Case
Supplementary Resources
Abstract
It was June 2006 and Shaun Matisonn, CEO of PruHealth plc – a 50/50 joint venture formed in late 2004 between Discovery Holdings in South Africa and Prudential plc in the United Kingdom (UK) – was about to relocate his office from Johannesburg to London. As he contemplated his move, Matisonn wondered how he was going to make the joint venture work. While PruHealth was showing early signs of success, Matisonn knew that joint ventures were notoriously difficult to manage, especially across two different continents. He had the backing of two very substantial shareholders, but with that came the challenge of two sets of equally substantial expectations. Matisonn thought about what had to be done to ensure that the business remained on track.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
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Resources
Exhibit 1 Market Shares of the Top Five UK PMI Insurers from 1992 to 2002
Source: Discovery Investor Briefing, 30 April 2004. Available www.discovery.co.za, investor relations link (accessed 8 May 2006).
Exhibit 2 Projected UK Health Spending
Source: Health Insurance in association with PruHealth, UK PMI Snapshot, October 2005. Available www.hi-mag.com/healthinsurance, supplements link (accessed 18 July 2006).
Exhibit 3 Prudential Brand Credibility and Public Trust
Source: Discovery Investor Briefing, 30 April 2004. Available www.discovery.co.za, investor relations link (accessed 8 May 2006).
Exhibit 4 Prudential Group Financial Highlights for 2003
RESULTS SUMMARY | 2003 £m | 2002 £m |
Achieved Profits Basis Results | ||
UK and Europe Insurance Operations | 359 | 516 |
M&G | 83 | 71 |
Egg | (34) | (20) |
UK and Europe Operations | 408 | 567 |
US Operations | 216 | 265 |
Prudential Asia | 378 | 516 |
Other Income and Expenditure (including Asia development expenses) | (208) | (215) |
Operating profit before amortisation of goodwill and exceptional items† | 794 | 1,133 |
Amortisation of goodwill | (98) | (98) |
Short-term fluctuations in investment returns | 682 | (1,406) |
Effect of changes in economic assumptions | (540) | (467) |
Profit on sale of UK general business operations | – | 355 |
Profit (loss) on ordinary activities before tax | 838 | (483) |
Operating earnings per share† | 26.4p | 42.8p |
Shareholders' funds | £7.0bn | £7.2bn |
2003 £m | Restated* 2002 £m | |
Statutory Basis Results | ||
Operating profit before amortisation of goodwill and exceptional items + | 357 | 449 |
Profit on ordinary activities before tax | 350 | 501 |
Operating earnings per share + | 12.9p | 16.7p |
Basic earnings per share | 10.4p | 23.5p |
Shareholders' funds | £3.3bn | £3.6bn |
2003 £m | 2002 £m | |
Dividend Per Share | 16.0p | 26.0p |
Insurance and Investment Funds under Management | £168bn | £155bn |
+ Operating profit and operating earnings per share include investment returns at the expected long-term rate of return but exclude amortisation of goodwill and exceptional items. The directors believe that operating profit, as adjusted for these items, better reflects underlying performance. Profit on ordinary activities and basic earnings per share include these items together with actual investment returns. This basis of presentation has been adopted consistently throughout these financial statements.
* Statutory basis results for 2002 have been restated for altered accounting policy for certain reinsurance contracts on the adoption of the revised Statement of Recommended Practice on accounting for insurance business, issued by the Association of British Insurers in November 2003.
Source: Prudential Annual Report 2003, available www.prudential.co.uk (accessed 18 July 2006).
Exhibit 5 Discovery Group Financial Highlights 1999-2003
Source: www.discovery.co.za, investor relations link (accessed 25 September 2006).
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved