unit-linked products Closed to new schemes but open for top-ups 1. Includes a small amount, £4bn, of non With-Profits AuMA; 2. Performance fees account for a minimal part of Institutional Asset Management income (£15m in FY 2018); 3. With-Profits Fund; 4. Assuming normal financial market development and policyholder behaviour Note: All AuMA figures refer to position as of H1 2019 8#9M&G plc at a glance Our investment case Leading house offering deep expertise in high-value added solutions with resilient margins • World class Private Asset franchise with £60bn AuM and an attractive fee model¹ UK's largest With-Profits Fund (£144bn with £11bn Own Funds) Customer and Distribution . Unique PruFund offering with fast growing asset base (£50bn H1 2019) • One of UK and Europe's strongest brands for institutional asset mgmt. • . Leading retail cross-border player in Europe with £37bn AuM Expanding international network of 20 distribution offices serving 28 markets Transformation Investment Engine 1. Fee income is mostly management fees; performance fees account for a minimal proportion of income (£15m in FY 2018) Note: All AuMA figures refer to position as of H1 2019 Finance and Capital . . Diversified sources of earnings Capital-efficient growth opportunities Strong cash generation over • the long-term 9#10Why the total is greater than the sum of the parts Developing high-value added solutions as Asset Owner and Asset Manager • Provide scale to our asset management operations Rapidly deploy seed funding in innovative investment solutions • Adopt a truly long-term investment perspective . Understand the needs of complex institutional clients Develop unique new Customer propositions and Distribution . Co-invest with clients thus aligning incentives Transformation Investment Engine • Differentiated capabilities underpinning sustainable growth Finance and Capital • More resilient earnings with long-term stable cashflows • Upside potential from capital optimisation actions 10#11M &G 2. Sources of competitive advantage#12What differentiates us Sources of competitive advantage Depth of investment capabilities Specialist coverage in high-value added areas of active mgmt., e.g. £140bn in multi-asset solutions¹ See appendix for more details Depth of investment expertise Values as of H1 2019 Multi-Asset Scale of Private Assets franchise One of the world's largest private asset investors; 36% AuM increase since 2015 (to £60bn) Private Asset growth over time and split by capability Private Assets growth (Ebn) £140bn Growth Target Return Conservative Macro Allocation Private Fixed Income Real Estate Infracapital & Alternatives Public Fixed Income Equities +36% £16bn UK Commandal Infrastructure ty Bend and Income Lang Income PE Fund of Funds 60.1 55.0 56.3 50.2 44.1 Direct Landing D& High Yield Value Recovery Cash Private Assets split ! y category Private Fixed Income 27.4 £60.1bn 21.2 Uniqueness of PruFund offering Part of our £144bn With- Profits Fund, one of UK's largest with an enviable performance track record With-Profits Fund historical returns Annualised 5-year rolling returns! PruFund Growth returns vs. peers 25% 15% 10% Fund Growth Fund Cativ Cash SONIA Cultivate Reach of distribution footprint Established international network of 20 distribution offices, with new openings in US and Australia Our international footprint 341bn AuMA 20 distribution offices 92% 28 markets UK £278.5bn Europe £50.1bn Middle East & Africa¹ £7.1bn Asia-Pac £8.5bn2 Multi- Continental Europe Real Estate Delt Capital Solutions Emerging Markets Inflation Linked Convertible 27 29 4 138 Private Assets Σ£60bn 2015 2016 2017 2018 HI 2019 2019 Total AuM 64 14 Σ£277bn Internal 3rd party 1. Of which £124bn through Prudential UK & Europe Strategic Asset Allocation and £16bn through 3rd party assets Note: All AuMA figures refer to position as of H1 2019 Infrastructure Equity Long lease property 5% Real Estate 1950 2000 2010 Americas E1.1bn Retail Savings Retail Asset Management Institutional Asset Management Heritage Distribution centres 12#13How we generate value for our customers and shareholders Competitive advantages at play Depth of investment capabilities • • Enables in-house implementation of the WPF SAA¹ retaining value for shareholders Caters to retail and institutional customer needs through a wide range of solutions Supports continuous product innovation Scale of Private Assets franchise • • Empowers us to invest rapidly and at scale to take advantage of market opportunities Gives us access to 3rd party sticky assets and resilient margins Powers PruFund performance and our institutional solutions Underpins significant portion of annuity book Uniqueness of PruFund offering Acts as an anchor for our broader offering in Retail Asset Management, e.g. PruFolio • Provides superior outcomes to retail customers • Generates long-term value and earnings for shareholders Reach of distribution footprint • Opens up international markets to pursue organic growth opportunities Provides comprehensive coverage of the UK and Europe to offer our products to retail and institutional customers 1. With-Profits Fund Strategic Asset Allocation 13#14How we will be known A new corporate identity and two strong market brands One Corporate Identity M &G Two Market Brands PRUDENTIAL M&G INVESTMENTS Region: Europe South Africa Audience: • Direct consumer Intermediated consumer Introducer Global Intermediated consumer • Wholesalers Institutional clients 14#15M &G 3. Growth opportunities 15#16Established track record Key drivers of growth over the past 10 years All charts show AuMA in £bn PruFund International Retail Asset Management 34589 25 17 12 50 43 36 24 23 21 17 11 53 46 44 41 36 33 33 32 Institutional Asset Management¹ 38 35 30 22 50 51 55 55 Customer and Distribution Transformation Investment Engine Finance and Capital 64 74 74 71 2008 2010 2013 2016 H1 2008 2010 2013 2016 2019 H1 2019 2008 2010 2013 2016 H1 2019 1. "PPL GILP" has been reclassified from Institutional to UK Retail from 2015 onwards 16#17Our principles and focus Sustainable growth Supportive Trends Our principles for growth Our Focus Global demographic trends An ageing society Lactancy at Share of population aged organd 2017 -31 NORTH AMERICA -19%6 -20%+ LATIN AMERICA 75 Retreat by corporates and governments A widening saving gap Corporates retreat from CB scham gevents defer MEGPRUDENTIAL JAPAN CHINA 27%+++ -11% AUSTRALIA -16% M&GPRUDENTIAL while savers face Ageing population globally Widening savings gap Disciplined 1 leveraging our core competencies 2 Capital-efficient for shareholders Putting cash to work The biggest opportunity a significant In Europe, as of financial assets is still held as cash... Cash as % of p-18 M&GPRUDENTIAL representing a huge untapped potential in the savings market Cash Eur 12.2 == Total €10tn Other EU-28 Cash deposits Other Financial Ass €10tn+ of cash in Europe 3 Profitable no 'loss-leader' approach Responsible 4 Aligned with our core value of care See July 2019 presentation Customer and Distribution Investment Engine Customer and Distribution Transformation Investment Engine Finance and Capital Multi- Develop investment solutions assets tailored to client needs Private Expand sourcing capacity Assets leveraging existing expertise Public Strengthen capabilities in high- Assets value added areas for active mgmt. Retail customers Broaden and digitise proposition Institutional Expand partnership model clients across and outside Europe 17 17#18Investment Engine Building capabilities in high-value added areas of the market Customer and Distribution Multi-Asset £140bn Transformation Manager of one of Europe's largest multi-asset funds (our With-Profits Fund) Our priority: Leverage in-house asset allocation, private and public asset capabilities to address client needs through outcome-oriented investment solutions Investment Engine Finance and Capital Private Assets £60bn One of the world's largest Private Asset managers, with sourcing mostly in the UK and Europe Our priority: Expand sourcing capacity internationally strengthening existing areas of expertise • • Continued focus on expanding presence in the US syndicated loans market building on success in Europe Enhancing Private Debt capabilities; targeting a c. 33% increase in origination and analyst staff over the medium term Public Assets £217bn An established active manager with critical scale across major Public Asset classes • Our priority: Strengthen capabilities in asset classes and regions where we can provide value as an active manager Enhanced Emerging Market Equity expertise acquiring a 7-strong Asia specialist team through lift-out in September 2019 . Strengthening Emerging Market Debt team to broaden proposition and capitalise on existing strong track record • Relocating and hiring investment staff in the US and Asia • Broadening Real Estate offering into higher risk-return strategies ESG Note: All AuMA figures refer to position as of H1 2019 • Ongoing development of systematic and thematic equity product offering; fund launches in 2017 and 2018 with further planned Already launched a number of funds within Private, Public and Multi-Asset Our priority: Develop a consistent and comprehensive approach to ESG across asset classes 18#19Customer and Distribution Expanding our proposition at home and internationally UK retail customers An established player with a unique offering, including both with-profits and asset management products Our priority: Broaden and digitise proposition • • Improving tied agents' productivity through technology upgrades Investing to enhance customer and advisor experience Leveraging PruFund as an anchor to broaden retail proposition; launched PruFolio and M&G OEICs on own platform in H1 2019 International retail customers A leading European cross-border manager Our priority: Leverage existing local presence and relationship with global banks to extend distribution reach Institutional clients One of the most highly regarded institutional asset managers in Europe and one of the market leaders in the UK • • Our priority: Expand our proven client partnership model to key institutions across and outside Europe Strengthening local distribution coverage in key institutional markets; e.g. hires in the US and Asia Adding dedicated solutions specialist resources to capitalise on the need of European insurance companies to outsource investment management post Solvency II Leverage the expanding 'Investment Engine' capabilities to broaden institutional investment proposition and tailor it to the needs of global clients . Capitalising on sub-advisory market growth • Significant wins in southern Europe • Ongoing project to distribute Pru Fund outside the UK . Customer and Distribution Transformation Investment Engine Finance and Capital Combine existing asset management and insurance expertise to establish M&G as a leading CDI provider in a maturing UK Defined Benefit market Leverage international retail distribution footprint to cross-sell institutional products and vice versa e.g. Italy has traditionally been a retail market for M&G but has added £0.5bn institutional AuM in 2017 and 2018 199#20Transformation A fundamental enabler across all areas of our business Customer and Distribution Transformation Investment Engine Finance and Capital Savings & Asset Management • Create a multi-channel, multi-wrapper, digital environment broadening our existing customer proposition • Lead market on experiential innovation, to offer superior critical customer outcomes (e.g. vulnerability and advice), on top of traditional ones (e.g. price) • Deliver a simplified and scalable distribution and investment model to improve efficiency and lower marginal costs to serve . Heritage • Improve customer outcomes through a fundamental transformation of our operational environment Simplify IT and systems landscape to reduce cost to serve and change (includes reduction from 14 policy administration systems to just one) • Variabilise cost base to maintain profitability as book runs-off through the outsourcing deal with TCS¹/ Diligenta Do the right thing for customers while strengthening controls and reducing ongoing change cost 1. Tata Consultancy Services 20 20#21M &G 4. Attractive financials 21 22#22Rewarding our shareholders Capital generation underpins attractive dividend Business target Dividend policy Expectations for ordinary dividends: Customer and Distribution Transformation Investment Engine Finance and Capital 3-year cumulative 1 Stable or increasing in absolute terms over time capital generation 1 2 Two dividend payments per year interim dividend being 1/3 of the previous full year 2020-22 mid-point ₤2.2bn target² After debt financing costs, other Corporate 3 2019 final ordinary dividend of £310m³ implying an "as-if" full year ordinary dividend of c. £465m³,4 Centre costs and tax 4 To develop broadly in line with capital generation over the longer term 1. Total change in Solvency II surplus before capital movements and dividends; 2. Provisional target subject to further consideration by the Remuneration Committee of appropriate 2020 incentive plan targets at year-end 2019; 3. Subject to the Company's financial performance and overall financial position remaining in line with expectations; 4. M&G plc expects³ to declare a one-off demerger related dividend of £100m in recognition that, for the majority of 2019, it was operating without incurring certain costs, e.g. debt interest costs, which it would expect to bear in future and which have been allowed for in determining the initial level of ordinary dividend 22 22#23Target and compensation Aligning remuneration with shareholders interests Business target 3-year cumulative capital generation 1 2020-22 mid-point ₤2.2bn target² After debt financing costs, other Corporate Centre costs and tax Customer and Distribution Transformation Investment Engine Executive Directors' Compensation³ Annual Bonus 30% Non-financial • Customer • Strategic 70% Financial 30% Capital generation • . People Diversity 20% 20% LTIP P With-Profits measure4 Total Shareholder 40% Returns 60% 1. Total change in Solvency II surplus before capital movements and dividends; 2. Provisional target subject to further consideration by the Remuneration Committee of appropriate 2020 incentive plan targets at year-end 2019; 3. Both Annual Bonus and LTIP are subject to potential uncapped downward Risk Adjustments; 4. Includes With-Profits Fund investment performance and expense measures Pre-tax operating profits Capital generation Finance and Capital 23#24Key messages 1 Unique and compelling business mix being both an Asset Manager and an Asset Owner 2 Differentiated and high-value added savings & investments solutions to address customers' needs 3 k 71 Proven track record for growing new franchises, at home and internationally 4 Well positioned to capture opportunities from demographic shifts and the search for yield 5 Attractive total return profile with capital discipline and profitable growth 24 24#25MQ &G Finance and capital management Clare Bousfield - Chief Financial Officer 25#26What we will cover today From earnings to dividends 1 Review of 2 H1 2019 results PruFund deep-dive 3 Capital and capital generation 4 Adjusted Operating Profit split (H1 2019)1 Heritage Savings & Asset Management S/H Annuities & Other Asset Management With profits 1. Total Adjusted Operating Profit before corporate centre expenses. Mix excludes £127m longevity assumption change from annuity book Financial mgmt. framework 1 Day 1 balance sheet Financial strength and flexibility Attractive dividends 2 Capital generation framework 3 Review of Invest in the Return of excess capital business key drivers 26#27M &G 1. Review of H1 2019 results 27#28H1 2019 Results summary • AuMA ₤341bn Up 6% from FY 2018 driven by strong market performance PruFund AuMA up 15% to almost £50bn Headwinds remain in Retail Asset Management flows • • • • Adjusted Operating Profit £715m Pro forma Group Solvency II ratio 170% Down from £772m in H1 2018 Savings & Asset Management £34m lower, due to lower asset management fee income Continued strong profitability of Heritage Corporate centre cost up £14m, increasing as expected ahead of listing Transformation programme on-track Position at 30 June 2019 on the basis of £3.2bn subordinated debt substitution 28#29Our profit drivers What underpins the earnings of each segment Segments Savings & Asset Management Sources of earnings Asset Management (Institutional and Retail) Key operating profit drivers Fees minus expenses Adjusted Operating Profit split (H1 2019)¹ With-Profits (PruFund) Shareholder transfers, net of hedging M &G Other With-Profits (Traditional) Result of other business Heritage Shareholder Annuities & Other 1. Total Adjusted Operating Profit before corporate centre expenses. Mix excludes £127m longevity assumption change from annuity book Shareholder transfers, net of hedging Asset returns, longevity experience, results of other businesses Heritage S/H Annuities & Other Asset Savings & Management With profits Management 29 29#30Net client flows and AuMA Net client flows £bn 4.1 1.4 Movement in AuMA £bn 321 2.1 (4.5) Institutional (1) (3) 71 Asset Mgmt. 4.3 3.2 Retail Savings 24 341 74 14 Retail Asset 79 12 76 Mgmt. (3.7) (3.1) Heritage o/w 57 Retail Savings 51 o/w PruFund: (3.8) Retail Asset Mgmt. Other Heritage S/H Annuities 25 14 PruFund: £43bn 15 £50bn 26 (0.8) Institutional Asset Mgmt. Traditional WP 85 91 H1 2018 H1 2019 AuMA at FY Net flows - S&AM 2018 Net flows - Heritage Market & other movements AuMA at H1 2019 30#31Adjusted Operating Profit by source H1 2018 H1 2019 YOY% £m £m Heritage Savings & Asset Management Asset Management With-Profits (PruFund¹) Other 265 216 (18)% 23 29 +26% 8 17 +113% Total Savings & Asset Management 296 262 (11)% With-Profits 91 97 +7% Shareholder Annuities & Other 392 377 (4)% Total Heritage 483 474 (2)% Corporate centre Total Adjusted Operating Profit (7) (21) 772 715 (7)% 1. Includes a small amount of Pru Fund predecessor unitised With-Profits contracts 31#32Sources of earnings Asset Management Savings & Asset Management AuM (£bn) 120 124 118 90 90 76 76 76 76 79 14 71 74 H1 2018 FY 2018 H1 2019 Institutional Retail ■Internal Profitability¹ (£m) Expenses 298 Revenue 563 Adj. Op. Profit 265 Expenses 298 Revenue 514 Adj. Op. Profit 216 H1 2018 H1 2019 Key ratios Average fee margin (bps of average AuM incl. internal²) 39 H1 2018 39 H1 2019 Cost/Income ratio (%) 54 57 H1 2018 H1 2019 1 Adjusted Operating Profit, excluding share of associate's profit and investment income; 2 Fee margin calculated as fee based Adjusted Operating Income, excluding performance fees, over monthly average Au M. Performance fees were H1 2018: £8m; H1 2019: £7m 32#33Sources of earnings Institutional Asset Management Savings & Asset Management Assets 3rd party Institutional net client flows (in £bn) Fees 1.2 6.6 4.1 (6.5) 1 (0.8) 3rd party Institutional AuM (in £bn) 74 74 71 -64 illI 2016 2017 2018 2019 H1 Institutional Asset Mgmt. average fees (in bps)² 26 25 22 22 22 2016 2017 2018 2019 H1 1. Outflow of one particular £6.5bn low-margin Institutional mandate as referred to in Prudential plc's Full Year 2018 results; 2. Includes fees on Prudential Assurance Company internal assets managed by M&G Key points • Flows are less volatile than retail due to long duration, liability-linked mandates • Tenure is typically 7+ years vs. 2-3 years for retail customers • 3rd party clients predominantly UK-centric but ongoing international expansion to support growth • Resilient fees underpinned by . gradual shift of product mix towards high-value added solutions and private assets 33#34Sources of earnings Retail Asset Management Savings & Asset Management Assets Fees 3rd party Retail net client flows (in £bn) Retail Asset Mgmt. average fees (in bps) 1 • 10.8 (9.3) 3rd party Retail AuM (in £bn) (3.8) 62 63 60 (7.5) 58 90 73 76 79 2016 2017 2018 2016 2017 2019 H1 2018 2019 H1 1. Includes fees on Prudential Assurance Company internal assets managed by M&G Key points ⚫ Negative flow picture in 2018 and 2019 due to challenging macroeconomic environment and retail investor confidence • Current focus on building sub-advisory offering expected • to generate flows into stickier mandates over time Fee pressure expected to continue over the medium-term • Gradual shift towards solutions and multi-assets to partially counterbalance this pressure 34 4#35Sources of earnings With-Profits / PruFund Savings & Asset Management PruFund AuMA (£bn) Adjusted Operating Profit (£m)¹ H1 18 H1 19 Inflow 6.0 5.5 Outflow (1.6) (2.0) Net 4.4 3.5 3.1 49.6 3.5 43.0 FY 2018 Net client Market & H1 2019 flow Other 32 (9) 23 36 (7) H1 2018 H1 2019 1. Shareholder Transfer includes PruFund and a small amount of Pru Fund predecessor unitised With-Profits contracts; 2. Not annualised 29 Key Developments • AUMA up 15% over first six months of 2019 • Net inflows 8%² of opening AuMA • Gross inflows remain strong at £5.5bn, though slightly lower YoY due to lower DB transfer activity Gross outflows continue to increase moderately as expected, as book matures Adjusted Operating Profit up 26% with shareholder transfers continuing to grow 35#36Sources of earnings Traditional With-Profits Heritage Traditional WP AUMA (£bn) Adjusted Operating Profit (£m) 84.6 (2.4) 8.4 90.6 FY 2018 Net client Market & H1 2019 flow Other 125 (34) 91 124 (27) H1 2018 H1 2019 46 97 Key Developments • AuMA up 7% over first six months of 2019, driven by strong market performance • Net client flow remains broadly stable YoY • Adjusted Operating Profit up 7% due to improved hedge result; pre-hedge shareholder transfers stable as expected Adjusted Op. Profit 36#37Sources of earnings Shareholder Annuities & Other Heritage Adjusted Operating Profit (£m) Return on excess assets & margin release Asset trading & other optimisation Longevity assumption changes TRASP¹ insurance recovery 1. Thematic Review of Annuity Sales Practices H1 2018 £392m H1 2019 £377m Other 23 111 92 92 63 166 Nature of earnings 118 127 Investment income from assets not backing insurance liabilities and gradual release of prudence in actuarial assumptions Lower discounted annuity liabilities due to trading into higher yielding assets and optimising asset allocation Change in mortality expectations for annuity customers 69 69 One-off indemnity insurance recovery for Thematic Review of Annuity Sales Practices Results of other activities (c. £50m positive one-offs in H1 2019) 37#38Sources of earnings - Expected development¹ Key drivers of Adjusted Operating Profit Savings & Asset Management Asset Management . AuM & Flows: Market conditions difficult near term. Focused on medium-term growth initiatives Average fee margin: Pressure across industry especially on retail, mitigated by focus on value-added solutions Costs: Beneficial impact of transformation; expected investment in growth initiatives dependent on market conditions Heritage With-Profits • . Shareholder transfers expected to remain at around current levels on average for medium term With-Profits . Shareholder transfers continue to rise as PruFund AuMA grow and the book matures • Hedge result to remain a net cost under normal market ● conditions (actual outcome depends on market movements) • Other . Result from minor other businesses (including Prudential international branches) and service companies Expected to remain small in Group context Shareholder Annuities & other Return on excess assets and margin release expected to decline gradually over the long-term as book runs off. Low double-digit £m reduction expected in 2020 due to payment of dividend up to M&G plc at end 2019 Hedge result to remain a net cost under normal market conditions (actual outcome depends on market movements) • Annuity asset trading expected to remain positive, but at lower levels than previous years after bedding-down of Solvency II . Longevity remains uncertain: Prudent approach with continued focus on mortality trends; CMI17 already adopted at H1 stage for FY 2019 Corporate centre Head office expense Expected to be in the range of £80-100m p.a. Debt interest cost • Coupons on post-demerger debt of £3.2bn amount to c. £190m² p.a. 1. Assumes no abnormal developments in financial markets, major regulatory changes, or other unexpected external developments; 2. Based on USD/GBP exchange rate as of the 30 of June 2019 38#39Continued With-Profits Transfer growth expected Illustrative With-Profits Shareholder Transfer¹ before tax (£m) 600 400 200 PruFund In-force book Traditional WP In-force book NB Scenario 3 NB Scenario 2 NB Scenario 1 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Shareholder transfers from future new PruFund business, shown in 3 different scenarios²: • Scenario 1: New business volume of £5bn p.a. Scenario 2: New business volume of £10bn p.a. • Scenario 3: New business volume of £15bn p.a. 1. Based on economic conditions at 30 June 2019, and assuming actual investment returns as per Expected Growth Rates (EGRS) in force at that date; 2. Alternative new business volume scenarios apply from 2020 onwards 39#40Mortality trends CMI Q2 2019 update Cumulative annual standardised mortality improvements (%) 4.9% 3.5% 3.4% 3.1% 2009 1.9% H 2010 0.3% 0.1% 0.0% 4.8% 2011 2012 2013 2014 2015 2016 2017 2018 H1-2019 (1.0)% Source: Institute and Faculty of Actuaries, Continuous Mortality Investigation Q2 2019 update (3.8)% 40 40#41M &G 2. PruFund deep-dive#42Before we move onto the details What is PruFund For customers A savings product similar to traditional mutual funds... • Multi-asset • Daily unit price • With a clear annual charge ... but with characteristics that make it stand out from the crowd . Low volatility Smoothed returns Strong performance track record For the With-Profits Fund A proposition priced to recover the costs the With-Profits Fund expects to incur: • Distribution and Admin expenses • Investment management Smoothing and holding account Shareholder Transfer Deviations from expectations are absorbed by the With-Profits estate For Shareholders Strategically Unique proposition Element of differentiated growth Anchor for our broader offering Financially Growing source of earnings (£54m in 2018, £29m in H1 2019) Store of value with back-end loaded profit signature Capital-efficient proposition 42#43Intro to PruFund A unique proposition What we covered in July Breadth and diversification of our With-Profits Fund SAA¹ With-Profits Fund Strategic Asset Allocation M&GPRUDENTIAL Asset allocation evolution between 2010 and 2019 Asset allocation as of April 2019 2018 2018 2018 Equities Real Estate Alternatives Equity Fixed Income UK and Europe China Europe Hedge Fund North America North America Infrastructure Asia Historical performance and returns With-Profits Fund historical returns M&GPRUDENTIAL Annualised 5-year rolling returns' PruFund Growth returns vs. peers 25% 20% 15% 10% 5% Africa TAA Alterative Credit Cash -5% 1960 1970 1980 2000 Fund Growth Fun C Can SONA Comte de ...and what we will cover today 1 Functioning of the PruFund from a customer perspective 2 Role of the With-Profits Fund 3 Financial impact on shareholder earnings and balance sheet 1. Strategic Asset Allocation 92% To warm us up PRUDENTIAL PruFund Explained 43#44Customer perspective PruFund components and investment returns Flexible components Three key choices for customers 1 Wrapper Retirement Pensions² type account¹ On / Off- shore bond ISA 2 Risk profile PruFund Cautious PruFund Growth Pru Folio range PruFolio range includes 5 different levels of risk appetite 3 Guarantee Without option With guarantee guarantee³ Resulting features Determined by customer choices Investment returns EGR Expected Growth Rate (EGR) Set quarterly based on expected long-term returns4 Annual Charges Upward unit price adjustments Annual Charges Includes Fund, Wrapper, and Guarantee fees5 Downward unit price adjustments 1. Including Income Drawdown; 2. Flexible Retirement Plan and Trustee Investment Plan; 3. Less than 1% of new customers in the 18 months to June 2019 have selected guarantee option; 4. Having regard to the investment returns expected to be earned on the assets of the funds over the long-term (15 years); 5. The Annual Charges cover, amongst other things, the expected cost of Shareholder Transfers Accrue daily to Applied based on customers' funds smoothing rules 44#45Customer perspective 1 Smoothing mechanism and Unit Price Adjustments ¹ in theory In theory Illustrative example 1 The smoothed unit price increases each day in line with the EGR less Charges 2 Unsmoothed unit price is below (above) the lower (upper) smoothing limit Smoothed unit price Unsmoothed unit price² Upper smoothing limit 3 Smoothed unit price is adjusted to narrow the gap 4 When exiting PruFund, the difference between the Smoothed and Unsmoothed Price accrues to the With- Profits Fund Estate Lower smoothing limit 1. Smoothing mechanism can be temporarily suspended in exceptional circumstances to protect the With-Profits Fund; if it is suspended, the smoothed unit price of the affected fund is set equal to the unsmoothed price 2. The unsmoothed price increases or decreases each day in line with the performance for the underlying assets in the With-Profits Fund less the pro-rated Annual Charges 45#46Customer perspective Smoothing mechanism and Unit Price Adjustments¹ in practice In practice PruFund Growth actual returns from inception to H1 2019 The combination of EGR and Annual Charges² defines the slope of the curve PruFund Growth Fund UK RPI Cumulative Rate ABI Mixed Investment 20-60% shares Cash SONIA Cumulative Rate 2006 2007 2008 <600 2011 2012 2013 2014 Upward unit price adjustment 2015 2016 2017 2018 2019 Sequence of downward unit price adjustments following the GFC3 1. Smoothing mechanism can be temporarily suspended in exceptional circumstances to protect the With-Profits Fund; if it is suspended, the smoothed unit price of the affected fund is set equal to the unsmoothed price 2. Charges refer to any charge allowed for in the unit pricing. Note that some charges may be taken by unit cancellation depending on product wrapper; 3. Global Financial Crisis 92% 55% 45% 18% 46#47From a customer to the With-Profits Fund perspective Withdrawals and the Shareholder Transfer (SHT) Single withdrawal Customer withdrawing 100% of funds in year 10 Net investment returns of £480 by year 10 120 600 480 1,000 Annual Charges are paid to the With-Profits Fund and include the cost of the SHT¹ 1,000 Initial investment Assumed gross returns 3 Assumed charges 4 Withdrawal at year-10 With-Profits income and expenses6 Illustrative5 PruFund fees Shareholders receive a transfer from the WPF² of 480/9= c. £53 Wrapper fees Guarantee fees (if any, not included in this example) With-Profits With-Profits Income Expenses With-Profits surplus Shareholder Transfer Paid by the With-Profits Fund upon customer withdrawal Distribution and Admin costs Investment management costs Smoothing and holding account 1. Shareholder Transfer; 2. With-Profits Fund; 3. Based on 5% Expected Growth Rate and assuming no Unit Price Adjustments; 4. Based on 1% Annual Charge (including both fund and wrapper fees); 5. For simplicity, the charts assume EGR of 5% and Annual Charges of 1% remaining unaltered over the entirety of the holding period with no Unit Price Adjustments; 6. With-Profits income and expenses shown on a present value basis; 7. This could be a surplus or deficit depending on how actual experience compares to that used in pricing new business, which is effected in accordance with FCA requirements 47#48Shareholder perspective The Present Value of the Shareholder Transfer Illustrative¹ Customer withdrawals Illustrative¹£10bn cohort and expected churn Payment to customers over 30 years (in £bn) Shareholder transfer Transfer is 1/9 of the net investment return SHT² based on expected returns (in £m) Present value Present value of Shareholder Transfer (PVST) 1.0 0.8 0.6 0.4 0.2 0.0 Principal investment 100 Σ of investment returns c. £7.5bn Same shape of inv. returns paid to Σ of undiscounted 6% customers but 1/9 of magnitude expected SHT c. £830m 50 Σ of principal paid back c. £10.0bn 5% 4% 0 SHT² based on risk-free³ returns (in £m) Σ of undiscounted 3% 100 2% Assumes customers only 50 earn risk-free 1% rate 0% 0 Net inv. returns Yearly exit as % of original cohort (RHS) 1. For simplicity, the charts assume EGR of 5% and Annual Charges of 1% remaining unaltered over the entirety of the holding period with no Unit Price Adjustments; 2. Shareholder Transfer; 3. Assumes risk-free rate of 1.5%; 4. Assumes 5% discount rate risk-free SHT c. £75m PVST based on expected returns and discount rate4: c. £340m PVST recognised under Solvency II on Day-13: c. £55m 48 88#49Shareholder perspective Solvency II impact Capital requirement turning into surplus SCR generated by PVST2 is based on a 1/200 shock to PruFund's assets PruFund impact on Shareholder balance sheet assuming a £10bn cohort¹ (in £m) Development over time Year-on-year movements in the balance sheet Own funds Day-1 SCR 800 assumed at 600 c. 1.8% of flows³ New business capital strain turns into surplus4 400 200 (200) - PVST² Cash paid to shareholders SCR generated by PVST³ Balance of PVST and SCR4,5 Unwind of the 1 discount rate Realisation of 2 'real' returns 3 Payment of SHT to shareholders Illustrative¹ Always Positive (as long as discount rates are not negative) Positive but only if real returns are greater than risk-free PVST² becomes cash on the balance sheet Solvency Capital Requirement 4 Exposure to market risk SCR changes as PVST2 and/or asset allocation move over time 1. For simplicity, the charts assume EGR of 5% and Annual Charges of 1% remaining unaltered over the entirety of the holding period with no Unit Price Adjustments; 2. Present Value of the Shareholder Transfer; 3. Day-1 SCR highly dependent on prevalent interest rates. Chart shown before the impact of any hedging; 4. Balance of PVST and capital requirements highly dependent on prevalent interest rates and investment returns. Chart shown before the impact of any hedging; 5. Assumes Shareholders retain cash on balance sheet and do not pay it out 49#50PruFund mechanics Summary Customers • Invest initial saving and/or retirement pot into the fund • Investment grows in line with an . EGR¹ (reviewed on a quarterly basis) • Annual Charges, which cover the expenses incurred by the WPF², including the cost of any Shareholder Transfer, are deducted from the investment • Downward / upward UPAS³ are applied for significant market movements With-Profits Fund • Receives the actual investment returns and accrues the Expected Growth Rate to customers Absorbs any positive or negative difference between the Annual Charges and the expenses incurred (which include the transfer paid to shareholders) • Pays the Shareholder Transfer at point of customers' withdrawal Shareholders • The PVST4 is recognised as an asset on the Solvency II balance sheet along with a related capital requirement • The balance between the two elements evolves over time generating a surplus • The Shareholder Transfer is paid by the With-Profits Fund when customers withdraw funds • The amount of the Shareholder Transfer is equivalent to 1/9th of the value created for the customer5 . Funds can be withdrawn in part or in full when needed 1. Expected Growth Rate; 2. With-Profits Fund; 3. Unit Price Adjustments; 4. Present Value of the Shareholder Transfer; 5. In case the claim value is less than the initial premium, the shareholder transfer will be correspondingly negative for 1/9th of the loss 50#51M &G 3. Capital and capital generation 51#521 Pro forma M&G plc Group Solvency II¹ • PAC represents the majority of the Group's consolidated solvency capital position of 169% at 30 June 2019 Shortly prior to demerger, M&G plc will assume £3.2bn of substitutable debt² from Prudential plc, offset by a pre-demerger dividend of £(3.2)bn³ and other closing adjustments of £0.1bn. Pro forma solvency ratio is 170%. • Actual solvency ratio at demerger will depend on ongoing capital generation from the business, market movements and other developments up until the demerger date H1 2019, £bn PAC M&G + other subs M&G plc Consolidated Own Funds 8.9 0.5 9.5 SCR 5.2 0.4 5.6 Solvency Ratio 173% 169% PRUDENTIAL Assumption of debt Pre-merger dividend/closing adjustments3,4 Pro forma Solvency II 3.2 (3.1) 9.6 5.6 170% 1. The Group has requested approval from the PRA to amend the Prudential Group internal model to apply at the level of the Group, rather than at the level of the Prudential Group. The decision is pending and is expected to be provided shortly before the Demerger, such that the Prudential Group internal model remains in place until the Demerger with the Group's model commencing from that point; 2. At nominal value; 3. Includes £0.2bn paid on 20 of September 2019; 4. Not induding £100m demerger related dividend expected to be paid in May 2020 52#53Pro forma M&G plc Group Solvency II H1 2019, £bn £3.2bn debt at nominal value 34% Solvency II Leverage Ratio¹ 9.6 Other Own Funds, including: £1.7bn TMTP2 £(2.3)bn risk margin £4.0bn surplus Own Funds 170% Solvency Ratio 6.9 5.6 0.4 Sectoral (M&G) Present Value of future Shareholder Transfer (PVST) 2.7 from With-Profits Fund Own Funds 1. Calculated as nominal value of debt as % of total Group Own Funds; 2. Transitional Measures on Technical Provisions; 3. Net of hedging 3.8 Shareholder Annuities & Other 1.4 Capital requirement on PVST3 SCR 53#54Capital generation framework Savings & Asset Management Expected IFRS Adj. Operating Profit Group Solvency II expected capital generation Own Funds SCR Fees Asset Management - expenses Retail Savings (incl. PruFund) Fees - expenses Change in capital requirement Shareholder Transfer & other Unwind of PVST¹ asset + new business value Release from run-off4 + addition from new business Traditional WP Shareholder Transfer Unwind of PVST asset Release from run-off4 Heritage Shareholder Annuities Return on excess assets + release of prudency margins Release of risk margin + income on surplus assets + credit margin earned on BEL² -run-off of TMTP3 Release from run-off 1. Present Value of Shareholder Transfer; unwind of PVST based on real world returns; 2. Best Estimate Liabilities; 3. Transitional Measures on Technical Provisions; 4. SCR movements include impact from run-off of hedging programme on Shareholder Transfer which negatively affects capital generation 54 54#55Capital generation¹ FY 2018 and H1 2019 FY 2018 movement 0.0 1.8 (0.1) (0.3) (0.4) Own Funds surplus 3.0 Total capital generation £1.5bn 4.0 H1 2019 movement 0.4 0.8 (0.1) (0.1) (1.1) Total capital generation £0.9bn 3.9 £bn FY 2017¹ Operating capital generation Dividends & Economic variances Other movements Tax capital FY 2018 movements Operating capital generation Economic variances Other movements Tax Dividends & capital movements H1 2019 Own Funds 9.1 1.6 (0.4) (0.1) (0.2) (0.4) 9.6 0.5 0.7 (0.1) (0.2) (1.1) 9.5 SCR 6.1 (0.2) (0.4) 0.0 0.1 5.6 (0.2) 0.3 0.0 (0.1) 0.0 5.6 Surplus 3.0 1.8 0.0 (0.1) (0.3) (0.4) 4.0 0.8 0.4 (0.1) (0.1) (1.1) 3.9 S-II Ratio 149% 1. M&G plc Group before pro forma adjustments; 2. Adjusted for transfer of Hong Kong to Prudential Asia and reinsurance of part of annuity portfolio to Rothesay 172% 169% 55#56Sources of operating capital generation before tax FY 2018 Underlying capital generation Savings & Asset Management £m OF1 SCR2 Total Asset Management 472 (75) 397 With-Profits in-force 50 (23)³ 27 With-Profits new bus. 75 (127) (52) Other 20 (3) 17 Total Underlying 617 (228) 389 Heritage £m OF1 SCR² Total With-Profits 178 (26)³ 152 S/H Annuities & Other 217 151 368 Total Underlying 395 125 520 £0.9 bn4 Other operational capital generation5 + 1. Own Funds; 2. Solvency Capital Requirement; 3. Includes run-off of Shareholder Transfer hedging programme of £(44)m in Savings & Asset Management and £(55)m in Heritage; 4. Includes £(13)m from Corporate Centre; 5. Includes management actions, non-market experience variances, assumption and model changes; 6. Thematic Review of Annuity Sales Practices Asset trading / hedging £0.16bn Expense assumptions £0.10bn TRASP6 £0.17bn ₤1.0 bn Longevity £0.38bn Other £0.15bn 56#57Sources of operating capital generation before tax H1 2019 Underlying capital generation Savings & Asset Management £m OF1 SCR2 Total Asset Management 239 239 With-Profits in-force 19 (18)³ 1 With-Profits new bus. 15 (48) (33) Other 18 (1) 17 Total Underlying 291 (67) 224 Heritage £m OF1 SCR² Total With-Profits 76 (22)³ 54 S/H Annuities & Other 129 73 202 Total Underlying 205 51 256 Other operational capital generation5 £0.5 bn4 + 1. Own Funds; 2. Solvency Capital Requirement; 3. Includes run-off of Shareholder Transfer hedging programme of £(31)m in Savings & Asset Management and £(35)m in Heritage; 4. Includes £(21)m from Corporate Centre; 5. Includes management actions, non-market experience variances, assumption and model changes Asset trading / hedging £0.11bn £0.3 bn Other £0.09bn Longevity £0.10bn 57 57#58Underlying capital generation Shareholder Annuities¹ Illustrative long-term run-rate Run-off is gradual, TMTP² amortisation dropping out in 2032 2020 2025 2030 2035 Amortisation of transitional measures drops out in 2032 1. Illustrative Solvency II capital generation; disregards any potential impacts from assumption changes and other non-recurring effects; 2. Transitional Measures on Technical Provisions; 3. Refers to the £3.2bn debt expected to be substituted upon demerger and related interest cost 2040 2045 Cumulative capital generation from Shareholder Annuities more than sufficient to repay all debt and interest cost³ 58#59Translating capital generation to Holding Company cash Indicative flows post-demerger 1. After tax Asset Management Retail Savings (incl. PruFund) Traditional WP Shareholder Annuities Other Legal entity generating distributable surplus M&G investments M&G Investments Prudential Assurance Company (PAC) Holding Company cash generation Dividend from M&G Investments X dividend to HoldCo Dividend from PAC X Head office expense¹ (X) PAC dividend to HoldCo Debt interest¹ (X) HoldCo cash generation before dividend X 59#60M &G 4. Financial management framework 60 60#61Financial management framework Business target 3-year cumulative capital generation 1 2020-22 mid-point £2.2bn target² After debt financing costs, other Corporate Centre costs and tax Uses of capital Financial Attractive strength and dividends flexibility Return of Invest in the business excess 1. Total change in Solvency II surplus before capital movements and dividends; 2. Provisional target subject to further consideration by the Remuneration Committee of appropriate 2020 incentive plan targets at year-end 2019 capital 61#622020-22 mid-point capital generation target Illustrative bridge from past underlying capital generation £bn 0.5 0.9 Savings & Asset Management Heritage FY 2018 underlying cap. gen.1 1.4 2.8 0.8 0.3 1.6 H1 2019 underlying cap. gen.1 18 months equivalent underlying cap. gen.² 3-year pro rated equivalent underlying Pro forma Corporate Centre costs 3 Assumed tax 4 Resulting 3-year net underlying cap. gen. cap. gen. 0.6 2.2 Additional cap. gen. required to meet target 2020-22 mid-point cap. gen. target5 1. Excludes Corporate Centre costs; 2. Set equal to the sum of FY 2018 and H1 2019 underlying capital generation; 3. Based on interest cost of £190m and the mid-point of the Head Office £80-100m cost expectation; 4. Assumed corporate tax at standard rate; 5. Provisional target subject to further consideration by the Remuneration Committee of appropriate 2020 incentive plan targets at year-end 2019; refers to total change in Solvency Il surplus before capital movements and dividends 62 62#63Uses of capital Financial strength and attractive dividends Financial strength Assessing our position relative to: Solvency ratio¹ Pro forma H1 170% Comfortable level given the nature of the business we are writing Dividend policy Expectations for ordinary dividends: Leverage ratio² 1 Stable or increasing in absolute terms over time Starting position at 34% Underpinned by strong Heritage cashflows • Aim to reduce gradually over time 2 Two dividend payments per year interim dividend being 1/3 of the previous full year 3 2019 final ordinary dividend of £310m³ implying an "as-if" full year ordinary dividend of c. £465m³,4 4 To develop broadly in line with capital generation over the longer term HoldCo Liquidity Ensure sufficient liquid resources to cover expected cash outflows for at least 1 year, including dividend 1. Group shareholder SII ratio; 2. Nominal value of debt as % of total Group Own Funds. 3. Subject to the Company's financial performance and overall financial position remaining in line with expectations; 4. M&G plc expects³ to declare a one-off demerger related dividend of £100m in recognition that, for the majority of 2019, it was operating without incurring certain costs, e.g. debt interest costs, which it would expect to bear in future and which have been allowed for in determining the initial level of ordinary dividend. 63#64Key messages 1 Resilient H1 performance despite challenging market backdrop 2 Differentiated proposition driving flow potential and protecting margins 3 Strongly positioned to generate sustainable growth in capital and cash 4 Robust and disciplined capital management framework 5 Aim to deliver attractive and sustainable returns to shareholders 64 50#65M &G Q&A#66M∞ &G Appendix 66#67M &G Appendix 1 Additional financial information 67 40#68Solvency II position Prudential Assurance Company (PAC) H1 2019, £bn Shareholder view 8.9 Surplus = 3.8bn Own Funds 5.2 With-Profits Fund view Consolidated solvency view¹ 4.5 Surplus = 3.8bn 11.1 Surplus = 6.6bn 8.9 SCR Own Funds Solvency ratio 173% 1. Regulatory view including the recalculation of Transitional Measures on Technical Provisions (TMTP) 4.5 SCR Own Funds Solvency ratio 249% 4.5 5.2 SCR Solvency ratio 139% 68#69Diverse risk exposures Analysis of M&G plc Group SCR (shareholder view) £bn 11.0 As of H1 2019 0.4 Sectoral (M&G) Operational & 1.3 expense 0.2 Lapse Longevity 1.7 0.9 Currency Credit 3.6 0.3 Interest rate Property 0.9 1.7 Equity Undiversified SCR 5.6 (5.4) Diversification, SCR deferred tax, and other 69#70M&G plc Solvency II Sensitivities Group Shareholder Solvency II market sensitivities (%) As of H1 2019 Base Shareholder S2 ratio 20% fall in equity markets 169 162 50bp fall in interest rates 162 100bp increase in credit spreads 20% credit asset downgrade¹ 1. Average impact of one full letter downgrade across 20% of assets exposed to credit risk Note: Sensitivities assuming recalculation of Transitional Measures on Technical Provisions (TMTP) 166 162 70#71Bonds in issue expected to transfer to M&G plc on demerger¹ ISIN Currency Nominal (in m) Coupon Issue Date Maturity Date Call Date XS2025521886 GBP 300 3.875% 2019 2049 2024 XS1888930150 USD 500 6.500% 2018 2048 2028 XS1888920276 GBP 750 5.625% 2018 2051 2031 XS1243995302 GBP 600 5.560% 2015 2055 2035 XS1003373047 GBP 700 6.340% 2013 2063 2043 XS1888925747 GBP 500 6.250% 2018 2068 2048 1. Prudential plc has in issue Tier 2 subordinated notes which include in their respective terms a substitution mechanic permitting Prudential plc to substitute the M&G plc as the issuer thereof at the point of demerger 1 71#72Operating capital generation FY 2018 H1 2019 Savings & Asset Management £m Asset Management With-Profits - of which: In-force¹ - of which: New business Other Own Funds SCR Total Own Funds SCR Total 472 (75) 397 239 239 125 (150) (25) 34 (66) (32) 50 (23) 27 19 (18) 1 75 (127) (52) 15 (48) (33) 20 (3) 17 18 (1) 17 Total Underlying capital generation 617 (228) 389 291 (67) 224 Other operating capital generation (66) 122 56 (60) (28) (88) Total Operating capital generation 551 (106) 445 231 (95) 136 With-Profits 178 (26) 152 76 (22) 54 Heritage Shareholder Annuities & other 217 151 368 129 73 202 Total Underlying capital generation 395 125 520 205 51 256 Other operating capital generation 698 206 904 100 321 421 Total Operating capital generation 1,093 331 1,424 305 372 677 Corporate centre Interest & Head Office cost Other operating capital generation (13) (13) (21) (21) (9) (9) (47) (38) Total Interest & Head Office capital generation (22) (22) (12) (47) (59) Total Operating Capital Generation 1,622 225 1,847 524 230 754 1. Includes a small amount of Pru Fund predecessor unitised With-Profits contracts 72#73IFRS Adjusted Operating Profit by source £m FY 2016 FY 2017 FY 2018 H1 2018 H1 2019 Heritage Savings & Asset Management Asset Management With-Profits (Pru Fund ¹) 384 477 473 265 216 32 39 54 23 29 Other 39 7 (59) 8 17 Total Savings & Asset Management 455 523 468 296 262 With-Profits 179 164 201 91 97 Shareholder Annuities & Other 574 683 961 392 377 Total Heritage 753 847 1,162 483 474 Corporate centre Total Adjusted Operating Profit (5) (8) (13) (7) (21) 1,203 1,362 1,617 772 715 1. Includes a small amount of Pru Fund predecessor unitised With-Profits contracts 73#74From IFRS Adjusted Operating Profit to Net Profit £m Total Adjusted Operating Profit FY 2016 FY 2017 FY 2018 H1 2018 H1 2019 1,203 1,362 1,617 772 715 Short-term fluctuations in investment returns 211 42 (3) (136) 364 Disposal of businesses & corporate transactions (508) (513) Restructuring costs (16) (73) (109) (41) (82) Profit Before Tax Attributable to Shareholders 1,398 1,331 997 82 997 Tax (264) (257) (191) (15) (203) Profit After Tax 1,134 1,074 806 67 794 4 74#75Shareholder Annuities - Credit quality As at H1 2019 BBB 14% Credit rating¹ <BBB 1% Risk Free Senior Unsecured 20% 22% A 41% AA 14% 1. Based on front office data AAA 8% Capital ranking¹ Subordinated 1% Secured 57% Risk Free 22% 75#76Efficiency benefits absorb upward cost pressures Cost efficiency programme to absorb inflation, offset business investment & reshape the cost base Indicative development of gross operating cost base Run-rate benefits from transformation programme expected to materially increase from end of 2019 2017 Inflation Absorb Inflation Policyholder Benefits Shareholder New Benefits¹ Business Growth & Investment Head Office Transformation programme benefits 1. Annual shareholder cash benefits of c. £145m, as previously announced % delivery of total planned run-rate benefits 100% 2022 2018 2019 2020 2021 2022 76#77Heritage Savings & Asset Management Asset under Management and Administration £ bn YE Net 2015 flows Market/ Other YE Net 2016 flows Market/ Other YE Net Market/ 2017 flows Other YE Net 2018 flows Market/ Other H1 2019 Institutional Asset Management 55.3 1.2 7.6 64.1 6.6 2.9 73.6 (2.4) (0.7) 70.5 (0.8) 4.7 74.4 Retail Asset Management 71.1 (9.3) 10.9 72.7 10.8 6.8 90.3 (7.5) (6.4) 76.4 (3.8) 6.0 78.6 Retail Savings 23.9 6.3 2.2 32.4 8.7 2.9 44.0 8.2 (1.6) 50.6 3.2 3.5 57.3 - of which: PruFund 16.5 6.5 1.7 24.7 9.0 2.2 35.9 8.5 (1.4) 43.0 3.5 3.1 49.6 0.2 0.0 0.0 0.2 0.0 0.0 0.2 0.0 0.0 0.2 0.0 (0.1) 0.1 Other Total Savings & Asset Management 150.5 (1.8) 20.7 169.4 26.1 12.6 208.1 (1.7) (8.7) 197.7 (1.4) 14.1 210.4 Traditional With-Profits 84.3 (5.4) 10.7 89.6 (5.5) 7.3 91.4 (5.3) (1.5) 84.6 (2.4) 8.4 90.6 Shareholder Annuities 36.3 (1.4) 4.5 39.4 (1.7) 1.4 39.1 (1.3) (12.9) 24.9 (0.5) 1.1 25.5 Other 12.8 (0.3) (0.1) 12.4 (0.5) 0.2 12.1 (0.4) 2.3 14.0 (0.2) 0.8 14.6 Total Heritage 133.4 (7.1) 15.1 141.4 (7.7) 8.9 142.6 (7.0) (12.1) 123.5 (3.1) 10.3 130.7 Group Total 283.9 (8.9) 35.8 310.8 18.4 21.5 350.7 (8.7) (20.8) 321.2 (4.5) 24.4 341.1 77#78AuMA by asset class H1 2019 ₤bn Equities Public fixed income On-balance sheet AuMA External AuMA S/H Annuity With-Profits Unit linked & other shareholder Total on- balance sheet Retail Institutional Total external Total AuMA 46 10 0 56 33 6 39 95 52 5 20 77 41 38 79 156 - of which Government 10 1 6 17 18 9 22 27 44 - of which Corporate 42 4 14 60 23 29 52 52 112 Private fixed income 7 0 3 10 1 17 18 28 Real estate 16 1 2 19 2 9 11 30 Alternatives 9 0 0 9 0 3 3 12 Other 14 1 2 17 2 1 3 20 20 Total 144 17 27 188 79 74 153 341 78#79M &G Appendix 2 Additional information on sources of competitive advantage 79#80Depth of investment expertise Values as of H1 2019 Multi-Asset Income Growth Target Return Conservative Macro Allocation £140bn £124bn Pru UK&E SAA £16bn 3rd party assets Private Fixed Income Leveraged Loans Real Estate UK Commercial Infracapital¹ & Alternatives Public Fixed Income Equities Infrastructure Equity Flexible Bond Fund Income Long Income PE Fund of Funds² Emerging Markets Value High Yield Cash Recovery Direct Lending Distressed Debt & Restructuring Multi-asset Illiquid Credit Asset Backed Securities (ABS) Residential Continental Europe Asia-Pacific Real Estate Debt Capital Solutions 27 29 Private Assets [£60bn 1. Infrastructure team; 2. PE Fund of Fund mandate of £2.2bn not induded in the reported AuM Note: All AuMA figures refer to position as of H1 2019 Absolute Return Emerging Markets Government Bonds Japan Inflation Linked Convertibles 4 138 64 14 Total AuM Σ £277bn 80#81Private Asset growth over time and split by capability Private Assets growth (£bn) Private Assets split by category +36% £16bn 60.1 55.0 56.3 50.2 44.1 2015 2016 2017 2018 H1 2019 Internal ■3rd party Private Fixed Income 27.4 Infrastructure Equity £60.1bn 21.2 4.1 7.4 Long lease property Real Estate 81#82With-Profits Fund Strategic Asset Allocation Asset allocation evolution between 2010 and 2019 100% 90% Asset allocation as of April 2019 80% 70% 60% 50% 40% Alternatives Real Estate Equity Fixed Income TAA¹ Cash 30% 20% 10% 0% + 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Equities Real Estate Alternatives Fixed Income UK Asia ex. Japan UK Europe North America Japan China Europe Private Equity Hedge Fund UK and Europe Africa TAA¹ US Alternative Credit² Cash GEM North America Infrastructure Asia MEA Asia 1. Tactical Asset Allocation mandate; 2. Includes: Convertibles, Bridge Loans, Private High-Yield Source: Allocation as of 1st of May for OBMG, the largest of the funds within the With-Profits sub fund with £77.8bn as of YE 2018 82#83With-Profits Fund historical returns Annualised 5-year rolling returns¹ PruFund Growth returns vs. peers 25% 20% 15% 10% 5% 0% 1950 1960 1970 1980 1990 2000 2010 -5% 1. Data shows OBMG returns; OBMG is the largest of the funds within the With-Profits sub fund, backing Pru Fund Growth Fund, with £77.8bn as of YE 2018 PruFund Growth Fund UK RPI Cumulative Rate ABI Mixed Investment 20-60% shares Cash SONIA Cumulative Rate 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 92% 55% 45% 18% 83#84Our international footprint £341bn AuMA 20 distribution offices 28 markets 0.8 Retail Savings 0.3 Americas £1.1bn Retail Asset Management Institutional Asset Management 131 57 UK 57 58 33 £278.5bn Heritage Distribution centres 13 Europe 37 £50.1bn Middle East & Africa¹ £7.1bn 2.8 5.7 Asia-Pac £8.5bn² 1. Assets from Prudential Investment Managers South Africa recorded on a proportional basis in line with M&G's 49.99% associate shareholding; 2. Includes £4.2bn of assets excluded from the reported total AuMA of £341bn as these assets are managed by M&G on behalf of other Prudential plc Group companies; Note: All AuMA figures refer to position as of H1 2019, based on client domicile 84#85Our Investor Relations contacts Spencer Horgan Director of Investor Relations +44 (0)203 977 7888 +44 (0)797 381 5837 [email protected] Luca Gagliardi Head of Investor Relations - Equity +44 (0)203 977 7307 +44 (0)752 559 7694 [email protected] Nicola Caverzan Head of Credit and Rating Agency Relations +44 (0)203 977 9025 +44 (0)781 1744 668 [email protected] Maria Baines Investor Relations Event Manager +44 (0)203 977 6122 +44 (0)781 020 3731 [email protected] 85