Final Results for 1999 - Part 2

Prudential PLC
23 February 2000


PART 2


GROUP FINANCIAL REVIEW

Modified Statutory Basis Results

Operating profit from continuing operations before amortisation of goodwill
totalled £776 million in 1999, a decrease of 10% over prior year.  The 1999
result includes an investment of £150 million in egg and a £70 million charge
for UK re-engineering costs; underlying growth before these items is 6%.

This underlying increase reflects good growth from our US operations and our
UK Retail Insurance business.  These increases were offset by the funding
costs of egg and of M&G, which was acquired in the first half of the year.

Our US operations generated a profit in 1999 of £451 million, 10% ahead of
prior year reflecting increased spread income due to growth in the liability
book  and a  slight  strengthening of the dollar against sterling (local
currency  results were  up 8% on prior year).  Jackson's after tax return on
capital for the  year of  17% is again ahead of our long-term target of 15%. 
However, we would expect 2000's returns to be closer to our target return.

In the UK, underlying  profits from our Retail Insurance operations increased
by 14% to £479 million.  Within this total, underlying profits from our
Retail IFA business of £99 million were 13% above prior year as increased 
funds under  management more than offset the impact of lower annual bonuses. 
The  14% increase  in  underlying profits from Retail Financial Services to
£380  million reflects a 56% increase in profits from General Insurance to £61
million  and  a 9% increase in long-term profits to £319 million.  The
increase in the long term result  reflects  higher  funds under management and
an exceptional  level  of maturities  offset  by  the impact of the rundown in
 annual  bonuses.   Despite recent rises in interest rates, expectations are
for continued low inflation and investment  returns, and we would therefore
expect to see a  continued  downward trend  in  annual  bonus  levels.  The
significant improvement  in  the  General Insurance result reflects better
claims and expense experience.

Profits  from  our Group Pensions business increased by 64% to  £36  million 
in 1999,  due  to  an  exceptional level of maturities and  increased  funds 
under management.   Group Pensions' current investment in an e-commerce
marketing  and distribution platform will impact 2000's result.

Prudential M&G Asset Management's underlying result of £87 million compares
with £28  million  in 1998 and includes a strong first time eight month 
contribution from  M&G  of  £56  million.  M&G's result is ahead of our
original  acquisition assumptions.   The  contribution from PPM of £43 million
is in  line  with  last year.

The investment in egg and Prudential Banking is £150 million compared with
£77 million in 1998.  This increase reflects both the success of the venture
with the resultant demand for additional capacity, and increased investment
in the e-card launch, development of future products and the continued
investment in systems.  Given the continued development expenditure and
proposed new initiatives, we anticipate a similar level of investment in 2000
to that incurred in 1999.  Current egg plans are to break even in the
latter part of 2001 as the benefits of the customer base and cross-buying
come through.

The movement in other income and expenditure from income of £38 million in
1998 to a charge of £78 million in 1999 predominantly reflects the cost of
funding the acquisition of M&G and the investment in  egg.

Operating earnings per share were down 14% on prior year at 29.1 pence.
This fall is higher than the 10% fall in operating profit due to the
unusually low effective tax rate in 1998 of 25%, compared with 27% in 1999.

Supplementary Achieved Profits Basis Results

On the achieved profits basis of reporting, operating profit from continuing
operations was £1,098 million in 1999, 9% ahead of 1998.  This is despite the
inclusion of the UK restructuring charge of £70 million and increased
investment in egg and is due mainly to the strong sales performance across
the Group.  Underlying growth excluding these items was an increase of 21%.

The achieved profits result for our long-term insurance operations was
an increase of 27% on 1998 at £1,230 million reflecting a 46% rise in
new business profits to £603 million and a 13% increase in in-force profits
to £627 million.

Within new business profits, the contribution from our UK businesses was up 
44% to  £304  million.  This increase reflected a 53% increase  in  Retail 
IFA  new business profits to £174 million due to increased sales and a revised
assessment of  persistency  of  our  Prudence Bond product, while within 
Retail  Financial Services  and  Annuities,  strong sales growth and a shift 
to  more  profitable product lines drove the result up 35% to £104 million.

Overseas, Jackson National Life generated new business profits of £198 
million, up 45% on prior year, reflecting record sales volumes and a shift in
product mix to  relatively  more  profitable variable annuity and ELI
products.   Prudential Asia's contribution of £90 million represents another
very strong result, up 61% on prior year, and is primarily attributable to the
increase in  sales  in  our  established markets, a more profitable sales 
mix,  and  our increased stake in Malaysia.  Prudential Europe's contribution
was £11  million, up 22% on 1998.

Profit from  long-term  in-force business of £627 million  compares  with 
£557 million  in  1998,  an increase of 13%.  The 1999 result was held  back 
by  the shareholders' charge of £92 million for the increase in the cost of
pensions mis-selling in the UK.

We  have  increased the provision for pensions mis-selling from £1.1 billion 
to £1.7  billion and now expect the total cost to be £2 billion.  The 
increase  in the provision reflects the impact of the revised, shorter,
timescale for dealing with  Phase  II  cases,  revised settlement and interest
 rate  assumptions  and additional Phase II cases.

The returns on average shareholders' funds for our long-term businesses based
on local  currency  achieved basis operating profit after tax,  are  shown  in
the following table:


                            1999   1998
                            %      %

UK operations               11     10
Jackson National Life       14     16
Prudential Asia*            18     18

*  Established operations net of development costs

Total  operating profit after tax on the achieved profits basis was £762
million and earnings per share were 39.1 pence.




Shareholders' Funds

Statutory basis shareholders' funds were £3,424 million at the end of 1999,
an  increase  of  £175 million from 1998.  The increase primarily  reflects 
the retained operating profit after dividend payments.

On  the  achieved profits basis, which recognises the shareholders' interest 
in our long-term businesses, shareholders' funds were £8,342 million, an
increase  of  £832  million  compared with  1998.   The  increase  reflects 
the operating  profits  retained in the long-term businesses and  strong 
investment returns.  After adjusting for borrowings, approximately 65% of
these  funds  are held in sterling with a further 25% held in US dollars.

The achieved profits basis provides a better indication of the Group's
financial strength.  It does not, however, anticipate the results of our
discussions  with the  FSA on the unattributed assets held in the main
with-profits fund.  For the purposes of the achieved profits basis results, it
is assumed that only  10%  of these assets are allocated to shareholders.  Our
discussions with the FSA on the unattributed assets continue.


Financial Strength of Insurance Operations

The solvency ratio of free assets to liabilities within the Group's main UK
long-term  fund  at the year end after charging for the pension mis-selling
provision is estimated to be 29%, an increase of 8% over prior year. Free
assets on an FSA basis  are  estimated  to be £18 billion at the year end. The
 fund's  financial strength has been rated Aaa by Moody's Investors Service. 
The solvency position of  Jackson National Life remains strong with a
risk-based capital ratio of over 240% of the regulatory minimum.  Adequate
solvency levels have been maintained by our insurance operations in Asia.

Funds Flow

In 1999 the Group's operations generated funds after tax of £567 million,
compared to £654 million in 1998, and retained funds after dividends were
£118 million.  In 1999, the Group invested £2,598 million in its businesses
including £278 million reinvested in Jackson National Life and £1,943 million
relating to the acquisition of M&G.  We have also invested £262 million in
Prudential Banking and egg as solvency capital and invested £97 million in
Asia, principally in Taiwan.  In addition, £310 million was repatriated from
businesses in 1999: £190 million of surplus capital from M&G, and £120
million from Prudential Assurance Company, following a review of capital
requirements.  Overall there was a net cash outflow in 1999 from the holding
company of £2,268 million.

As a result of the above outflow and exchange translation losses of £22
million, the  holding company net borrowings at the end of 1999 totalled
£1,837  million, compared with £453 million of net cash at the end of 1998.


Shareholder's Borrowings

Shareholders'  borrowings at the end of 1999 totalled £1,915  million 
including £1,614 million at fixed rates of interest with maturity dates
ranging from  2001 to  2029.  Of this long-term borrowings balance, £496
million was denominated in US  dollars, in order to partially hedge the
currency exposure arising from  our investment  in  Jackson National Life. 
There were also £301 million  short-term commercial paper borrowings, all
sterling denominated.

The Group successfully launched two bonds during the year: a £250 million
5.5%  bond  maturing in 2009, and a £250 million 5.875% bond maturing  in 
2029.  The  Group also successfully placed £168 million of loan notes due to
mature  in 2004.   The  proceeds of these debt issues along with the net cash
held  in  the Group at the end of 1998 were used to finance the acquisition of
M&G.

Prudential  plc  enjoys strong debt ratings from both Moody's Investors 
Service and  Standard and Poor's.  Its rated long-term debt is Aa3 and AA+, 
whilst  the short-term ratings of its guaranteed finance subsidiaries are P-1
and A-1+.  The Group also retains access to both committed and uncommitted
bank facilities.

Treasury Policy

The Group operates a central treasury function, which has overall
responsibility for  managing  its  capital funding programme as well as its 
central  cash  and liquidity  positions.   The treasury function is also
responsible  for  the  co-ordination of risk management and investment policy
across the Group.

To  reduce  investment, interest rate and currency exposures, and to 
facilitate efficient investment management, derivative instruments are used. 
Group  policy is  that amounts at risk through derivative transactions are
covered by cash  or by  corresponding assets.  The accounting treatment of
derivative  contracts  in consistent with that of the underlying assets or
liabilities.

The Group transacts business primarily in sterling and US dollars.  The
currency exposure  relating  to the translation of reported earnings  is  not 
separately managed  although  its  impact is reduced by interest payments  on 
the  foreign currency  borrowings  and  by the adoption of average  exchange 
rates  for  the translation of foreign currency revenues.

Accounting Policies

There  have  been no changes in accounting policies during the year that 
impact materially on the results.


1 Segmental Analysis


                            Analysis of new business   Analysis of premiums
                            by product distributor     and profit by product
                                                       provider

                                                             Operating profit
                                                       Gross      (based on
                                                     premiums     longer-term
                             Single       Regular     written     investment
                                                                   returns)
                                                                   before
                                                               amortisation of
                                                                   goodwill
Results Analysis      1999   1998    1999   1998    1999   1998   1999   1998
by Business Area       £m     £m      £m      £m     £m     £m     £m     £m
_____________________________________________________________________________
UK Operations
Retail Financial
Services and
Annuities            3,211  1,821     146    192   4,837  3,236    380   333
Retail IFA           2,476  1,779     112    113   3,531  2,754     99    88
Retail Insurance
Operations           5,687  3,600     258    305   8,368  5,990    479   421
Group Pensions         630    544      81     37   1,281  1,434     36    22
Prudential M&G Asset
Management             570      -      13      -     948      -     87    28
egg and Prudential
Banking                  -      -       -      -       -      -   (150)  (77)
_____________________________________________________________________________
Total                6,887  4,144     352    342  10,597  7,424    452   394
_____________________________________________________________________________
USA
Jackson National
Life                 4,062  2,835      24     28   4,449  3,237    457   411
Broker dealer and
fund management          -      -       -      -       -      -     (6)    -
Total                4,062  2,835      24     28   4,449  3,237    451   411
_____________________________________________________________________________

Asia
Long-term business
and investment
products               765    114     106     79   1,237     532    27    23
Development expenses     -      -       -      -       -       -   (12)  (10)
_____________________________________________________________________________
Total                  765    114     106     79   1,237     532    15    13
_____________________________________________________________________________

Europe                 120     96      27     19     168     126     6     4

Other income and expenditure

Investment return
and other income        -      -       -       -      -       -      93   189
Interest payable        -      -       -       -      -       -    (131) (105)
Corporate expenditure   -      -       -       -      -       -     (40)  (46)
_____________________________________________________________________________
Total                   -      -       -       -      -       -     (78)   38
_____________________________________________________________________________


Re-engineering costs    -      -       -       -      -       -     (70)    -

Total continuing
operations         11,834  7,189     509     468 16,451   11,319    776   860
_____________________________________________________________________________

Results Analysis by Activity
_____________________________________________________________________________
Long-term business   10,639 6,982     489    453  14,826 10,640    943   832
Investment products
and management        1,195   207      20     15   1,307    369     70    28
General business          -     -       -      -     318    310     61    39
Banking                   -     -       -      -       -      -   (150)  (77)
Other income and
expenditure               -     -       -      -       -      -    (78)   38
Re-engineering costs      -     -       -      -       -      -    (70)    -


Total continuing
operations          11,834  7,189     509    468  16,451 11,319    776   860



2 Funds Flow

Holding Company Funds Statement                         1999 £m     1998 £m
_____________________________________________________________________________
Operating profit after tax
before amortisation of goodwill                           567          654
Dividends                                                (449)        (407)
Reinvested in businesses                                 (278)        (260)
_____________________________________________________________________________
Funds available to holding company                       (160)         (13)
New investment in businesses                           (2,320)        (265)
Capital repatriated from businesses                       310            -
Disposal of businesses                                      -          481
New share capital subscribed                               34           15
Timing differences and other items                       (132)        (175)
_____________________________________________________________________________
Holding company net cash movement                      (2,268)          43
_____________________________________________________________________________





Movement in Net Cash Balances                          1999 £m        1998 £m
Holding company cash less shareholders' borrowings
at beginning of year                                     453            405
Holding company net cash movement (as above)          (2,268)            43
Exchange translation (losses) gains                      (22)             5

Holding company cash less shareholders' borrowings at
end of year                                           (1,837)           453


Represented by:

Holding company cash and short-term investments            78         1,826
Borrowings - Holding company                           (1,760)       (1,223)
           - Jackson National Life                       (155)         (150)
                                                       (1,837)          453





3 Movement in Shareholders' Capital and Reserves
                                                         1999 £m   1998 £m
_____________________________________________________________________________
Profit for the financial year                             542          880
Exchange movements                                         48          (50)
Goodwill on disposal of subsidiaries                        -           28
New share capital subscribed                               34           15
Dividends                                                (449)        (407)
_____________________________________________________________________________
Net movement in shareholders' capital
and reserves                                              175          466
Shareholders' capital and reserves at
beginning of year                                       3,249        2,783
_____________________________________________________________________________
Shareholders' capital and reserves
at end of year                                          3,424        3,249
_____________________________________________________________________________

4 Abridged Statutory Profit and Loss Account

General Business Technical Account
(based on longer-term investment returns)              1999 £m      1998 £m
_____________________________________________________________________________
Gross premiums written                                    318          310
_____________________________________________________________________________
Net premiums earned                                       302          293
Allocated investment return transferred
from the non-technical account                             40           41
Claims incurred                                          (200)        (209)
Net operating expenses                                    (93)         (86)
_____________________________________________________________________________
Technical result                                           49           39
_____________________________________________________________________________
Gross premiums written and technical result
relate to continuing operations.

Long-Term Business Technical Account(based on
longer-term investment returns for investments
attributable to shareholders                            1999 £m      1998 £m
_____________________________________________________________________________
Gross premiums written
(excluding investment products)
Continuing operations                                  14,580       10,640
Acquisitions                                              246            -
Discontinued operations                                     -          423
_____________________________________________________________________________
Total                                                  14,826       11,063
_____________________________________________________________________________
Net premiums earned                                    14,751       10,993
Investment income (including realised
investment gains)                                      10,661        8,516
Unrealised investment gains                             6,239        3,842
Claims incurred and changes in technical
provisions                                            (22,034)     (18,868)
Expenses and tax                                       (2,670)      (2,261)
Allocated investment return transferred from (to) the
non-technical account                                      14           (5)
Transfer to the fund for future appropriations         (6,325)      (1,609)
_____________________________________________________________________________
Technical result after tax                                636           608
_____________________________________________________________________________

Analysed as:
Continuing operations                                     628          601
Acquisitions                                                8            -
Discontinued operations                                     -            7
_____________________________________________________________________________

4 Abridged Statutory Profit and Loss Account (continued)


                        Before
                        re-engineering Re-engineering
Non-Technical Account   costs 1999 £m  costs 1999 £m      1999 £m    1998 £m
_____________________________________________________________________________
General business
technical result              61              (12)             49          39
Long-term business technical
result before tax

  Continuing operations      926              (41)            885         832
  Acquisitions                17               (7)             10           -
  Discontinued operations                                       -           8
Investment products and management
  Continuing operations       31              (10)             21          28
  Acquisitions                39                               39           -
Banking                     (150)                            (150)        (77)
Other income and expenditure (78)                             (78)         38
Amortisation of goodwill     (54)                             (54)          -
Operating profit based on
longer-term investment
returns                      792              (70)            722         868
Short-term fluctuations in
investment returns                                             28          24
Profit on business disposals                                    -         249
_____________________________________________________________________________
Profit on ordinary activities before tax
(including actual investment returns)                         750       1,141
Tax                                                          (208)      (261)
_____________________________________________________________________________
Profit for the financial year                                 542         880
Dividends                                                    (449)       (407)
_____________________________________________________________________________
Retained profit for the financial year                         93         473
_____________________________________________________________________________


Basic Earnings per Share
Based on operating profit after
tax before amortisation of
goodwill of £567m (£654m)                                    29.1p      33.7p
Adjustment for amortisation of goodwill                      (2.8p)        -
Adjustment from post-tax longer-term
investment returns to post-tax actual
investment returns                                            2.3p       0.8p
Adjustment for profit on business disposals
(1999 tax paid on prior year disposals)                      (0.8p)     10.8p
Based on profit for the financial year
of £542m (£880m)                                             27.8p      45.3p
Average number of shares                                    1,947m     1,942m


Diluted earnings per share
Based on profit for the financial year  of
£542m (£880m)                                                27.7p      45.0p
Average number of shares                                    1,959m     1,955m


Dividend per share                                           23.0p      21.0p


5 Notes on the Unaudited Results


(a)   The results for 1999 are unaudited and are not the Company's statutory
      accounts.  The results for 1999 have been prepared using the same       
      accounting policies as were used in the 1998 statutory accounts.  The   
      results for 1998 have been derived from those accounts.  The auditors   
      have reported on the 1998 statutory accounts and they have been         
delivered to the Registrar of Companies.  The auditors' report was unqualified
and did not contain a statement under section 237 (2) or (3) of the Companies
Act 1985.

(b)   Acquisitions reported in section 4 relate to the Company's purchases of
      the whole of M&G Group plc in April and of a majority holding in Chinfon
      Life Insurance Company of Taiwan in November. Goodwill of £1,527m and   
      £50m respectively arose on the acquisitions and is being amortised on a 
      straight line basis over 20 years.

(c)   Discontinued operations comprise the Company's Australasian operations
      which were sold in September 1998.

(d)   Costs in respect of re-engineering the Company's UK operations relate
      principally to redundancy and related property, outsourcing and other   
      costs.  These costs have been allocated to the appropriate caption      
      within the technical and non-technical accounts.

(e)   The statutory tax charge comprises £83m (£136m) UK tax and £125m (£125m)
      overseas tax.

(f)   The average number of shares for 1999 has been reduced by 4 million as a
      result of a change in treatment of shares purchased under employee      
      incentive plans.

(g)   The general business operating result comprises:



                                                             Operating profit
                                                               (including
                         Gross                                 longer-term
                        premiums     Underwriting   Investment  investment
                         written        result        return      returns)

                            1999   1998   1999   1998   1999  1998  1999  1998
                      £m     £m     £m     £m     £m    £m    £m    £m
_____________________________________________________________________________
UK Operations
Home                  274    273    35     19     23    21    58    40
Motor                  44     37    (3)    (7)     6     6     3    (1)

Total                 318    310    32     12     29    27    61    39
_____________________________________________________________________________


(h) The 1999 Annual Report will be posted to shareholders on 24 March 2000.



6 Supplementary Achieved Profits Basis Results


Results Analysis by Business Area                       1999 £m      1998 £m
_____________________________________________________________________________
UK operations

New business                                              304          211
Business in force                                         327          304
_____________________________________________________________________________
Total long-term business                                  631          515
General business                                           61           39
Prudential M&G Asset Management                            87           28
Banking                                                  (150)         (77)
_____________________________________________________________________________
Total                                                     629          505
_____________________________________________________________________________

USA
New business                                              198          137
Business in force                                         277          231
_____________________________________________________________________________

Total long-term business                                  475          368
Broker dealer and fund management                          (6)           -
_____________________________________________________________________________
Total                                                     469          368

Asia
_____________________________________________________________________________
New business                                               90           56
Business in force                                          35           27
_____________________________________________________________________________
Total long-term business                                  125           83
Development expenses                                      (12)         (10)
_____________________________________________________________________________
Total                                                     113           73
_____________________________________________________________________________

Europe
New business                                               11            9
Business in force                                           6            5
Total long-term business                                   17           14



Other income and expenditure

Investment return and other income                        111          202
Interest payable                                         (131)        (105)
Corporate expenditure                                     (40)         (46)
Total                                                     (60)          51
_____________________________________________________________________________

Re-engineering costs                                      (70)           -

Total operating profit(based on long-term
investment returns) before amortisation of goodwill     1,098         1,011



6. Supplementary Achieved Profits Basis Results (continued)

Summarised Consolidated Profit and Loss Account         1999 £m      1998 £m
Operating profit (including investment returns
based on long-term rates of investment return)
New business                                              603          413
Business in force                                         627          557
Total long-term business                                1,230          970
General business                                           61           39
Prudential M&G Asset Management                            87           28
Banking                                                  (150)         (77)
Other income and expenditure                              (60)          51
Re-engineering costs                                      (70)           -
Total                                                   1,098        1,011
Discontinued operations                                     -           12
_____________________________________________________________________________
Total operating profit before amortisation
of goodwill                                             1,098        1,023
Amortisation of goodwill                                  (54)           -
Short-term fluctuations in investment returns             637          289
Net loss from changes to projected investment
return and discount rates                                   -         (106)
Profit on business disposals                                -          202

Profit on ordinary activities before tax
(including actual investment returns)                   1,681         1,408
Tax                                                      (519)        (371)

Profit for the financial year                           1,162        1,037
Dividends                                                (449)        (407)
____________________________________________________________________________
Retained profit for the financial year                    713          630
_____________________________________________________________________________


Basic earnings per share                                  1999         1998
_____________________________________________________________________________
Based on operating profit after tax before
amortisation of goodwill of £762m (£752m)                  39.1p       38.7p
Adjustment for amortisation of goodwill                    (2.8p)         -
Adjustment from post-tax long-term investment
returns to post-tax actual investment returns              24.2p       10.3p
Adjustment for changes to projected investment
return and risk discount rates                                -        (4.1p)
Adjustment for profit on business disposals
(1999 tax paid on prior year disposals)                    (0.8p)       8.5p
Based on profit for the year of £1,162m (£1,037m)          59.7p       53.4p
Average number of shares                                  1,947m      1,942m




6. Supplementary Achieved Profits Basis Results (continued)

Movement in Shareholders' Capital and Reserves          1999 £m      1998 £m
_____________________________________________________________________________
Profit for the financial year                           1,162        1,037
Exchange movements                                         85          (75)
Goodwill on disposal of subsidiaries                        -           28
New share capital subscribed                               34           15
Dividends                                                (449)        (407)
_____________________________________________________________________________
Net movement in shareholders' capital and reserves        832          598
Shareholders' capital and reserves at beginning
of year                                                 7,510        6,912
_____________________________________________________________________________
Shareholders' capital and reserves at end of year       8,342        7,510
_____________________________________________________________________________
Represented by:
Statutory basis capital and reserves                    3,424        3,249
Additional reserves on the achieved profits basis       4,918        4,261
_____________________________________________________________________________
Shareholders' capital and reserves at end of year       8,342        7,510
_____________________________________________________________________________
Comprising:
UK operations                                           5,029        3,911
USA                                                     2,533        2,166
Asia                                                      593          378
Europe                                                     68           46
Other operations (including net shareholders'
borrowings/cash)                                          119        1,009
_____________________________________________________________________________
Shareholders' capital and reserves at end of year       8,342        7,510
_____________________________________________________________________________


Notes on the supplementary achieved profits basis results

(a)   The results for 1999 are unaudited.  The results for 1998 have been
      derived from the achieved profits basis results supplement to the       
      Company's statutory accounts for that year.  The supplement included an 
      unqualified report from the auditors.

(b)   The results have been prepared in accordance with the draft 'Guidance on
      accounting in Group Accounts for proprietary companies' long-term       
      insurance business' issued by the Association of British Insurers in    
     July 1995 and are provided as a supplement to the statutory basis results
     contained in this announcement.  The results for 1999 have been prepared 
     using the same principal assumptions as were used for 1998.


(c)   The results for UK investment products are now included within          
      Prudential M&G Asset Management.  Previously the results were included  
      within the business in force result for UK long-term business.          
      Comparative figures have been restated accordingly.