Final Results - Part 1

Prudential PLC
22 February 2001



Part 1

Embargo 07:00 hrs GMT - Thursday 22 February 2001


PRUDENTIAL PLC 2000 UNAUDITED RESULTS


  * Record group insurance and investment sales of £13.9 billion, up 13 per
    cent on 1999

  * Overseas new business achieved profits increased to £383 million, up 30
    per cent on 1999

  * New business achieved profits in Asia up 70 per cent

  * Record new business achieved profits at Jackson National Life

  * Margins maintained in the UK

  * Strong investment performance at M&G

  * Egg on track with total customer numbers increasing to 1.35 million

  * Total dividend up 6.5 per cent to 24.5p per share

                                                         2000      1999       %
                                                           £m        £m
New business achieved profits                             613       603      2%
Achieved basis operating profit                         1,029     1,098    (6)%
Statutory basis operating profit                          840       776      8%
Statutory basis profit before tax                         947       750     26%
Full year dividend per share                            24.5p     23.0p    6.5%
Shareholders' funds - achieved profits basis            8,833     8,342      6%


Commenting on the results, Jonathan Bloomer, Prudential's group chief
executive said:

'2000 has been a year of significant international development for the
Prudential group. This reflects the fundamental transformation that has taken
place across the group over the last five years, which has established us as a
major international financial services company.


'The continued diversification of our product range, broadened distribution
reach, increased access to our chosen markets and the quality of our partners
and staff have resulted in a record inflow of new insurance and investment
funds of almost £14 billion in 2000. The changing business mix is reflected in
the fact that 25 per cent of this total came from investment product sales.


'Statutory basis operating profit grew by 8 per cent to £840 million in 2000
and new business achieved profits, which exclude any profit from investment
sales, increased to a record £613 million. Achieved basis operating profit
fell 6 per cent to £1,029 million due to lower in-force profits from our US
operations.

'Value creation involves growing the business in the most appropriate way by
deploying capital in the most efficient markets, and can involve taking some
difficult decisions. The recently announced decision to restructure our direct
sales channels and customer service operations in the UK was taken in the
long-term interests of our customers and shareholders.


'Understanding customer needs in individual marketplaces has been paramount in
helping us design the products and channels of delivery to suit consumers and
keep us ahead of the competition.


'During the year we have expanded our operations by reaching new markets as
well as broadening our services in existing markets. We are a scale player in
the UK, the United States and Asia, and we manage £165 billion of client funds
world-wide. With over 50 per cent of our new business revenue and over 60 per
cent of our new business achieved profits in 2000 coming from overseas, we
have established our position as a leading international retail financial
services group, with a focus on long-term savings.


'One of the key initiatives in 2000 was our listing in June on the New York
Stock Exchange. This reflects the increasingly international nature of our
business and will enable us to widen our international shareholder base. The
listing also offers us flexibility in respect of funding any future expansion
in the United States.


'We also completed an Initial Public Offering (IPO) of a minority share of
Egg, our internet financial service business, on the London Stock Exchange.
The IPO has promoted the continued growth of Egg and has given Egg's
management team the currency to expand the business further. We have retained
79 per cent of the company to ensure that Prudential shareholders benefit in
the future growth of Egg.


'At M&G, fund performance has been extremely strong across all activities in
2000. We have seen excellent performance in a number of our flagship retail
equity funds as well as in fixed income, and new funds including the Innovator
fund and the Global Technology fund have shown market leading returns. In
addition, despite difficult market conditions globally, the life fund has
outperformed its competitors and its strategic benchmarks due in particular to
strong relative returns from UK and European equities, as well as fixed
income.


'During 2000 we have made great progress in developing our presence in Asia
where we have seen total insurance sales grow by 75 per cent over the year to
£504 million. We entered two of the largest life markets, China and India, and
the business will be further enhanced by our acquisition of Orico Life
Insurance Co. Ltd in Japan, which we announced in January 2001. Orico is a
modern and innovative life business and the acquisition gives us access to one
of the world's largest life insurance markets.


'In the United States, Jackson National Life has leading positions in a number
of product areas and has continued to drive forward its strategy of broadening
its distribution reach. During the year, JNL acquired Highland Bancorp, which
was merged with Jackson Federal Bank, a wholly owned subsidiary of JNL. This
has given our banking operation scale and enabled JNL to broaden its product
range to incorporate banking products for national distribution. JNL also
acquired IFC Holdings, the leading bank third-party marketing organisation in
the US, which has significantly enhanced its distribution through both banks
and its broker-dealer network.


'The markets in which we operate around the world are experiencing tremendous
change, bringing with it both enormous opportunities and challenges. We have
continued to adapt to meet these changes and we have a significant brand and
distribution presence in each of our chosen markets. I am confident that the
group is well placed for the future and that our focus on value rather than
volume will enable us to deliver superior investment returns to our customers
and to our shareholders.'


The final dividend of 16.3p per share will be paid on 30 May 2001 to
shareholders on the register at the close of business on 30 March 2001.
Shareholders will once more be offered a scrip dividend alternative.

                                    -ENDS-

Media Enquiries:                         Analyst Enquiries:
Geraldine Davies - 020 7548 3911         Rebecca Burrows - 020 7548 3537
Steve Colton - 020 7548 3721             Andrew Crossley - 020 7548 3166
Tina Christou - 020 7548 3719

Notes to Editors:


 1. There will be a conference call today for wire services at 7.30am on 020
    8240 8242. This conference call will be hosted by Jonathan Bloomer, Group
    Chief Executive.


 2. A presentation to analysts will take place at 10:00am at Governor's House,
    Laurence Pountney Hill, London, EC4R 0EU. A webcast of the presentation
    and the presentation slides will be available on the group's website,
    www.prudential.co.uk


 3. A press conference will take place at 11:45am at Governor's House, Laurence
    Pountney Hill, London, EC4R 0EU.

PRUDENTIAL PLC 2000 UNAUDITED RESULTS
Results Summary                                                     2000   1999
                                                                      £m     £m
Statutory operating profit (based on longer-term investment
returns) before amortisation of goodwill
UK Insurance Operations
                                               Long-term business    468    454
                                                 General business     33     61
                                                                     501    515
M&G                                                                  125     87
Egg                                                                (155)  (150)
UK Operations                                                        471    452
US Operations                                                        466    451
Prudential Asia                                                       22     15
Prudential Europe                                                   (10)      6
Other income and expenditure                                       (109)   (78)
Re-engineering costs                                                   -   (70)
Operating profit before amortisation of goodwill                     840    776
Amortisation of goodwill                                            (84)   (54)
Short-term fluctuations in investment returns                       (48)     28
Profit on sale and flotation of holding in Egg                       119      -
Share of exceptional gain of associate company                        21      -
Profit on sale of holding in associate company                        99      -
Profit before tax (including actual investment returns)              947    750
Earnings per share
Based on operating profit after tax and minority interests before  31.5p  29.1p
amortisation of goodwill
Based on profit after tax and minority interests - basic           35.1p  27.8p
Based on profit after tax and minority interests - diluted         35.0p  27.7p
Dividend per share                                                 24.5p  23.0p
Achieved profits basis shareholders' funds                             £      £
                                                                   8.8bn  8.3bn
Insurance and investment funds under management                        £      £
                                                                   165bn  170bn
Banking deposit balances under management                              £      £
                                                                   7.6bn  8.2bn
Profit before tax includes actual investment returns. The Company believes that
operating profit, which is based on longer-term investment returns, before
amortisation of goodwill better reflects the Group's underlying performance.




OPERATIONAL REVIEW

United Kingdom

Insurance Operations

Prudential is one of the leading UK life insurers and is well placed to be a
significant player in the Stakeholder market. Operating under both the
Prudential and Scottish Amicable brands, we are a leading provider of pension
annuities and with-profits bonds in the UK. Statutory basis operating profit
from our UK insurance operations fell 3 per cent to £501 million in 2000 and
achieved basis operating profit grew 11 per cent to £708 million.

The UK pensions market has undergone significant change ahead of the launch of
stakeholder pensions in April 2001. In preparation for the lower charging
environment of stakeholder pensions, we are investing in alternative
lower-cost distribution models. Our considerable investment in distribution
and technology, coupled with the strength of our brand in that market gives us
a considerable advantage. We have already announced agreements with the Trades
Union Congress and the British Chambers of Commerce to be their preferred
provider of stakeholder pensions. With these two agreements in place, we have
the potential to be the leading player in this new market.


The benefit of lower pensions charging will not be confined solely to new
stakeholder pensions customers. Our existing UK individual pensions customers
will also benefit from reduced pension charges with effect from April 2001, to
reflect the one per cent stakeholder charges.


During 2000, we restructured our UK operations into three key areas:
Prudential Financial Services, Prudential Intermediary Business and Prudential
Insurance Services. Prudential Financial Services is responsible for all
direct distribution of Prudential-branded products; Prudential Intermediary
Business, for all distribution of products via the Independent Financial
Adviser channel; and Prudential Insurance Services, for all administration of
in-force products under the Prudential brand, together with our successful and
profitable General Insurance business. This reorganisation reflects the
importance of focusing on the needs of our customers, while recognising the
importance of the low cost business models necessary for the low margin
environment in which we will be operating.


In addition, we recently announced changes to our direct sales channels and
customer service operations in the UK. These changes, which are being
implemented in order to continue to meet changing customer needs and to ensure
we operate cost-effectively as a scale player in the UK marketplace, represent
a further evolution of the group's business model in the UK to improve our
service offering to over six million customers.


In the IFA sector, our UK intermediary business continues to develop, offering
products under both the Scottish Amicable and Prudential brands. In March
2001, we will be bringing together our two sales forces (Scottish Amicable and
Prudential) into a new integrated structure that will more effectively bring
our products and services to a wider group of financial advisers. The
development of our adviser extranet which provides on-line servicing, product
information and highlights sales opportunities is part of our overall aim of
adding value to the IFA sales process and has been a key differentiator for us
in this market place. In 2000 sales of Prudence Bond were £1.5 billion,
bringing the total sold in the last 10 years to £10 billion, ensuring we
remain a leading player in the market, despite increased competition from new
players and very aggressive pricing from other life companies.


We have integrated our annuities business with that of our intermediaries
business, predominantly to capitalise on opportunities in the over 50s market
where we expect to see substantial and profitable growth. We are well placed
to take advantage of the potential of this market through our existing
Prudential Annuities business and by leveraging the additional sales potential
available through our intermediaries' distribution capability. In 2001 this
business will build through the impetus of its recent profitable growth and
maintain the shift in focus from annuities at the point of retirement to
income through retirement.


M&G


M&G is our UK and European fund manager, responsible for managing £126 billion
of funds. Since its acquisition in 1999, M&G has been successfully integrated
into the group and we have restructured our entire European fund management
business under this single investment brand, while the PPM brand continues in
the United States and Asia. During 2000, we completed the sale of part of our
institutional business, as previously announced, and focused M&G on its core
strengths in unit trusts, specialist fixed income, and pooled life and pension
fund management.


Profits increased from £87 million to £125 million in 2000, reflecting a full
12 months' contribution (compared to eight months in 1999) as well as
increased fees from Prudential's life funds which had a particularly strong
performance.

Fund performance has been extremely strong across all activities in 2000 on
the back of M&G's merged investment team and research process. We have seen
excellent performance in a number of our flagship retail equity funds as well
as in fixed income, and some of our new funds have shown market-leading
returns. The breadth of this achievement is shown through the M&G Managed
Growth Fund's top quartile performance over three and five years, as this
directly reflects the success of its underlying fund-of-fund portfolio of 22 M
&G unit trusts.

The integration of PPM in the UK and M&G allowed us to extend this process
across our internal funds, including the £80 billion managed on behalf of the
Prudential Assurance Company's long-term fund. In 2000, despite difficult
market conditions globally, this fund beat its competitor and strategic
benchmarks due to strong relative returns from UK and European equities as
well as fixed income. This was an exceptional result. Most impressively, the
UK equities portfolio outperformed its benchmark in all four quarters of 2000
despite the radically different investment characteristics in these periods.


Product innovation is key for M&G. In June 2000, we launched the Innovator
Fund which aims to pick fast growing companies with the potential to become
the market heavyweights of the future. Both this and our Global Technology
Fund have performed particularly strongly since they were launched. Building
on our success in this area, M&G is expanding its range of global thematic
funds and launched the Global Financials and Global Media and Communications
funds in February 2001.


M&G continued to develop its business in 2000 with one of the most exciting
initiatives being Cofunds, a fund supermarket for intermediaries, founded
through a joint venture with Gartmore, Jupiter and Threadneedle. Mutual fund
supermarkets have proved to be extremely successful in the US and Cofunds'
exclusive focus on the intermediary market offers it exciting growth
opportunities in the UK and potentially in Europe. M&G has also won the
contract to provide the third party administration capability for Cofunds,
which opened for business in February 2001.


M&G has made considerable progress throughout its refocused wholesale division
with the specialist fixed income business, which we retained due to its
competitive advantages and growth potential, winning £2.1 billion of net new
mandates in 2000. This was due to increasing demand from defined benefit
pension schemes for corporate bonds and sophisticated liability matching
services, both team specialities. In pooled funds, our flagship UK equity and
balanced funds have shown improved performance during the year. In addition,
the private finance group continues to expand its innovative capabilities and
launched the UK's first sterling Collateralised Debt Obligation in early 2001.


During 2000, we also established M&G Europe to target the increasing appetite
for equity investment on the Continent. We will initially look at entry into
Germany, with the intention of launching before the end of this year, and plan
subsequent entry into other European markets from 2002 onwards.


Prudential Property Investment Managers (PruPIM) continues to manage in excess
of £10 billion worth of property and in 2000 consolidated its outstanding
long-term performance record. PPM Ventures (PPMV) has continued to build its
global private equity investment capability and now has over £600 million
invested on behalf of its clients. PPMV has also continued its successful
investment record during 2000.


Overall, this has been an outstanding year for our investment businesses in
the UK with strong performance across our entire range of activities,
continued product and business innovation and a clear focus on our core
strengths going forward.

Egg

Prudential launched Egg in October 1998 as a division of Prudential Banking.
Since then Egg has become a leading internet financial services brand
providing banking products and intermediation services over the internet. Egg
currently offers customers deposit accounts, credit cards, personal loans,
mutual funds, general insurance and online shopping.

2000 was an important year for Egg in terms of investing in and developing its
business model and customer acquisition. This continuing investment resulted
in Egg reporting losses of £155 million for the year, which was in line with
expectations. Customer acquisition has continued to grow rapidly with 559,000
net new customers joining Egg during the year, giving an impressive customer
base of just over 1.35 million at the year-end. Cross-sales numbers are also
showing encouraging signs, with nearly 400,000 products cross-sold since
launch.


We successfully completed a public offering of just over a 20 per cent share
in Egg in June. This will enable Egg to maximise the potential for growth in
the business both in the UK domestic market and, over time, internationally.
Egg has continued to develop and enhance its range of products and services,
adopting new technologies for the benefit of customers, while growing rapidly
and retaining its market leading brand position.


Product innovation and partnership remains integral to Egg's philosophy. In
April, Egg announced its joint venture with leading retailer Boots, whereby
Boots' highly successful 'advantage' loyalty card has combined with Egg to
create a combined credit and loyalty card. The rate of customer acquisition
for the card has started well and we expect this growth to continue over the
coming months.


Egg remains at the forefront of adopting the latest technology to open up new
channels for customers to access its services. Egg has a multi-channel
strategy, encompassing internet, telephone, WAP and interactive digital
television. In addition, it has introduced several new products and services
during the year including the launch of the first mutual fund supermarket in
the UK, a share trading service, and a general and home insurance online
supermarket.


The year ahead is of equal importance for Egg. The early part of the year will
see continued focus on acquiring credit card customers, as well as
capitalising on the forthcoming ISA season with the expansion of its range of
pre-packaged easy choice ISAs.


The senior management team remains committed to achieving a break-even
position for the existing UK business during the fourth quarter of 2001 and we
are confident that they are on track to meet this target.


Europe


Prudential Europe was formed in 1999 and is responsible for spearheading
Prudential's expansion into continental Europe. We currently have operations
in France and Germany where we have established distribution agreements with
strong local partners. In addition, we have established a leading position in
the unit-linked market through our German broker business. New business
achieved profits increased in 2000 by £2 million to £9 million.


Our strategy is to capture a significant and profitable share of the growing
European savings market, building a substantial market presence through a
business model that unbundles the value chain. We will provide competitive and
relevant products, support and service, tailored to meet local markets
requirements through an open platform in partnership with distributors and
local market participants.


2000 was a significant year for our operations in Europe. We continued to
develop our presence in our chosen markets, taking advantage of the growing
European medium and long-term savings market. We expanded our offering of
products and services, and increased our range of distribution partners and
channels.


In Germany, we have continued the development of our broker business, with the
establishment of a local front office customer service infrastructure to
better support the activity. Through our joint venture agreement with Signal
Iduna, we have begun distribution of a long-term care bond product through
Signal Iduna's sales force. We aim to be in a position to capture the
significant opportunities expected to arise through future legislative and
competitive changes.


In France, we have established a branch of the Prudential Assurance Company in
Paris, clearly demonstrating our commitment to becoming a major long-term
player in the French market. Our first product launched in France was
Prudential Europe Vie, an innovative equity-backed single premium savings
product that offers a choice of investment through the Prudential life fund or
Reactif, a unit-linked fund provided by Vega Finance. This product is now
selling through the Centre Francais du Patrimoine (CFP), the largest
multi-product broking network in France and early indications are that it has
been extremely well received. Co-operation with our joint venture partner CNP
Assurances has continued with an objective to begin operating in both the
French and the UK markets in the near future.


We will combine the local expertise of country teams and partners with our
global product and service capability. Our approach integrates a range of
specialist capabilities to deliver unique and innovative offerings to European
markets and provides Prudential with significant scope for large scale,
profitable distribution and brand promotion.

Jackson National Life, USA

In the United States, Jackson National Life is the 20th largest life insurance
company in terms of total assets. JNL offers a range of products including
fixed and equity-indexed annuities, variable annuities, life insurance and
stable value products which consist of guaranteed investment contracts and
funding agreements.

Despite an increasingly competitive environment, Jackson National Life has
continued to perform strongly, with sales in 2000 amounting to £4.9 billion,
an increase of 19 per cent on 1999. Statutory basis operating profit increased
by £15 million to £466 million, despite operating in a market experiencing
high policy surrenders, adverse investment performance and growing pressures
on spreads. Achieved basis operating profit fell from £469 million to £226
million, reflecting changes in persistency and expense assumptions following
an increase in the level of fixed annuity surrenders and the development of
systems designed to handle higher volumes of our increased product range.

Jackson National Life has continued to expand distribution, both by adding
representatives to our broker-dealer network and through strategic
acquisitions. These included the acquisitions of Highland Federal Bank and IFC
Holdings. The acquisition of Highland Federal doubled its retail branch
network and assisted it in obtaining critical mass in its banking operations.
IFC Holdings further strengthens JNL's presence in the broker-dealer market,
giving it the largest bank broker-dealer, and increases the scale and
profitability of Jackson's own broker-dealer business, National Planning
Holdings, the fifth largest independent financial planner broker-dealer in the
USA.


Excellent growth in retail sales has been achieved predominantly through
increased sales through bank and broker-dealer channels. JNL continues to
expand its distribution capability, which will assist with future acquisitions
or joint ventures.


JNL has continued to expand and improve its product portfolio including an
equity-index linked banking deposit product, MarketPath, available throughout
the United States, and Target Select, an innovative multi-year guarantee fixed
annuity. JNL has also expanded its client base by adapting the Medium Term
Note programme to reach Australian investors, and has begun developing a
client base in Asia.


Building on its established website, JNL has made significant progress in
incorporating internet efficiencies into the service areas of the business. It
has launched an internet-based variable annuity application, allowing
producers to complete and submit applications electronically. It has also
completed the installation of a fully automated new business system for life
insurance. This will eliminate the processing of paperwork and therefore
shorten the time required to issue a policy.


In November JNL relocated its headquarters to a new award-winning office
complex. This move enabled JNL to consolidate its staff, previously housed in
five different locations and allowed it to make significant gains in
productivity. JNL has also reorganised its service centre along product lines
to improve the quality and efficiency of customer service and to lower
marginal cost, allowing it to make more profit from expanded premium sales.


In 2000 Standard and Poor's raised its insurer financial strength rating on
Jackson National Life and Jackson National Life of New York to AAA. According
to S&P, the rating upgrade reflected JNL's improving risk profile and the view
that JNL has become a core operation to Prudential based on its significant
contribution to group earnings.

Asia

In Asia we have operations in 11 countries, offering life insurance with
health insurance options, investment products and general insurance tailored
to each local market. We distribute these products primarily through our high
quality agency sales forces and through strong bank and broker arrangements.
Total insurance sales of £504 million in 2000 were 75 per cent up on 1999. New
business achieved profits were 70 per cent higher at £153 million and
statutory basis operating profit rose 47 per cent to £22 million.


We now have strong and expanding businesses with growing customer recognition
of our brand name and values across the region. Life insurance remains our
core business, and continues to offer major opportunities for further growth.
We also have a growing mutual fund presence and will continue to expand our
product range to serve our customers' lifetime financial services needs as
profitable opportunities arise. Building professional agency distribution
remains one of our core strengths in the region, however we are widening our
distribution channels with a growing number of bank distribution arrangements.
All our expansion and development plans have a clear focus on adding
significant value to our customers and shareholders.


During 2000 we had three significant new market launches. In China, the UK's
first life operation had a high profile launch with our CITIC (China
International Trust & Investment Corporation) Prudential joint venture in
Guangzhou. We re-entered the Indian life market after nearly 50 years' absence
with the launch of ICICI Prudential Life in December. Our joint venture with
Bank of China had great success in signing up employers for Hong Kong's
Mandatory Provident Fund during the year and the first round of collections
commenced in early 2001.


We also made two important acquisitions. In October, we acquired Prudential
Taiwan SITE, a mutual fund operation with around £1 billion of funds under
management underlining our commitment to the growing Taiwanese market for high
quality financial services products. This also gives us a great opportunity to
leverage synergies from our successful mutual fund business in India. In
February this year, we acquired Orico Life in Japan, an operationally and
financially sound, modern Japanese life insurance company. Major changes are
underway in the Japanese life insurance market and Orico Life provides us with
a very strong platform to effectively apply our distribution management and
product innovation skills to rapidly build scale in one of the world's largest
life insurance markets.


Our existing operations continue to make good progress. Prudential Taiwan Life
now has more than three times the number of agents compared to when we
acquired the business in November 1999. New business volumes also continue to
grow strongly. Prudential Hong Kong has also considerably strengthened its
agency force and at the year-end, was fourth in the market in terms of new
business, its highest ever ranking. New business sales in Vietnam, our
greenfield operation launched in November 1999, continue to exceed all our
expectations. These successes illustrate the strength of our approach to
building and managing high quality agency forces across the region.


Our bancassurance distribution partnership with Standard Chartered Bank
continues to show good growth in new business volumes from Singapore and Hong
Kong and was extended to Malaysia in April 2000. Results to date are
encouraging.


In 2000 we launched a number of new products, in line with our focus on
customer needs. These included our first range of Syariah compliant funds in
Malaysia to cater for the Islamic sector of the population, and PRUeSaver in
Singapore, our first insurance product specifically designed for distribution
via the Internet.


We have continued to make innovative use of technology across Asia during the
year to further improve our customer service and efficiency. Our electronic
proposal and signature system has been enhanced with the addition of automatic
underwriting and in Singapore we were the first insurer to provide customers
with WAP phone services including access to policy details. Our comprehensive
customer service, including full e-transactional functionality, has helped
Prudential ICICI become the largest private sector mutual fund manager in
India.


In Singapore, Prudential won Asia's 'Life Insurance Company of the Year' award
for its commitment to innovation, responsiveness to customer needs and high
quality customer service.


Following another outstanding year of growth, we are now firmly established as
a leading life insurer and retail financial services provider in Asia and we
will continue to strengthen this position in 2001.










FINANCIAL REVIEW

New Insurance and Investment Business

Total insurance and investment sales for full year 2000 amount to £13.9
billion, 13 per cent ahead of prior year. On an annual premium equivalent
(APE) basis, sales amounted to £1,904 million, 13 per cent ahead of prior
year. The growth in new business volumes reflects strong growth in overseas
APE sales, with Asia up 165 per cent and the US up 18 per cent, offsetting a
16 per cent fall in the UK. APE sales of insurance products fell 2 per cent in
2000, while investment products grew 162 per cent and now account for 20 per
cent of total group APE sales.

Total Achieved Operating Profit

The group total achieved operating profit before amortisation of goodwill was
£1,029 million compared to £1,098 million in 1999. This result reflects a £10
million improvement in new business profits offset by a lower in-force result,
down £124 million. The in-force result was affected largely by Jackson
National Life (JNL) where adverse persistency and expense experience have
resulted in an assumption change impact of £258 million together with current
year experience variances of £61 million. Profits from non-long term business
improved £45 million in 2000, primarily due to the one-off UK re-engineering
charge of £70 million in 1999.

New Business Achieved Profit

Group new business achieved profit from insurance business of £613 million,
which excludes profits from investment product sales, is £10 million (2 per
cent) ahead of prior year, with strong growth in the US and Asia offsetting a
fall in the UK operations. The growth in new business achieved profits,
despite a 2 per cent fall in insurance sales, reflects slightly stronger new
business margins at group level.

Prudential Asia's new business achieved profits of £153 million is 70 per cent
up on 1999 reflecting strong sales growth across all operations (APE insurance
sales growth of 107 per cent). New business achieved profits as a percentage
of APE reduced in line with anticipated changes in geographic and product
mixes.

The 12 per cent growth in JNL's new business achieved profits to £221 million
is principally driven by an 18 per cent growth in new insurance sales,
reflecting a 44 per cent increase in sales of variable annuities and a 28 per
cent increase in sales of fixed annuities.

UK Insurance Operations' new business achieved profit of £230 million is 25
per cent below 1999, primarily reflecting a 24 per cent reduction in sales
volumes. Sales volumes reflect lower sales of Prudence Bond and mortgage
endowments through the IFA channel, and the significant reduction in the size
of the direct sales-force in 2000. Margins from our UK business are in line
with 1999.

Prudential Europe's new business achieved profit of £9 million is £2 million
up on 1999. This mostly reflects higher sales through the German broker
business.

The ratio of group new business achieved profit to APE has increased to 40 per
cent from 39 per cent in 1999 and 36 per cent in 1998, primarily reflecting
the growing proportion of higher margin sales in Asia, with broadly maintained
margins in the UK and US.


In-force Achieved Operating Profit

UK Insurance Operation's in-force profits were £478 million, £151 million
better than 1999, reflecting the growth in the business and a change in
assumptions to reflect an improvement in the persistency of Prudence Bond. No
adjustment has been required to the provision established in 1999 in respect
of the cost of resolving pensions mis-selling.

JNL's in-force result was a loss of £2 million, down from a profit of £277
million in 1999, reflecting a higher than expected level of surrenders of
fixed annuities, primarily of older policies. Relatively high offered
crediting rates and an increasingly competitive market encouraged customers to
surrender fixed annuities early, giving rise to an adverse experience variance
of £24 million. The level of surrenders peaked during the early summer,
falling towards the end of the year due to the effects of JNL's conservation
measures and lowering interest rates. The assumption going forward has been
changed to reflect an assumed continuation of the level of surrenders
experienced towards the end of the year, giving rise to a charge of £192
million.

In addition, there was an adverse expense variance during the year of £37
million. This reflects changes in the business mix and the development of
JNL's systems to provide the capacity for increased volumes of upscale
products at lower cost, continuing the process of creating a balanced product
portfolio. This has required a reassessment of the unit cost assumption at
current policy volumes, giving rise to a negative assumption change impact of
£66 million.

Asia's in-force achieved operating profit before development costs of £60
million compares to a profit of £35 million in 1999. The result reflects the
growth in the business during 2000.

Statutory Basis Operating Profit

Group operating profit of £840 million was £64 million ahead of 1999, which
included a £70 million UK re-engineering charge. Excluding the UK
re-engineering charge, MSB operating profit was in line with 1999.

UK Insurance Operations operating profit in 2000 was £501 million, £14 million
below 1999. Prudential Insurance Services profit of £346 million was £32
million below 1999, as the impact of increased funds under management in the
long term result was offset by the impact of lower reversionary bonus rates.
The general insurance result was impacted by £33 million as a result of the
severe floods in October and November. Profit from Prudential Intermediary
Business was up £26 million to £127 million, primarily reflecting a one-off £
30 million profit relating to the reinsurance of the M&G life and pensions
business and its transfer to Scottish Amicable. Profit from Prudential
Financial Services was down £8 million to £28 million in 2000, reflecting
increased investment in our new stakeholder platform.

M&G profit increased from £87 million to £125 million in 2000, primarily
reflecting a full 12 months contribution from the acquired M&G business
compared to 8 months in 1999 and increased life fund fees, the result of
out-performance by life fund investments against benchmarks in 2000.

Egg's reported loss of £155 million is in line with the expectation laid out
in its prospectus in 2000. Egg's results were announced separately on 19
February.

US operations profit of £466 million was £15 million ahead of prior year
reflecting increased spread, fee income and expenses at JNL. In addition,
there were positive contributions from the US fund manager, PPM America, and
the independent brokerage network, National Planning Holdings, and a
favourable movement in the exchange rate. The 1999 result benefited from the
one-off positive of £17 million arising from a change in accounting for
guarantee assessments.

Prudential Asia's profit of £22 million was £7 million ahead of 1999 despite
increased development expenditure and support for new operations.

Prudential Europe reported a £10 million loss in 2000 compared to a £6 million
profit in 1999. This is mostly due to development spend for the future
platform and set-up costs for the French branch.

Other income and expenditure was £31 million higher than prior year primarily
reflecting the full year funding cost of the M&G acquisition and the cost of
additional Egg funding up until the date of its IPO.

Profit before Tax

Profit on ordinary activities before tax amounted to £947 million in 2000,
compared to £750 million in 1999. This improvement is despite increased
goodwill amortisation of £84 million, mainly due to a full 12 months
amortisation in respect of the M&G acquisition. The £239 million profit on
business disposals represents the sale of the minority stake in Egg and the
disposals of our stake in St James's Place Capital.

Earnings per Share

Earnings per share, based on operating profit after tax and related minority
interests before amortisation of goodwill, have improved 8 per cent in 2000 to
31.5p.

Dividend per Share

The final dividend per share is 16.3 pence, resulting in a full year dividend
growth of 6.5 per cent to 24.5 pence.

Funds under Management

Insurance and investment funds under management at 31 December 2000 totalled £
165 billion, compared to £170 billion at the end of 1999. This reduction is
mainly due to the disposal of £12 billion of our institutional equity fund
management business during 2000.

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