Our strategy

Our strategy is designed to create sustainable economic value for our customers and our shareholders. It is focused on three long-term opportunities:

  • The significant protection gap in Asia;
  • The transition of US baby boomers into retirement; and
  • The UK ‘savings gap’ and ageing population in need of returns and income.

Focus on customers & distribution

We believe that in order to do well for our shareholders we must first do good for our customers. Hence, customers are at the centre of our operating principles.

Our products are designed to provide peace of mind to our customers, whether that be in relation to saving for retirement, or insuring against the risks of illness or death. Satisfied customers are a key driver of our growth as they become our advocates, recommending our products and services to their friends and families.

Distribution plays a key role in our ability to reach, attract and retain these valued customers across our regions. Building out and diversifying our distribution platform in order to reach a growing customer base will help ensure that we fully capitalise on the opportunities available to us in each of our regions.


The Asian middle class population is forecast to double by 2020 and will then represent over half of the global middle class. This group is getting wealthier and will have significant and growing needs for protection against illness and accident.

Read more about our performance in Asia

United States:
build on strength

The US ‘baby boomer’ generation is the wealthiest demographic in the global economy. Over the next 20 years they will be retiring at a rate of 10,000 per day, creating significant demand for retirement services.

Read more about our performance in the United States

United Kingdom:

The UK has an ageing population and a ‘savings gap’, that is unsustainable over the long term. This will drive increasing demand for savings products and retirement income solutions.

Read more about our performance in the United Kingdom

Asset management:

Europe is home to the second-largest retail asset management industry in the world, with over £5.8 trillion of assets. Asset managers with trusted brands and superior investment performance will see increasing demand for their products.

Read more about our performance in asset management

Implementing our strategy

Our strategy is underpinned by a set of key operating principles.

Balanced metrics and disclosures

We aim to have clarity and consistency internally and externally in the performance indicators that drive our businesses. Alongside this we develop our financial disclosures to enable our external stakeholders to fairly assess our long-term performance. We have three objectives:

  • To demonstrate how we generate profits under the different accounting regimes; for example, in the IFRS sources of earnings disclosures within the Chief Financial Officer’s report;
  • To show how we think about capital allocation via a number of metrics that highlight the returns we generate on capital invested in new business, including internal rates of return, payback periods and new business profitability; and
  • To highlight the cash generation of our business, which over time is the ultimate measure of performance.

Find out what we measure and our performance

Disciplined capital allocation

We rigorously allocate capital to the highest-return product and geographical locations with the shortest payback periods, in line with our risk appetite. This has had a positive and significant impact, so that over the last five years, new business capital investment has declined by 6 per cent, while new business profits have increased by 77 per cent.

This has, in turn, transformed the capital dynamics of our Group: for example, the free capital generated from our existing life and asset management operations reached £3.1 billion in 2013 compared to £2.1 billion five years ago. This transformation enabled our business operation to remit £1,341 million to the Group, nearly double the level of remittance five years ago.

Proactive risk management

Balance sheet strength and proactive risk management enable us to make good our promises to customers and are therefore key drivers of long-term value creation and relative performance. We have continuously strengthened our capital position since 2008, in spite of the financial crisis and the challenging macroeconomic environment that followed. Management actions that have been taken over this period include:

  • The sale of our capital-intensive Taiwan agency business in 2009, improving our IGD capital position;
  • The establishment of £1.9 billion of credit default reserves1 in the UK annuity business; and
  • Controlling sales of US variable annuities in a manner which appropriately balances value, volume, capital generation and balance sheet risk.


  1. On a statutory (Pillar 1) basis.


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