Bonus Declaration

Prudential PLC
24 February 2004

24 February 2004

PRUDENTIAL ANNOUNCES BONUS RATES AND WITH-PROFITS FUND PERFORMANCE IN 2003 FOR
4.5 MILLION WITH-PROFITS POLICYHOLDERS

Prudential today announced its 2004 bonus rates on with-profits savings and
investment policies.

4.5 million With-Profits policyholders are to reap the rewards of having
invested in the financially strong Prudential With-Profits Fund during 2003, as
£1.9 billion is added to their policy values.

Headline Facts:
With-Profits Pension, Endowment and Bond Policy Values Up on 2003

Prudential With-Profits Fund investment return +16.5%

27% Investment Return In With-Profits Fund Over 5 Years, 1 January 1999 - 31 December 2003

Solvency Ratio up +2.1% from 8.4% to 10.5%

With-Profits Annuity Rates increased

Restoration of MVR-Free Withdrawals up to £25,000 for policies over 5 years old

The strong investment return on the Prudential With-Profits Fund has enabled an
increase in 'smoothed returns' on Prudential With-Profits products. These
products generally have outperformed the average annual interest payable on a
typical deposit account* - as they are designed to do. Also, Prudential's
With-Profits products have outperformed a typical balanced managed unit trust.
The financial strength of the Prudential With-Profits Fund has enabled
Prudential to maintain a high equity backing ratio and protect policyholders
from the worst effects of recent poor stock market conditions.

See notes (1), (2), (3) & (4)
*All references to deposit accounts and unit trusts in this document carry the following source: The deposit rates
assumed are gross of tax rates (net of tax, for Prudence Bond ) for accounts available for deposits of £2,500+(RP) or
£25,000+ with 90 days notice (SP), while the unit trust returns are based on an average for the 'Balanced Managed'
sector, offer to bid, gross income reinvested (net income reinvested, for Prudence Bond ). The unit-linked life fund
returns are based on the average returns in the ABI UK Life Fund's 'Balanced Managed - Life Fund' category.

 Prudential will pay two types of bonus this year:

 Regular bonuses (or annual bonuses) are added to policies each year in order to
gradually increase the plan value.

 Final bonuses (or terminal bonuses) may be added when a policy matures, is
cashed-in/transferred or the policyholder dies. Prudential uses these bonuses to
return to each policyholder a fair share of the assets of the With-Profits Fund,
while smoothing the ups and downs of the market especially around the date of
maturity. Payment of a final bonus is not guaranteed.
Bonus Overview:

Based on the assumption that the policy remains in force to maturity, where applicable. If the customer transfers,
cashes in or switches early then MVRs and any product-specific charges may be applied and may have the effect of
reducing the payout value on the policy.

Benefits to Customers

  • Prudential's With-Profits customers to receive bonuses worth £1.9 billion
  • Significant year-on-year increases in policy values
  • 10 year Prudence Bond (£10,000 single premium) up +6.8% on 2003
  • 15 Year Personal Pension (£200 per month regular premiums) up +8.5% on 2003
  • 10 year with-profits endowment (£50 per month regular premiums; male aged 30 next birthday at outset) up +12.2% on
    2003
  • Annuities - the total bonus anticipated at the first policy anniversary, in the following year, remains at 6%
  • Long-term expected investment return on the With-Profits Fund of +7.5% p.a. gross.

Annual Bonus Rates Examples 2004 (2003)

  • Prudence Bond           +3.25% (+3.25%)
  • Personal Pension +3.25% (+3.50%)
  • With-Profits Endowment     +1.00%/2.00% (+1.00%/2.00%) : (sum assured/ existing regular bonus)

Fund Strength

  • The Prudential With-Profits Fund achieved a very strong investment return, earning +16.5% gross during 2003, one
    of the strongest performances declared to date;
  • Over the last five years, the Prudential With-Profits Fund has earned +27%. The financial strength of the fund
    gives the fund's managers flexibility in their investment strategy. Prudential remains well positioned to continue
    to deliver competitive returns to existing and new customers

£25,000 MVR-Free Withdrawal

  • Due to improving market conditions and the strength of the With-Profits Fund, Prudential has been able to restore
    MVR free withdrawals from £10,000 to £25,000, in any one 12 month period for policies held for more than 5 years.
    See Note (6)

Solvency Outlook

  • A strong asset allocation and investment strategy has further strengthened the Prudential With-Profits Fund. It
    remains one of the strongest in the UK with a AA+ rating from Standard & Poor's
  • Increased solvency ratio to +10.5% at 31 December 2003 compared with +8.4% at 31 December 2002. Prudential does
    not use implicit items in this calculation and no credit is taken for present values of future profits

 Prudential UK Bonus Rates 2004

  • Prudence Bond holders will have a regular bonus of +3.25% added to their policies in 2004 until further notice,
    the same as in 2003 (announced 5th January 2004)
  • Personal Pension customers will have a regular bonus of +3.25% added to their policies in 2004 until further
    notice (compared with +3.50% in 2003)
  • With-Profits Endowment customers will receive a regular bonus of +1.00% on sum assured and +2.00% on existing
    regular bonuses, unchanged from 2003
  • The investment return achieved on the Prudential With-Profits Fund in 2003 was very strong at +16.5% before tax.
  • Prudential continues to have a prudent approach to the setting of With-Profits bonus rates and, combined with
    active fund management, sets the level of bonus rates at an affordable level so as not to diminish the potential of
    the Fund to deliver in future years. The full growth on the Fund is not being passed on to policyholders because the
    returns achieved in 2003 only partly address the very poor investment returns between 2000 and 2002
  • In total, £1.9 billion will be added to the value of customers' policies as a result of today's bonus
    announcement.




Announcing the 2004 bonus rates Mark Wood, Chief Executive of Prudential UK &
Europe said: 'All of our with-profits customers have seen an increase in the
value of their policies during 2003. Prudential has protected policyholders from
the worst effects of the difficult markets of the last three years. The
financial strength of our Fund, and the way we have managed it, sets Prudential
apart.'

Prudential Policy Values Grow

Investors who have held Prudential With-Profits policies during 2003 are reaping
the benefits of strong With-Profits Fund performance which is seen in the
increase in the policy value over the year.

Prudential's With-Profits customers have seen the value of their policies
increase year-on-year. Despite poor stockmarket investment returns over the
three-year period to 2002, the financial management of the Prudential
With-Profits Fund, and the expertise of its in-house investment team have
combined to keep the Fund financially strong. The growth that each With-Profits
customer has seen over the last year reflects the financial strength of the
Prudential With-Profits Fund. The Fund has consistently generated a positive
return over the medium and longer term with a 27% investment return in the
With-Profits Fund over 5 Years. (1 January 1999 - 31 December 2003).

TYPICAL INCREASE IN POLICY VALUES FOR PRUDENTIAL CUSTOMERS IN 2004
Prudence Bond With-Profits Bond       Annual Increases in Cash-in values   Year-on-Year Increase in a Bond's Value +
Policy Duration   Single Premium                Feb 2004 Bonus %           Bond Value    Bond Value    Increase in Value
                                                                                                       over 2003
In 2004 (2003)                                                             Date 2004     Date 2003
5 Years           £10,000                             +4.2                 £11,991       £11,507*      +£484

(4 years)
7 Years           £10,000                             +3.3                 £13,457       £13,024       +£433

(6 years)
10 Years          £10,000                             +6.8                 £18,448       £17,278       +£1,170

(9 years)

+ before deducting any MVRs

* after deducting the 1% discontinuance charge at 4 years duration
Personal Pension                      Annual Increase in cash-in values, Year-on-Year Increase in a
                                       after allowing for premiums paid
                                               during the year           Policy's Value
Policy Duration    Regular                     Feb 2004 Bonus %          Policy         Policy Value   Increase in Value
                                                                                        Date 2003      over 2003
In 2004 (2003)     Premium                                               Value

                                                                         Date 2004
5 Years            £200 p.m.                         +3.7                £12,860        £9,998         +£2,862

(4 Years)
10 Years           £200 p.m.                         +5.9                £30,540        £26,448        +£4,092

(9 years)
15 Years           £200 p.m.                         +8.5                £64,765        £57,314        +£7,451

(14 years)


With-Profits Endowment 25 Year Policy Annual Increase in cash-in       Year-on-Year Increase in a Policy's Value
(male 35 next birthday at outset)     values, after allowing for
                                      premiums paid during the year
Policy Duration      Regular          Feb 2004 Bonus %                 Policy        Policy        Increase in Value
                                                                                                   over 2003
In 2004 (2003)       Premium                                           Value         Value

                                                                       Date 2004     Date 2003
10 Years             £50 p.m.         +3.0                             £5,478        £4,718        +£760

(9 years)
15 Years             £50 p.m.         +6.6                             £12,387       £11,017       +£1,370

(14 years)
20 Years             £50 p.m.         +5.1                             £23,247       £21,516       +£1,731

(19 years)
25 Years             £50 p.m.         +19.4                            £55,126       £45,574       +£9,552

(24 years)

TYPICAL INCREASE IN PAYOUT VALUES FOR PRUDENTIAL CUSTOMERS IN 2004
 Prudential With-Profits Annuity     Annual Increase in annuity   Year-on-Year Increase in an annuity per
(based on a starting annuity of      per annum                    annum.
£4,708 p.a.)

Policy Duration      Premium         Feb 2004 Bonus %             Annuity p.a.    Annuity p.a.   Increase in
                                                                                                 Value over
In 2004 (2003)                                                    Date 2004       Date 2003      2003
5 Years (4 years)    £100,000        +2.8                         £5,768 p.a.     £5,613 p.a.    +£154 p.a.
10 Years             £100,000        +2.5                         £9,440 p.a.     £9,207 p.a.    +£233 p.a.

(9 years)

See Note (5)

Future returns are expected to continue to be positive based on achieving
Prudential's long-term expected investment return of +7.5%.

Industry Leading Performance -

Competitive Performance Against Alternative Investment Products

Customers have benefited from investing in the Prudential With-Profits Fund,
which over the longer term has enjoyed a better performance than that delivered
by deposit-based products. The Fund has also beaten the returns on an average
'Balanced Managed' unit trust over both short and long terms. This is clear
evidence that with-profits policies from a financially strong provider, such as
Prudential, continue to offer policyholders consistently attractive returns
during a period when the stockmarket has been very volatile.

Customer Payouts that Beat the Alternatives
Product         Premium       Term          Value 6th   % increase in value Overall     Outperformance
                                            April 2004  over 12 months      Return over
                                                        after allowing for  term p.a.   Over Unit Trust p.a.
                                                        premiums paid in
                                                        the year                        See notes (1)-(4)
PruBond         £10,000       5 years       £11,991     +3.2%               +3.7%       + 3.0%
PruBond         £10,000       10 years      £18,448     +6.8%               +6.3%       + 1.5%
Individual      £200 p.m.     20 years      £122,097    +7.8%               +8.6%       + 0.3%
Pension         male retiring
                at 65
With-Profits    £50 p.m.      25 years      £56,385     +19.4%              +9.4%       -0.8%

Endowment       male 30 n/b

These policy values demonstrate the strength of Prudential's With-Profits Fund
and show that returns generally remain above the returns achieved by typical
exposed investment products, even before taking account of tax relief on pension
contributions.

Prudential's With-Profits Performance Compared With Alternative Investment
Products

PRUBOND
Investment Product                     Total Payout      Annualised       2004 Bonus        2004 Bonus
                                                                          compared to       compared to Unit
                                                         return           Deposit Return    Trust Return. See
                                                                          (capital g'teed)  notes 1-4
                                                                          See notes 1-4
Prudential With-Profits Bond           £18,448           +6.3%            + 2.8%            + 1.5%

(10 year , £10,000 single premium)
Average building society account       £13,888           +3.5%
Average balanced managed unit trust    £15,981           +4.8%
Average balanced managed               £14,321           +3.7%

unit-linked life fund

What this means for the Typical Prudence Bond Customer

A typical customer with a Prudence Bond policy will have seen its value increase
from £10,000 to £11,991 over five years up to 6th April 2004. By investing with
Prudential over the last 12 months, the policyholder's bond is worth +3.2% more
than it was on 6 April 2003. This payout represents an overall return of + 3.7%
each year over the last 5 years. The same customer would only have received a
+2.7% p.a. return in interest paid if their money had been in a deposit account
(although the capital would have been guaranteed. See Notes 1-4) or +0.7% p.a.
on a unit trust over the same 5-year period (See notes 1-4).

LIFE POLICIES
                                    Total Payout        Annualised return 2004 Bonus Return 2004 Bonus Return
                                                                          v Deposit         v Unit Trust

Prudential With-Profits Endowment   £56,385             +9.4%             + 5.7%            -0.9%
(25 Year Term, £50 per month
regular premiums; male aged 30 next
birthday at outset)
Average building society account    £24,502             +3.7%
Average balanced managed unit trust £65,322             +10.3%
Average balanced managed            £41,879             +7.4%

Unit-linked life fund

What this means for the typical With-Profits Endowment Customer

For a typical customer who holds a twenty-five year with-profits endowment,
paying a premium of £50 per month, the payout value on maturity is £56,385,
which is equivalent to 9.4% return for each of the 25 years.

PENSIONS
Investment Product                  Total Payout     Annualised return  2004 Bonus Return v     2004 Bonus Return v Unit
                                                                        Deposit                 Trust
Prudential With-Profits Individual  £122,097         +8.6%              + 4.6%                  + 0.3%
Pension

(20 year term, £200 per month
regular premiums)
Average building society account    £72,291          +3.9%
Average UK balanced managed unit    £118,171         +8.3%
trust
Average balanced managed            £88,526          +5.7%

Unit-linked life fund

What this means for the typical Individual Pension Customer

For a typical male personal pension customer, who has paid £200 per month into
their pension for 20 years and is retiring at age 65, the fund is £122,097. If
the same customer had decided to transfer the policy last year, he would have
received 8% less than if he had kept the policy for another year at last year's
bonus rates, and, after allowing for the premiums paid in the year.

David Belsham, Appointed Actuary of Prudential Assurance, said: 'We have
announced a very strong set of bonuses. By taking the decision to continue
investing with us, our customers have benefited from attractive payout values in
what have been turbulent and volatile market conditions. In general,
Prudential's returns still comfortably exceed those achieved on both
deposit-based products and on alternative exposed investments, such as unit
trusts. The strength of our Fund makes us one of the strongest providers in the
UK, with a AA+ rating from Standard & Poor's, and we are well positioned to
continue to deliver competitive returns to existing and new customers in the
future. Prudential firmly believes that with-profits will continue to provide
good value to customers and that is why we are strongly committed to the
with-profits market today and in the future.'

Asset Allocation

The asset allocation policy of the Prudential With-Profits Fund has been a major
contributor to the strong performance delivered in recent years. By successfully
implementing investment strategies, based on investment markets views,
Prudential has preserved the financial strength of the Fund and delivered
excellent long run investment returns.
                             31/12/03       31/12/02      31/12/01      31/12/98

                                %              %              %             %
Equity shares
-     UK shares                 33             32            38            59
-     Non-UK shares             15             13            14            13
Fixed interest                  31             33            28            12
Cash                            2              2              3             5
Property                        17             18            15            11
Alternative investments         2              2              2             -
Total                          100            100            100           100

                                    - ENDS -

Media Contacts:

James Murray:      T -020 7150 2654 or 07810 181757

Darragh Leeson: T- 020 7150 2600 or 07801 856011

NOTES TO EDITORS

Release Specific Notes:

(1.) The deposit rates, unit trust values and unit-linked life fund values used
are for periods ending 31 December 2003.

(2.) The deposit rates assumed are gross of tax rates (net of tax, for Prudence
Bond ) for accounts available for deposits of £2,500+(RP) or £25,000+ with 90
days notice (SP), while the unit trust returns are based on an average for the
'Balanced Managed' sector, offer to bid, gross income reinvested (net income
reinvested, for Prudence Bond ). The unit-linked life fund returns are based on
the average returns in the ABI UK Life Fund's 'Balanced Managed - Life Fund'
category.

(3.) * Source: Micropal, £25,000, invested as at 30 January 2004, 29/12/89 to 31
/01/04

(4.) * Source: Lipper Hindsight, % growth total return, 31/12/98 to 31/12/03.

(5.) The figures shown in the table for Annuities are the increase in pension at
the policy anniversary, where the rate of bonus anticipated at the outset was
nil. The increases will be lower where a non-zero rate of anticipated bonus was
chosen by the policyholder.

(6.) MVR policy is subject to change without notice.

(7.) Past performance is no guide to the future and the value of final bonus
cannot be guaranteed.

(8.) Final Bonus Rates:


        25 Year Endowment, the Final Bonus element of £56,385 total payout is
        £17,537

        20-year Personal Pension, the Final Bonus element of £122,907 total
        payout is £415.

        Prudence Bond - The Final Bonus elements are:

Entry date      Valuation date  Final Bonus       Total Bond Value
                                Element
1.9.99          1.9.04          £111              £11991
1.9.99          1.9.03          £117              £11623
1.9.97          1.9.04          £178              £13457
1.9.97          1.9.03          £164              £13024
1.9.94          1.9.04          £2585             £18448
1.9.94          1.9.03          £1916             £17278
6.4.94          6.4.04          £2354             £18448


        Personal Pension - the final bonus elements are:

Bonus year           Term        Total Policy Value   Final bonus element
           2003       4               £ 9,998                        £ 92
           2003       9               £ 26,448                      £ 723
           2003       14              £ 57,314                     £ 5,689
           2004       5               £ 12,860                      £ 277
           2004       10              £ 30,540                     £ 1,591
           2004       15              £ 64,765                     £ 9,048



 1. Market Value Reduction Policy (MVRs)

Prudential applies MVRs on policies where the face value of the policy
significantly exceeds the value of the underlying assets.

Prudential's current MVR policy is as follows:

• MVRs are decided on a case by case basis.

• Anyone holding a With-Profits Bond policy for five years or more who withdraws
more than £25,000 over any twelve month period may be subject to an MVR.

• Anyone who has held a With-Profits policy for less than five years may be
subject to an MVR regardless of the amount withdrawn.

• MVRs are not applied on death, maturity or, in the case of retirements, on
selected retirement dates. MVRs are also not applied to With-Profits annuities

If a customer switches into another investment or between Prudential's
With-Profits Funds then an MVR may be applied when: they cash-in or transfer
their plan (including early retirement); take a full or partial withdrawal from
their policy

• Prudence Bond customers can take up to 5% of their total fund value, MVR-free,
as 'Income' in any one twelve month period.

• The average MVR applied to Prudence Bond contracts in 2003 was 6.3%.

• In 2004 to 12 February, the average MVR was 4.3%.

2. Fund Performance in context:

In the year to 31 December 2003, the FTSE 100 (Total Return) index rose by
17.9%.* The Prudential With-

Profits Fund returned 16.5% before tax. Over the past three years, the FTSE 100
(Total Return) index fell by 21.1%**, whilst the Prudential With-Profits Fund
returned 3.3%, clearly demonstrating that with-profits products still continue
to balance the risk and the return for the policyholder. * Micropal ** M&G

3. Customer Communication:

Prudential will continue its policy of openly communicating with policyholders.
Advertisements announcing this year's bonus declaration will appear in a range
of national daily newspapers.

4. Customers seeking further information should contact:

Prudential: t: 0800 000 000, Web: www.pru.co.uk. Calls may be recorded.

5. Year-on-Year Comparison

Prudence Bond regular bonus held at +3.25%.

     Twenty five year with-profits endowment - maturity payout reduced by 10%

     Ten year Personal Pension - cash value reduced by -0.5%

6. Prudential's financial strength

Financial strength is an important issue for customers, who want to be assured
of the financial strength of the company providing the policy. Prudential's
long-term Fund is rated AA+ by Standard and Poor's.

7. Attached with this announcement is a with-profits factsheet. (Appendix 1)

WITH PROFITS FACTSHEET APPENDIX 1

1. Bonus Policy

Prudential's bonus policy is set out in detail in its With-Profits Guide
(available on request from Prudential). The main aims of the company's bonus
policy are:

• To give each with-profits policyholder a return on the premiums which he or
she has paid

that reflects the earnings of the underlying investments, whilst smoothing the
peaks and troughs of investment performance; and

• To ensure that with-profits policyholders receive a fair share of the profits,
(as decided by the Directors of PAC on the advice of the Appointed Actuary),
distributed from the with-profits fund by way of bonus additions to their
policies.

2. Types of Bonus

There are two types of bonus:

Regular bonuses (or annual bonuses) are added to policies each year in order to
gradually

increase the plan value (excluding MVR, or cash-in charges).

 Final bonuses (or terminal bonuses) may be added when the benefits of a policy
matures, is cashed-in/transferred or the policyholder dies. These bonuses are
used to make up the difference between the guaranteed benefits (regular bonuses)
and the overall value of each customer's policy asset share. Prudential uses
these bonuses to return to each policyholder a fair share of the assets of the
with-profits fund, while smoothing for impact of market changes, especially
around the date of maturity. Payment of a final bonus is not guaranteed.

3. Determination of Bonus Rates

The balance between regular and final bonuses influences the investment strategy
that the fund can adopt. Regular bonuses increase the amounts guaranteed to
policyholders and so need to be backed by less risky (and so normally less
rewarding) investments. This, in turn, affects the overall level of return
achieved. Regular bonus rates are therefore targeted on a prudent proportion of
the investment return that we expect to earn in the future. Regular bonus rates
have been gradually reduced over in line with declining inflation and the
associated reduction in expected future investment returns.

Total claim values are set by reference to 'asset shares', which are calculated
for typical policies by accumulating the premiums paid, less allowance for
expenses and charges, at the actual rates of return earned on the assets of the
with-profits fund over the life times of those policies. The asset shares also
include allowance for distributions to shareholders and profits from other
sources arising in the with-profits fund. These asset shares provide a target
level for claim values paid to customers.

4. What is smoothing?

Smoothing is applied so that the claim values actually paid change only
gradually over time. In normal investment conditions, we aim to ensure that
total payouts on equivalent policies do not generally change by more than 10 per
cent from one year to the next, and we have applied this guideline for 2004's
bonus declaration.

Prudential's intention is that any smoothing of profits or losses should balance
out over time, so that in the long run With-Profits policyholders neither gain
nor lose as a result of the smoothing policy.

5. Where do profits from the with-profits fund go?

Prudential's With-Profits policyholders currently receive 90 per cent of the
profits distributed from the With-Profits Sub-Fund as bonus additions to their
policies and shareholders receive the remaining 10 per cent as dividend
payments. Since policyholders and shareholders share proportionately in these
profits, their interests are exactly aligned.

6. Prudential's with-profits investment strategy.

The company's investment strategy is to seek to secure on behalf of its
policyholders the highest combination of income and growth in capital value
while maintaining the security of the fund.

The table below shows the investment mix of Prudential's With-Profits Fund.
                             31/12/03       31/12/02      31/12/01      31/12/98

                                %              %              %             %
Equity shares
-     UK shares                 33             32            38            59
-     Non-UK shares             15             13            14            13
Fixed interest                  31             33            28            12
Cash                            2              2              3             5
Property                        17             18            15            11
Alternative investments         2              2              2             -
Total                          100            100            100           100

7. Investment Returns

The underlying investment return on the Prudential With-Profits Fund was 16.5%
gross in the year to 31/12/03 compared with growth of 17.9% in the FTSE 100
(Total Return). Source M&G

Returns on the With-Profits Fund in recent years have been as follows:
Year                   Returns on the Prudential With-Profits Fund
2003                   + 16.5%
2002                   -8.1%
2001                   -3.5%
2000                   +3.0%
1999                   +19.3%




                      This information is provided by RNS
            The company news service from the London Stock Exchange