Interim Results

Prudential PLC
24 July 2002


EMBARGO: 0700 hrs, Wednesday 24 July 2002

PRUDENTIAL PLC 2002 INTERIM RESULTS AND FIRST HALF NEW BUSINESS SALES

Highlights:

  • Total Group insurance and investment sales of £13.7 billion, up 36 per
    cent on first half of 2001 (£10 billion).

  • New business achieved profits up 16 per cent to £397 million.

  • Group margin of 43 per cent (38 per cent for the full-year 2001).

  • Over 70 per cent of Group sales and around 65 per cent of new business
    achieved profits from outside the UK.

  • Free Asset Ratio of 11 per cent as at 30 June 2002.

  • Total dividend up 2.3 per cent to 8.9 pence per share.

Results Summary:
                                                               H1 2002   H1 2001        %
                                                                    £m        £m
Total Group insurance and investment sales                      13,707    10,047      36%
New business achieved profits                                      397       342      16%
Achieved basis operating profit*                                   543       642    (15)%
Statutory basis operating profit*                                  317       340     (7)%
Holding company net cash movement                                  354      (25)      N/A
Dividend per share                                                8.9p      8.7p     2.3%
Shareholders' funds - achieved profits basis                     8,053     9,053    (11)%

* From continuing operations and before UK re-engineering costs.

Commenting on the results, Jonathan Bloomer, Prudential's Group Chief Executive,
said:

'In the first six months of 2002, we have made a good start to our goal of
doubling the value of the Group over four years, and the benefits of our
strategy of diversification by product and distribution channel in each of our
chosen markets internationally are clear.

'We have, inevitably, been affected by capital markets and our first-half
results reflect the impact of falls in equity markets around the world and the
difficulties and write-offs in the bond markets. However, our financial strength
and capital position allow us to deal with these and benefit from the inevitable
flight to quality, and maintain the platform to deliver continued growth in the
future. Our strategy, active management of capital, and focus on profitable
growth and return on capital have positioned us strongly.'

Total Group insurance and investment sales of £13.7 billion were up 36 per cent.
Total insurance sales of £6.4 billion were up 6 per cent (insurance sales on an
annual premium equivalent (APE) basis were up 2 per cent to £926 million) and
net inflows of investment products were up 50 per cent to £826 million.

New business achieved profits increased by 16 per cent to £397 million,
principally due to strong growth in Asia and the United States. The Group margin
increased to 43 per cent from 38 per cent for the full-year 2001. Achieved basis
operating profits decreased by 15 per cent to £543 million. This was due to a
fall of 49 per cent in the in-force result, which was adversely affected by a
£71 million charge relating to average realised bond losses and a £56 million
negative expense assumption charge in the United States.

On the achieved profits basis, we show the effect of short-term fluctuations in
investment returns and changes in long-term economic assumptions in order to
arrive at a total profit figure. This adjustment is inevitably volatile due to
fluctuations in stock markets and in the first half of 2002 it was negative due
to the fall in equity markets and bond default and impairment losses we
experienced in the United States. Despite this negative adjustment, the Group
reported a profit on ordinary activities before tax on an achieved profits basis
of £166 million.

We fully expect these sorts of fluctuations given the uncertain economic climate
and volatile equity markets we witnessed throughout the first half of the year.
However, the underlying performance of the business was strong, reflecting the
fact that Prudential is a financially strong company with outstanding businesses
and a broad international base.

Dividend
The Board has increased the interim dividend by 2.3 per cent to 8.9 pence per
share. We are confident of maintaining a real rate of dividend growth while at
the same time having the capital flexibility to deliver our growth plans.

UK Insurance Operations
Our UK insurance business reported good results in the first half of the year.
Total sales of insurance products were up 13 per cent (21 per cent excluding
sales through closed distribution channels) to £3.1 billion and margins
increased to 36 per cent from 30 per cent for the full-year 2001. These results
demonstrate the success of the business in focusing on products where we have
market-leading presence, scale economics and higher return on capital, as well
as building strong multi-channel distribution while continuing to drive down
operating costs. The original annual gross cost saving target of £175 million
from 2004 that we announced last November is running ahead of schedule and we
have increased the target to £200 million.

The performance of the UK life sector over the last few months has been affected
by concerns over capital adequacy and financial strength in declining equity
markets and the uncertainty brought about by the various regulatory reviews
being undertaken into the UK retail savings and pension industries.

Despite the sharp fall in share prices over recent weeks, Prudential remains one
of the strongest companies in the life insurance sector and the long-term fund
remains well capitalised:

  • The Free Asset Ratio ('FAR') as at 30 June 2002 was 11 per cent (12.2 per
    cent as at 31 December 2001). In arriving at the FAR, no credit has been
    taken for the present value of future profits or contingent loans. The main
    UK life fund has no subordinated debt or financial reinsurance.

  • The life fund had a balanced asset mix as at 30 June 2002 (details of
    asset mix as at 31 December 2001 are in brackets):

      • UK equities - 36 per cent (38.6 per cent)
      • International equities - 14.8 per cent (14.4 per cent)
      • Property - 15.6 per cent (14.9 per cent)
      • Bonds - 29.4 per cent (27.8 per cent)
      • Other asset classes - 2 per cent (1.6 per cent)
      • Cash - 2.2 per cent (2.7 per cent)

  • We remain comfortable with the allocation of assets in the life fund. We
    have not been reducing our holding in equities in response to recent falls
    in equity markets and continue to write business as usual.

  • Life Fund performance has remained strong in the first six months, with
    the fund up over 0.7 per cent against its strategic benchmark and 1.3 per
    cent against its competitive benchmark. The three-year record remains almost
    2 per cent per annum ahead of the strategic benchmark and nearly 3 per cent
    per annum ahead of competitors.

  • The UK life fund is rated AAA by Standard & Poor's and Aaa by Moody's.

Earlier this month, we saw the publication of the Sandler Review into UK retail
savings and the Pickering Report on regulation of the UK pensions industry.
Prudential fully supports the drive for further simplification of financial
services to help close the UK savings gap and we will play an active part in the
consultation process. In the meantime, we urge the Government to align these and
the other reviews currently being undertaken and to work closely with the
regulators and industry to create a single package of measures to help reduce
the savings gap.

If this can be achieved, it will clearly increase the size of the long-term
savings market and we believe that there will be enormous opportunities for the
larger companies like Prudential with financial strength, a strong brand,
economies of scale, low cost bases and a diversified product and distribution
offering. The strategy that we set out for our UK insurance business last year
means that we are ideally positioned, particularly as customers place an
increasing emphasis on financial strength and trusted brands when making
decisions about their long-term savings and investments.

M&G
M&G has had a good half-year with net retail sales growing strongly (up 59 per
cent), a fall in the amount of redemptions, and an increase in retail market
share. The business has also won a number of sizeable new institutional fixed
income mandates. These results were achieved in difficult market conditions and
endorse the strength of M&G's brand, diversified product range and broad
distribution base. In March, M&G International commenced distribution of M&G
branded mutual funds in the German and Austrian markets.

Egg
Having achieved a break-even position for its UK business in November of last
year, Egg reported a profit before tax in the UK for the half-year of £8.7
million. Customer numbers have increased by over 360,000 in the first half,
taking the total to over 2.3 million. Egg completed the acquisition of Zebank,
the first digital online bank in France, in May and the business remains on
track to launch in France later this year.

Prudential Europe
We have completed a full appraisal of the opportunities for our
Prudential-branded businesses in continental Europe and have concluded that an
organic strategy would at present be too slow and expensive to create value and
acquisitions would be necessary to give us scale. It is clear that the returns
achievable would be too low to justify any significant investment of capital and
that there is little opportunity for short to medium-term growth. We will,
therefore, run our existing operations in France and Germany for value but not
push for growth.

This decision does not affect either M&G or Egg's operations in Europe, both of
which are well positioned to capitalise on the growth prospects in their chosen
markets.

Jackson National Life
Jackson National Life ('JNL') recorded a 10 per cent increase in total sales to
£2.9 billion and a 26 per cent increase in new business achieved profits to £117
million in the first half, despite the continued market volatility in the US.
This was a strong result and is testament to JNL's excellent track record of
product innovation and its ability to broaden distribution channels, both of
which have continued in 2002.

The considerable uncertainty for markets, particularly the capital markets, that
we witnessed in the United States last year has continued into 2002. This has
led to further losses on corporate bonds and no one in the US, including JNL,
has been immune from these difficult market conditions.

Given the high volume of fixed annuities being written and the credit losses
incurred in the first half, we are reviewing the capital requirements for JNL
and estimate that a capital injection of around £300 million will be required in
the second half of the year.

The long-term demographic trends in the US are compelling and we believe that
there are significant growth prospects, bringing with them outstanding
opportunities for high quality, efficient businesses like JNL which has a cost
base well below the industry average, modern IT systems and diversified products
and distribution.

Prudential Corporation Asia
Prudential Corporation Asia ('PCA') has had another six months of impressive
growth with new business achieved profits increasing by 27 per cent. Prudential
is the leading European life insurer in Asia with 22 operations (nine of which
have top-five market shares) in 12 countries. PCA's performance once again
endorsed its successful strategy of entering new markets, strengthening and
diversifying distribution channels, and launching innovative, customer-focused
products.

Although there has been a slowdown in some Asian economies and only modest
growth expected in the region as a whole for the remainder of this year, the
long-term outlook remains very positive and PCA, with its significant portfolio
of businesses, multi-channel distribution capabilities, excellent strategic
partners, and customer-focused product expertise, is very well placed to
continue delivering profitable growth.

Summary
Prudential has some outstanding businesses across the Group. Trading in the
first six months of this year has been strong and our capital strength leaves us
very well placed to continue delivering value in the future.

                                     -ENDS-

Enquiries to:
Media:                                     Investors/Analysts:

Geraldine Davies        020 7548 3911      Rebecca Burrows    020 7548 3537
Steve Colton            020 7548 3721
Clare Staley            020 7548 3719

Notes to Editors:

 1. There will be a conference call today for wire services at 7.30am on Tel: 020
    8288 4700 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 0HH. A webcast of the presentation and
    the presentation slides will be available on the Group's website,
    www.prudential.co.uk

 3. There will be a conference call for international investors at 2:30pm (dial
    in telephone number: [phone], US callers 1 303 713 7888).
    Callers to quote 'Prudential Interim Results' for access to the call.

    A recording of this call will be available for replay for one week by
    dialling:

    UK: 020 8288 4459, US: 1 703 736 7336, access code 672132.

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

 5. An interview with Jonathan Bloomer (in video/audio/text) will be available 
    on www.prudential.co.uk and www.cantos.com from 7.00am on Wednesday 24 July
    2002.

 6. Annual premium equivalent (APE) sales comprise regular premium sales plus
    one-tenth of single premium insurance and investment sales.

 7. Prudential reports its investment products based on net in-flows, given the
    relatively high liquidity of these flows in Asia.

 8. The Free Asset Ratio is a common measure of financial strength in the UK for
    long-term insurance business. It is the ratio of assets less liabilities
    (before deduction of the required regulatory minimum solvency margin) to
    liabilities, and is expressed as a percentage of liabilities.

 9. Total number of Prudential plc shares outstanding as at 30 June 2002 was
    1,996,861,875.

10. Photographs are available at www.newscast.co.uk.

11. Financial Calendar:

     Third quarter 2002 New Business Figures           Thursday 17 October 2002
     Payment of Interim Dividend                       Thursday 28 November 2002
     2002 Full-Year New Business Figures               Thursday 23 January 2003
     2002 Full-Year Results                            Tuesday 25 February 2003
     First quarter 2003 New Business Figures           Thursday 17 April 2003
     2003 Annual General Meeting                       Thursday 8 May 2003

This statement may contain certain 'forward-looking statements' with respect to
certain of Prudential's plans and its current goals and expectations relating to
its future financial condition, performance and results. By their nature, all
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances which are beyond Prudential's control including
among other things, UK domestic and global economic and business conditions,
market related risks such as fluctuations in interest rates and exchange rates,
the policies and actions of regulatory authorities, the impact of competition,
inflation, deflation, the timing, impact and other uncertainties of future
acquisitions or combinations within relevant industries, as well as the impact
of tax and other legislation and other regulations in the jurisdictions in which
Prudential and its affiliates operate.  As a result, Prudential's actual future
financial condition, performance and results may differ materially from the
plans, goals, and expectations set forth in Prudential's forward-looking
statements.

Prudential undertakes no obligation to update the forward-looking statements
contained in this statement or any other forward-looking statements we may make.


 PRUDENTIAL PLC 2002 UNAUDITED INTERIM RESULTS

                                                                               Half Year
                                                                              ended 30 June                 Full Year
 Results Summary                                                     2002 £m              2001 £m             2001 £m
 Achieved Profits Basis Results
 UK Insurance Operations                                                 332                  377                 620
 M&G                                                                      34                   40                  75
 Egg                                                                       1                 (63)                (88)
 UK Operations                                                           367                  354                 607
 US Operations                                                           104                  238                 319
 Prudential Asia                                                         169                  134                 415
 Prudential Europe                                                         5                    5                   8
 Other Income and Expenditure (including development expenses)         (102)                 (89)               (178)
                                                                         543                  642               1,171
 UK re-engineering costs                                                   -                 (24)                (57)
 Operating profit from continuing operations                             543                  618               1,114
 Discontinued UK general business operations                               -                   35                  72
 Operating profit before amortisation of goodwill and exceptional items  543                  653               1,186

 Amortisation of goodwill                                               (49)                 (47)                (95)
 Short-term fluctuations in investment returns                         (661)                (580)             (1,402)
 Effect of change in economic assumptions                               (22)                    -               (482)
 Merger break fee (net of related expenses)                                -                  338                 338
 Profit on sale of UK general business operations                        355                    -                   -

 Profit (loss) on ordinary activities before tax                         166                  364               (455)

 Operating earnings per share                                          18.4p                23.4p               41.9p

 Shareholders' funds                                                 £8.05bn              £9.05bn             £8.15bn

 Statutory Basis Results
 Operating profit before amortisation of goodwill and exceptional items  317                  362                 622

 Operating earnings per share                                          11.4p                13.1p               23.3p

 Dividend Per Share                                                     8.9p                 8.7p               25.4p

 Insurance and Investment Funds under Management                      £159bn               £168bn              £163bn

 Banking Deposit Balances under Management                            £8.3bn               £6.9bn              £6.5bn

 Note

    Operating profit for insurance operations includes investment returns at the 
    expected long-term rate of return. For the purposes of the presentation 
    shown above, to be consistent with the alternative earnings per share, 
    operating profit excludes amortisation of goodwill and the profit on sale of 
    UK general business operations. The directors believe that operating profit,
    as adjusted for these items, better reflects underlying performance. Total 
    profit includes these items together with actual investment returns. This
    basis of presentation has been adopted consistently throughout the Interim 
    Report.




OPERATIONAL REVIEW

UK INSURANCE OPERATIONS

In the first half of 2002, the UK insurance business recorded total insurance
sales of £3.1 billion, up 21 per cent on the same period last year (excluding
sales through closed distribution channels). Sales on the annual premium
equivalent (APE) basis were up four per cent to £398 million.

New business achieved profits of £142 million were 19 per cent higher on a
like-for-like basis than 2001 (after applying the active basis for setting
economic assumptions adopted from the end of 2001) and excluding sales made
through closed channels. This was due to a combination of increased new business
sales and improved margins, which increased to 36 per cent from 30 per cent for
the full year 2001.

These results endorse the strategy we set out in November 2001 and reflect the
importance of a strong brand, capital strength and a broad product mix, which
takes on an even greater significance at a time of intense market volatility.

We have increased our cost saving target to £200 million per annum by 2004, up
from the original £175 million target we set last November. This is the result
of a number of initiatives, including IT savings. These further cost savings
will have a positive earnings impact, contributing an additional £5 million to
both modified statutory basis and achieved profits in 2002, rising to an
additional £10 million from 2004 onwards.

Total insurance sales via the intermediary channel were up 18 per cent to over
£2 billion, (APE insurance sales were £233 million, up 5 per cent) on the same
period last year. Life sales performed particularly strongly, with an increase
of 60 per cent, driven by significant sales of Prudence Bond in the first
quarter of 2002. One year after the direct sales force was closed, we continued
to see healthy sales through our direct distribution channels, where we have
developed a strong business to business proposition. Total insurance sales via
direct channels increased by 27 per cent on the prior year to over £1 billion,
with APE sales up three per cent to £165 million. Direct annuity sales increased
18 per cent to £39 million on the APE basis.

In last year's strategic review of the UK business, we said that our focus would
be on high growth medium to long-term savings products, including with-profits
bonds, corporate pensions and annuities, which enable us to meet the needs of
our customers for lump sum investments, saving for retirement, and income in
retirement. We are seeing good results from this strategy, reflected in strong
sales of annuities, a healthy pipeline of bulk annuity business, increased sales
of group pensions and solid with-profits sales.

Annuities
Total sales of individual annuities increased by 22 per cent to £703 million
compared to the same period last year. These sales were achieved despite the
challenge of difficult market conditions and a lower interest rate environment.
We have a 20 per cent share of this market.

This year we have received an unprecedented level of enquiries into bulk
annuities as concerns grow over funding of defined benefit schemes. While sales
(£163 million in the first half of 2002) were slow at the beginning of the year,
leading to a decrease in sales of 54 per cent compared to the first half of
2001, there have been encouraging signs of an upturn, with a significant level
of business being written towards the end of the second quarter. In addition, we
have been broadening our distribution in this area and have recently entered
into long-term strategic partnerships with consulting actuaries Hazell Carr and
with the employee benefits consultancy Jardine Lloyd Thompson, to undertake
administration on our behalf and facilitate our expansion into this fast growing
and highly profitable market.

Pensions
Total sales of corporate pensions were £510 million, up 41 per cent on the prior
year. Our focus is on larger corporate schemes, including Stakeholder, where we
can offer quality service within the economics of a one per cent environment. We
are the corporate pension scheme provider to one-fifth of FTSE 350 companies and
in total manage more than 3,500 pension schemes, and we hold a market-leading
position within the public sector market place.

With-profit bonds
Sales of with-profits bonds for the first half of 2002 increased by 47 per cent
to £1.2 billion. The half-year performance was strong, although reducing
investor confidence in the turbulent equity markets contributed to lower sales
of with-profit products in the second quarter compared to the first quarter of
2002. This lower level of sales is expected to continue into the second half of
the year. Prudence Bond accounted for £119m of APE sales via intermediaries in
the first six months of the year, a 72 per cent increase on the same period last
year.

We launched two innovative versions of the with-profit bond in the first half of
this year. In January, we launched an enhanced 'no initial charge' with-profit
product to build on the success of Prudence Bond which was enthusiastically
received by Independent Financial Advisers (IFAs). This was followed in March by
our International Prudence Bond, an offshore version of Prudence Bond, which is
the first new product to be sold under the Prudential International name.

The UK insurance operations reported strong results in the first six months of
2002 and we have continued to grow the business successfully in a highly
competitive market place. As the UK financial services market continues to
change, Prudential, with its strong brand, financial strength and focused
product range, is ideally placed to benefit from an increased 'flight to
quality' as customers place greater importance on these characteristics when
making their investment decisions.



M&G

Gross retail fund inflows in the first half of 2002 were £549 million, up seven
per cent on the same period last year despite difficult market conditions,
reflecting the strength of M&G's diversified product range and broad
distribution base. Net retail fund inflows improved significantly, up 59 per
cent to £210 million. According to figures published by the Investment
Management Association (IMA) to May 2002, M&G had bucked the industry trend with
a fall in the value of redemptions. In March, M&G successfully rolled over its
Recovery Investment Trust into a new vehicle. This was a highly successful
rollover, resulting in the retention of £171 million of the original £279
million fund.

Total operating profit for the first six months of the year was £34 million,
compared to £40 million in 2001. This reduction was mainly due to the
significant fall in stock markets during the past 12 months. M&G has not
recognised any performance-related fee in respect of its management of the
Prudential Life Fund at the half-year. The performance fee is based on
performance over a three-year period. M&G does not accrue any performance fee
due until the end of the year.

The latest IMA figures to the end of May show that M&G increased its retail
market share further during the first six months of 2002, winning 3.5 per cent
of the total £13 billion of retail funds sold during the period, compared to
three per cent for the same period last year. This reflected the market's
continued recognition of the size and strength of M&G's fixed income team. M&G
also significantly increased its market share of ISA sales and PEP transfers
over the same period, winning over nine per cent of all direct business and
seven per cent of all business sold through intermediaries.

Despite the continued volatility in equity markets during 2002, M&G has
consolidated its top decile performance over three and five years in its
flagship British Opportunities Fund. The M&G Recovery Fund has also performed
well in the first half, delivering top decile returns. In May, M&G completed its
global specialist range of funds with the UK launch of the M&G Global Healthcare
Fund.

In addition, M&G continued to maintain its successful performance record for
management of the Prudential Assurance Company Life Fund. The three year record
remains nearly two per cent per annum ahead of the strategic benchmark and
almost three per cent per annum ahead of competitors.

M&G's institutional business has continued to build on its strong position in
fixed income and the fund management of defined contribution and pooled pension
schemes, winning a further net £1 billion in fixed income assets during 2002. M&
G's market leadership in fixed income has enabled it to introduce innovative
initiatives in the areas of private debt and structured finance.

In March of this year, M&G International's German business commenced
distribution and is now selling a range of funds in Germany and Austria, and
plans are in place to launch in Italy in the fourth quarter of 2002.



EGG

Egg announced its Interim Results on 23 July 2002. After meeting its commitment
to break even in the fourth quarter of 2001, Egg delivered another impressive
performance in the first half of 2002. The core UK business reported a pre-tax
profit of almost £9 million (Group pre-tax profits increased to £1.2 million),
operating income increased by 103 per cent to £154 million and savings balances
grew by £1.6 billion. Egg's management is confident that UK profits will
continue to grow in the second half of the year.

Customer numbers increased by 362,000 in the first half of 2002, taking Egg's
total customer base to over 2.3 million. The acquisition of Zebank, the first
digital online bank in France, was completed in May and the business remains on
track to launch in France later this year.



PRUDENTIAL EUROPE

Total sales were up £1 million to £37 million for the first six months of 2002,
while sales on an APE basis were also up £1 million to £13 million. Total
achieved basis operating profits of £5 million, before development costs, were
consistent with the same period last year, while new business achieved profits
also remained constant at £3 million.



JACKSON NATIONAL LIFE

Jackson National Life ('JNL') reported strong growth in sales and new business
achieved profits in the first half despite the continued volatility and intense
competition in the US market. These strong results were principally due to JNL's
highly rated customer offering which it has developed still further in the first
six months of the year. JNL's costs remain among the lowest in the industry and
it has a highly rated service and technology capability, which sees it well
positioned for continued growth and diversification.

Total sales of insurance products on the APE basis of £298 million were 10 per
cent higher in the first half of 2002 than in the corresponding period last
year. Single premium annuity sales increased by 19 per cent to £1.7 billion in
the first half of this year, significantly helped by sales in the second quarter
which outperformed the first quarter by 49 per cent.

Fixed annuities have continued to attract strong sales, showing an improvement
each month on sales for the same period last year, and a total increase of 29
per cent to £1.1 billion compared with the first half of 2001. Sales in the
second quarter of this year outperformed the first quarter by 46 per cent. These
sales figures were achieved in a market in which key competitors have continued
to focus on top line growth at the expense of profitability.

New business achieved profits increased 26 per cent to £117 million, driven by
the strong increase in insurance sales and an improvement in the new business
margin from 35 to 39 per cent over the past six months. These strong results
show that despite exceptionally difficult market conditions, JNL has a robust
strategy in place, based on a diversified product offering, high quality
distribution network and strong cost position.

We have continued to see a high level of bond defaults in the first half of 2002
and JNL, like its competitors, has not escaped the impact of these volatile
market conditions. Defaults and impairments on bonds have resulted in realised
losses of US$228 million. Losses are accounted for on a five-year average basis
and the effect of these losses is to increase the half-year-on-half-year charge
by £63 million to £71 million. These losses equated to 0.6 per cent of JNL's
total invested assets.

During the first half, JNL made a number of revisions to its product line and
these have had a positive impact on sales; more than a third of new retail sales
came from products which have been introduced in the last twelve months. In
January, JNL launched Perspective II, a new variable annuity product, which is
highly competitive in its market and can be individually tailored to each
customer's needs with explicit charging for the specific features it offers.
This revision to the product line led to sales of variable annuities showing a
strong upward trend over the first six months of this year, increasing by eight
per cent on the same period in 2001, while second quarter sales outperformed
those made in the first quarter by 64 per cent.

During the first half of 2002, JNL has once again shown that it has the ability
to adapt to difficult market environments and continues to focus on broadening
its product range, enabling it to sell profitable products and meet customers'
needs in almost any economic environment. It has a strong management team and is
well positioned to capitalise on the opportunities that the world's largest
savings market has to offer.



PRUDENTIAL CORPORATION ASIA

Prudential Corporation Asia ('PCA') delivered another strong performance in the
first half of 2002.

Despite the recent economic slowdown in Asia, sales of insurance products on the
APE basis for the first half of the year were up three per cent to £217 million.
Excluding single premium Central Provident Fund (CPF) related sales in
Singapore, which were at exceptional levels in the first half of 2001 due to
further government liberalisation of the CPF funds, sales were up 19 per cent.
APE sales for the second quarter of 2002 were up 26 per cent on the first
quarter.

New business achieved profits of £135 million for the half-year were up 27 per
cent on the same period in 2001. The average margin of 62 per cent in the six
months to 30 June 2002 increased from 59 per cent for the full-year 2001,
reflecting a return to a lower, more normal level of single premium business in
Singapore and the managed change in Taiwan's product mix to include more
profitable unit-linked products.

Mutual funds under management of £3.8 billion at 30 June 2002 were up 10 per
cent on 31 March 2002 (74 per cent up on 30 June 2001), with strong net inflows
of £535 million during the second quarter of this year. This was driven
principally by Taiwan (£319 million), India (£129 million) and new fund launches
by BOCI-Prudential in Hong Kong and PCA ASSET in Japan.

According to latest industry statistics, PCA's market share has increased in
most of the markets in which it operates. We have strengthened our top three
positions in Malaysia, Hong Kong and Singapore, while in the Philippines we are
ranked fourth in the market. In India, we have both the largest private sector
life insurance and mutual fund businesses. In Taiwan, Prudential SITE is now the
largest mutual fund business with assets under management growing to £2.6
billion. Overall, PCA now has nine operations throughout the region with a top
five market share.

PCA's diversified range of businesses means it is not dependent on any one
market for growth. Its established operations (Singapore, Malaysia and Hong
Kong) averaged an impressive 33 per cent growth in APE sales in the second
quarter compared to the first quarter of 2002. In Taiwan, this figure was up 16
per cent following the successful introduction of unit-linked products in
January 2002. Japan's APE sales for the first six months of 2002 increased by
more than 50 per cent on the same period last year. APE sales in PCA's other
operations increased by 32 per cent on the first quarter of 2002 as they
continued to build scale in their respective markets.

Agency distribution remains the primary means of accessing customers in Asia and
PCA has increased its total number of agents by 18 per cent to 70,000 over the
past six months, with the largest increases in India, China and Vietnam.
Alternative distribution channels contributed 23 per cent of APE sales over the
first six months of 2002, compared to 17 per cent for the whole of last year,
and is evidence of PCA's success in continuing to diversify its distribution
channels.

Prudential is the leading European life insurer in Asia. It has a very strong
track record of delivery and has continued to implement its clearly stated
strategy of focusing on profitable growth opportunities across its 22 operations
in 12 countries. Developments during the year included the acquisition of ING's
life insurance operation in the Philippines; the introduction of new customer
financial planning centres in Japan; and the achievement of a more balanced
product mix in Taiwan as unit-linked products become increasingly well
understood by customers.

Despite the slowdown in some Asian economies, with only modest growth in GDP
expected for the region as a whole for the rest of this year, the long-term
outlook remains very positive. We are confident that PCA, with its significant
portfolio of businesses, multi-channel distribution capabilities, excellent
strategic partners and customer-focused product expertise, is ideally placed to
continue to deliver profitable growth.



FINANCIAL REVIEW

Building on our excellent sales in 2001, Prudential has continued to deliver
strong growth with total new business inflows reaching £13.7 billion, 36 per
cent ahead of last year.

Total insurance sales increased 6 per cent to £6.4 billion, while sales on the
annual premium equivalent (APE) basis were up 2 per cent to £926 million
compared to the same period last year. Gross investment inflows increased 82 per
cent to £7.3 billion, while net investment inflows reached record levels, up 50
per cent on the prior year. Net mutual fund inflows in Asia were £655 million,
an increase of 48 per cent while net investment inflows by M&G were £210
million, a 59 per cent increase over the prior year.

Over 70 per cent of Group sales were generated by our overseas operations in the
six months to 30 June 2002.

New business achieved profit (NBAP)

Group new business achieved profit from insurance business of £397 million was
16 per cent ahead of the prior year, reflecting strong growth for JNL and PCA
principally due to improved margins. The Group new business achieved profit
margin increased from 38 per cent for the year to 31 December 2001, to 43 per
cent for the half year, with margins improving in all key territories. During
the first half of 2002, 64 per cent of the Group's NBAP was generated from our
overseas operations.

UK Insurance Operations new business achieved profit of £142 million was one per
cent higher than the equivalent period in the prior year, reflecting decreased
sales offset by improved margins. Margins for the UK long-term business improved
from 30 per cent for the year ended 31 December 2001 to 36 per cent for the
half-year 2002 due to a focus on more profitable products combined with an
improvement in product profitability. Prudential Europe's new business achieved
profit of £3 million was in line with the prior year.

The 26 per cent improvement in JNL's new business achieved profit to £117
million was driven by a 10 per cent increase in new insurance sales combined
with an improvement in the new business margin from 35 per cent for the year
ended 31 December 2001 to 39 per cent. This primarily reflects an improvement in
the spread on new business combined with a favourable change in product mix and
revisions to the economic assumptions at the half year.

PCA's new business achieved profit of £135 million was up 27 per cent on half
year 2001 principally reflecting an improvement in the new business margin in
Asia. PCA's margin for the first half of 2002 was 62 per cent, up from 59 per
cent for the year ended 31 December 2001. The improvement in the margin reflects
a favourable shift in country and product mix as we continued our focus on
maximising value from our Asian operations. The split of NBAP by product type is
now 23 per cent traditional products, 43 per cent unit linked products and 34
per cent accident and health products. This compares to the 2001 year-end when
the split was 31 per cent traditional, 38 per cent unit linked, and 31 per cent
accident and health.

In-force achieved profit

The UK in-force profit of £190 million was down 20 per cent on the half year
2001, principally reflecting a lower discount rate being applied.

The US in-force result has decreased significantly from a profit of £134 million
in the half year to 30 June 2001 to a loss of £23 million. This was primarily
due to a £71 million charge relating to defaults and impairments on bonds which
is recognised through operating profit on a five year average basis. Actual
losses in the half year to 30 June 2002 were US$228 million and include a number
of one-off event risks where we have seen investment grade bonds fall to below
investment grade status almost overnight, for example, WorldCom where the US
business has written down its investment by US$120 million.

The US in-force result was also affected by lower than assumed spread income of
£15 million primarily due to additional non-accrual bond interest as a
consequence of defaults and impairments on bonds, and a higher than normal level
of cash balances. However, we continue to see improvements in our spread,
including the benefits from reductions in crediting rates on our in-force book
that we have introduced over the last six months. The forward looking spread is
currently running ahead of the long term assumption of 175 basis points.

In recent years our US operations have invested in technology and the
development of our systems platform in order to process efficiently higher
volumes of business and this has added to our fixed cost base in recent years.
With the current lower volumes of variable annuity and life sales, the business
is running below capacity but as the business grows, it will be able to take
advantage of lower marginal costs. We have addressed this at the half-year with
a revision to the unit expense assumption resulting in a charge of £56 million.

PCA's in-force profit (before development costs) has increased from £28 million
in the first half of 2001 to £34 million in 2002 as the operations continued to
build in-force business.

Our European operations generated a £2 million in-force profit before
development costs, in line with the prior year.

Non-insurance operations

M&G's profits of £34 million compare to £40 million in the half year to 30 June
2001. This is largely due to the impact of lower equity markets on fee income
with the FTSE All-Share Index averaging 350 points (12 per cent) less in 2002
than in 2001. M&G has not recognised any performance-related fee in respect of
its management of the Prudential Life Fund at the half-year. The performance fee
is based on performance over a three-year period. M&G does not accrue any
performance fee due until the end of the year.

Egg's UK operations generated a profit of almost £9 million in the first half of
2002 having moved to profitability late in 2001. Egg International recorded an
£8 million loss in 2002 including £6 million relating to investment in the
development of Egg's French business. Egg is now an established business with
over 2.3 million customers, and is growing rapidly. Egg's results are presented
in their own report.

National Planning Holdings, our US broker-dealer, and PPMA, our US fund manager
together delivered profits of £10 million, broadly in line with the first half
of 2001.

Development costs were £16 million, down from £21 million in the first half of
2001, and included £11 million for Asia and £5 million for Europe. The Asian
development costs include £8 million in relation to the development of the
Japanese business.

Other net expenditure increased by £18 million to £86 million largely due to
higher interest expense and lower investment income. Interest payable on core
debt increased from £60 million to £67 million. Group corporate expenses
including PCA head office costs were down slightly on 2001.

Achieved profit - profit before tax

Total achieved profit before tax and minority interests was £166 million
compared to £364 million for the first half of 2001. This reflected a decline in
operating profit from £653 million to £543 million due to the lower profit on
in-force business described earlier. The result also reflected an adjustment for
short-term fluctuations in investment returns of £661 million which includes
£447 million in relation to the UK and £202 million in relation to JNL.

The UK component largely relates to the life fund and reflects the difference
between an actual investment return of negative 2.6 per cent and a long term
assumed return of 7.1 per cent. The life fund investment return year to date is
0.7 percent above its strategic benchmark. The US component largely reflects the
full charge for bond write-downs and impairments to the extent that it is not
included in operating profit, and the difference between the expected long-term
investment returns for equity-like investments and the actual returns achieved.

Economic assumption changes of £22 million reflect the net impact of revisions
to economic assumptions for JNL and PCA.

The £355 million profit on the sale of our General Insurance operations is in
line with the profit estimated in our 2001 annual report.

Achieved profit - profit after tax

Profit after tax and minority interests was £201 million after accounting for a
tax credit of £34 million reflecting the utilisation of capital losses available
to the Group that were acquired during 2001. Minority interests in the Group
results were a credit of £1 million.

Modified statutory basis - operating profit

Group operating profit before tax on the modified statutory basis (MSB) was £317
million, £45 million lower than first half 2001. Adjusting for the discontinued
General Insurance operations and the direct sales force closure costs in 2001,
MSB profit was down 7 per cent (£23 million).

UK Insurance Operations operating profit in 2002 (excluding the discontinued
General Insurance operation) was £215 million, £7 million up on 2001. The US
operations result of £150 million was £70 million worse than in the prior year,
principally reflecting a £63 million charge for the first half of 2002 in
relation to average realised gains and losses on bonds, up from £7 million for
the first half of 2001.

Prudential Asia's operating profit before minority interests and development
expenses was £16 million against a profit of £22 million in 2001, principally
reflecting start-up losses in the North Asian insurance operations. The more
established operations in Singapore, Hong Kong and Malaysia reported further
growth in operating profit, up 7 per cent to £27 million, despite the strong
growth in sales which have a negative first year impact on profits on an MSB
basis due to new business strain.

During the second half of 2002 and in 2003 significant investment has been
planned to build high quality customer focused distribution channels in Japan
and Korea as we pursue a strategy of creating material scale in these
businesses. As outlined in our 2001 results, we expect the effect of this
investment to depress our MSB result for Prudential Asia in 2002 and 2003.

Modified statutory basis - profit before tax

MSB profit before tax and minority interests was £471 million in 2002, compared
to £548 million for the first half of 2001. This decline principally reflects
lower operating profit and a £152 million adjustment for short-term fluctuations
in investment returns. The profit on the sale of the General Insurance business
was £355 million and amortisation of goodwill was £49 million against £47
million in 2001.

Modified statutory basis - profit after tax

MSB profit after tax and minority interests was £422 million, reflecting a tax
charge of £50 million. The effective rate of tax on MSB total profit in 2002 was
11 per cent, compared to 33 per cent in 2001, due to the utilisation of capital
losses available to the Group that were acquired during 2001.

Earnings and dividend per share

Earnings per share, based on achieved basis operating profit after tax and
related minority interests but before amortisation of goodwill were down 5 pence
to 18.4 pence. Earnings per share on an MSB basis were down 1.7 pence to 11.4
pence.

The interim dividend per share of 8.9 pence represents a growth of 2.3 per cent.
We are confident of maintaining a real rate of dividend growth while at the same
time having the capital flexibility to deliver our growth plans.

Funds flow

The holding company net funds inflows for the six months was £354 million
compared to a net outflow of £25 million in the prior period. Capital remitted
from business units amounted to £95 million and capital re-invested in existing
businesses during the period totalled £146 million. The dividend declared of
£178 million reflects the dividend per share of 8.9 pence.

Looking to the second half of 2002, following the high volume of fixed annuities
being written and reflecting the credit losses incurred, we are reviewing the
capital requirements of JNL, and currently estimate that a capital injection of
around £300 million will be required.

Shareholders' borrowings and financial flexibility

Net core structural borrowings at 30 June 2002 were £1.8 billion, a £0.4 billion
improvement on the 2001 year-end position. This improvement principally
reflected the net cash inflow of £354 million referred to earlier.

We manage our balance sheet efficiently with regards to both our ratings and
capital efficiency. Interest cover has been maintained at the 31 December 2001
level and has improved from the level at the end of 2000. Senior debt has
reduced steadily since 1999, despite the funding of our investments across the
group, notably Egg and Asia. Our level of gearing has improved relative to the
full year as we look constantly for ways to improve the efficient use of our
capital.

Although each business unit is expected to meet its own liquidity needs, the
Group has access to £1.2 billion committed bank facilities provided by 12 major
international banks. These facilities have not been drawn on this year.

Prudential enjoys strong debt ratings from both Moody's and Standard & Poor's.
It has a long-term debt rating of Aa3 and AA respectively, while short-term
ratings are P-1 and A-1+.

Funds under management

Prudential's funds under management support a range of businesses operating in
many geographic areas. Each of the operations formulates a strategy, based on
the nature of its underlying liabilities, its level of capital and local
regulatory requirements. Where the nature of the underlying liabilities, its
level of capital and its local regulatory requirements permit, Prudential seeks
to invest its assets predominately in equities and property that have, over
longer periods, provided superior returns to fixed interest assets.

Insurance and investment funds under management at 30 June 2002 totalled £159
billion, compared to £163 billion at the end of 2001. This reduction is mainly
due to a fall in the market value of investments which more than offset the net
sales achieved during the year. The total includes £135 billion of Group
investments under management and £24 billion of external funds under management.

Shareholders' funds

On the achieved profit basis, which recognises shareholders' interest in
long-term businesses, shareholders' funds at 30 June 2002 were £8,053 million, a
decrease of one per cent from 31 December 2001. The decrease principally
reflects short-term fluctuations in investment returns and adverse exchange rate
movements, offset by operating profits and the profit on the sale of our General
Insurance operations.

Statutory basis shareholders' funds, which are not affected by fluctuations in
the value of investments in the Prudential Assurance Company (PAC) long-term
fund, increased by £158 million since the year end to £4,108 million at 30 June
2002.

Financial strength of insurance operations

A common measure of financial strength in the United Kingdom for long-term
insurance business is the free asset ratio. The free asset ratio is the ratio of
assets less liabilities to liabilities, and is expressed as a percentage of
liabilities. The free asset ratio of the PAC long-term fund was estimated as 11
per cent at the end of June 2002, compared with 12.2 per cent at 31 December
2001. The free asset ratio at the end of June has been calculated in accordance
with FSA guidance on resilience tests released on 28 June 2002.

The statutory valuation has been prepared on a conservative basis in accordance
with the valuation rules, and without use of implicit items. No credit has been
taken for the present value of future profits or contingent loans. The main UK
life fund has no subordinated debt or financial reinsurance arrangements.

All the long-term funds remain well capitalised with the PAC long term fund
being rated AAA by Standard & Poor's and Aaa by Moody's.

 ACHIEVED PROFITS BASIS RESULTS

                                                                                     Half Year
                                                                                   ended 30 June
                                                                                             Restated        Full Year
 Summarised Consolidated Profit and Loss Account                                   2002 £m    2001 £m          2001 £m
 UK Insurance Operations                                                               332        377              620
 M&G                                                                                    34         40               75
 Egg                                                                                     1       (63)             (88)
 UK Operations                                                                         367        354              607
 US Operations                                                                         104        238              319
 Prudential Asia                                                                       169        134              415
 Prudential Europe                                                                       5          5                8
 Other Income and Expenditure (including development expenses)                       (102)       (89)            (178)
                                                                                       543        642            1,171
 UK re-engineering costs                                                                 -       (24)             (57)
 Operating profit from continuing operations                                           543        618            1,114
 Discontinued UK general business operations                                             -         35               72
 Operating profit before amortisation of goodwill and exceptional items                543        653            1,186
 Amortisation of goodwill                                                             (49)       (47)             (95)
 Short-term fluctuations in investment returns                                       (661)      (580)          (1,402)
 Effect of change in economic assumptions                                             (22)          -            (482)
 Merger break fee (net of related expenses)                                              -        338              338
 Profit on sale of UK general business operations                                      355          -                -
 Profit (loss) on ordinary activities before tax (including actual investment          166        364            (455)
 returns)
 Tax                                                                                    34      (127)              213
 Profit (loss) for the period before minority interests                                200        237            (242)
 Minority interests                                                                      1         19               25
 Profit (loss) for the period after minority interests                                 201        256            (217)
 Dividends                                                                           (178)      (172)            (504)

 Retained profit (loss) for the period                                                  23         84            (721)


 Basic Earnings Per Share
 Based on operating profit after tax and related minority interests before
 amortisation of goodwill and exceptional items of £365m (£461m and £828m)           18.4p      23.4p            41.9p
 Adjustment for amortisation of goodwill                                            (2.5)p     (2.4)p           (4.8)p
 Adjustment from post-tax long-term investment returns to post-tax actual
 investment returns (after related minority interests)                             (22.2)p    (20.1)p          (48.9)p
 Adjustment for post-tax effect of change in economic assumptions                   (0.9)p          -          (16.0)p
 Adjustment for post-tax merger break fee (net of related expenses)                      -      12.1p            16.8p
 Adjustment for post-tax profit on sale of UK general business operations            17.3p          -                -

 Based on profit (loss) for the period after minority interests of £201m (£256m      10.1p      13.0p          (11.0)p
 and £(217)m)

 Average number of shares                                                           1,986m     1,976m           1,978m

 Dividend Per Share                                                                   8.9p       8.7p            25.4p

 Note
        The tax charge and earnings per share for the 2001 Half Year have been 
        restated for the implementation of FRS 19 on deferred tax.



 TOTAL INSURANCE AND INVESTMENT NEW BUSINESS

                                   Insurance Products          Investment Products                Total
                                 Half Year ended 30 June      Half Year ended 30 June    Half Year ended 30 June
                                     2002 £m    2001 £m        2002 £m     2001 £m          2002 £m    2001 £m
                                                                    
 UK Operations                         3,105      2,751            620         579            3,725      3,330
 US Operations                         2,869      2,616              -           -            2,869      2,616
 Prudential Asia                         407        642          6,669       3,423            7,076      4,065
 Prudential Europe                        37         36              -           -               37         36

 Group Total                           6,418      6,045          7,289       4,002           13,707     10,047
                                                                  


 Insurance Products - New Business Premiums by Product Distributor

                                            Single                      Regular            Annual Premium Equivalents
                                     Half     Half      Full     Half      Half      Full     Half       Half    Full
                                     Year     Year      Year     Year      Year      Year     Year       Year    Year
                                  2002 £m  2001 £m   2001 £m  2002 £m   2001 £m   2001 £m  2002 £m    2001 £m  2001 £m

 UK Insurance Operations
 Direct distribution
 Individual pensions                   10        9        14        7        10        15        8         11       16
 Corporate pensions                   395      248       469       54        72       131       93         97      178
 Life                                  37       18        71        2         1         4        6          3       11
 Annuities                            391      327       663        -         -         -       39         33       66
 Department of Social Security        195      175       185        -         -         -       19         17       19
 rebate business
 Total                              1,028      777     1,402       63        83       150      165        161      290
 Intermediated distribution
 Individual pensions                   57      130       219       18        33        68       24         46       90
 Corporate pensions                    52       33        82        9         8        19       14         11       27
 Life                               1,350      834     2,297        8        16        27      143         99      257
 Annuities                            475      601     1,172        -         -         -       47         60      117
 Department of Social Security         45       55        64        -         -         -        5          6        6
 rebate business
 Total                              1,979    1,653     3,834       35        57       114      233        222      497

 Closed Direct Sales Force              -      164       167        -        17        18        -         33       36
 distribution

 Total UK Insurance Operations      3,007    2,594     5,403       98       157       282      398        416      823

 US Operations
 Fixed annuities                    1,053      814     1,899        -         -         -      105         81      190
 Equity linked indexed annuities      129      139       271        -         -         -       13         14       27
 Variable annuities                   484      447       768        -         -         -       49         45       77
 Guaranteed Investment Contracts      282      150       170        -         -         -       28         15       17
 GIC - Medium Term Notes              909    1,055     1,504        -         -         -       91        105      150
 Life                                   -        -         -       12        11        22       12         11       22
 Total                              2,857    2,605     4,612       12        11        22      298        271      483
                                                      
 Prudential Asia                      211      479       650      196       163       369      217        211      434

 Prudential Europe                     27       27        58       10         9        20       13         12       26

 Group Total                        6,102    5,705    10,723      316       340       693      926        910    1,766

 Note
    Annual Premium Equivalents are calculated as the aggregate of regular new 
    business premiums and one tenth of single new business premiums.
    Single new business premiums include increments under existing group pension 
    schemes and pensions vested into annuity contracts (at the annuity purchase 
    price). Regular new business premiums are determined on an annualised basis.

 Investment Products - Funds Under Management (FUM)
                                                                                             Market
                                         FUM                                              and Other                FUM
                                  1 Jan 2002       Gross Inflows       Redemptions        Movements       30 June 2002
                                          £m                  £m                £m               £m                 £m
 UK Operations                        10,328                 620             (483)          (1,227)              9,238
 Prudential Asia                       3,296               6,669           (5,980)             (87)              3,898

 Group Total                          13,624               7,289           (6,463)          (1,314)              13,136




 ACHIEVED PROFITS BASIS RESULTS

 Operating Profit before Amortisation of Goodwill and Exceptional Items
                                                                                     Half Year
                                                                                    ended 30 June      Full Year
 Results Analysis by Business Area                                                2002 £m   2001 £m      2001 £m
 UK Operations
 Insurance Operations:
     New business                                                                     142       140          243
     Business in force                                                                190       237          377
     Long-term business                                                               332       377          620
 M&G                                                                                   34        40           75
 Egg                                                                                    1      (63)         (88)
 Total                                                                                367       354          607
 US Operations
 New business                                                                         117        93          167
 Business in force                                                                   (23)       134          136
 Long-term business                                                                    94       227          303
 Broker dealer and fund management                                                     10        11           16
 Total                                                                                104       238          319
 Prudential Asia
 New business                                                                         135       106          255
 Business in force                                                                     34        28          160
 Long-term business                                                                   169       134          415
 Development expenses                                                                (11)      (10)         (19)
 Total                                                                                158       124          396
 Prudential Europe
 New business                                                                           3         3            8
 Business in force                                                                      2         2            0
 Long-term business                                                                     5         5            8
 Development expenses                                                                 (5)      (11)         (29)
 Total                                                                                  0       (6)         (21)
 Other Income and Expenditure
 Investment return and other income                                                    12        24           51
 Interest payable on core structural borrowings of shareholder financed              (67)      (60)        (118)
 operations
 Corporate expenditure:
     Group Head Office                                                               (17)      (20)         (39)
     Asia Regional Head Office                                                       (14)      (12)         (24)
 Total                                                                               (86)      (68)        (130)
                                                                                      543       642        1,171
 UK re-engineering costs                                                                -      (24)         (57)
 Operating profit from continuing operations before amortisation of
 goodwill and exceptional items                                                       543       618        1,114

 Analysed as profits (losses) from:
 New business                                                                         397       342          673
 Business in force                                                                    203       401          673
 Long-term business                                                                   600       743        1,346
 Prudential Asia and Prudential Europe development expenses                          (16)      (21)         (48)
 Other operating results                                                             (41)      (80)        (127)
 UK re-engineering costs                                                                -      (24)         (57)

 Total                                                                                543       618        1,114



 ACHIEVED PROFITS BASIS RESULTS
                                                                                      30 June
                                                                                              Restated    31 December
 Summarised Consolidated Balance Sheet                                           2002 £m       2001 £m        2001 £m
 Investments in respect of non-linked business:
         Equities                                                                 36,722        46,426         40,948
         Fixed income securities                                                  61,220        54,717         59,181
         Properties                                                               10,376        10,347         10,487
         Deposits with credit institutions                                         4,510         4,701          4,176
         Other investments (principally mortgages and loans)                       5,573         4,552          5,110
                                                                                 118,401       120,743        119,902
 Assets held to cover linked liabilities                                          16,918        18,290         17,453
 Banking business assets                                                          10,569         8,690          8,972
 Deferred acquisition costs                                                        3,222         3,139          3,204
 Goodwill                                                                          1,637         1,706          1,687
 Core structural borrowings of shareholder financed operations                   (2,055)       (1,597)        (2,152)
 Obligations of Jackson National Life under sale and repurchase and lending      (3,950)       (3,231)        (3,721)
 agreements
 Borrowings to support short-term fixed income securities reinvestment           (1,397)         (511)        (1,330)
 programme
 Deferred tax                                                                    (1,564)       (2,297)        (2,005)
 Dividend payable                                                                  (178)         (172)          (332)
 Other net (liabilities) assets                                                    (283)         (161)            262
                                                                                 141,320       144,599        141,940
 Insurance technical provisions (net of reinsurance):
         UK Operations                                                          (87,363)      (83,328)       (85,583)
         US Operations                                                          (24,278)      (25,409)       (25,055)
         Prudential Asia                                                         (5,431)       (4,622)        (4,941)
         Prudential Europe                                                         (675)         (614)          (634)
                                                                               (117,747)     (113,973)      (116,213)
 Fund for future appropriations                                                  (9,303)      (17,992)       (13,202)
 Less: shareholders' accrued interest in the long-term business                    3,945         4,715          4,200
 Insurance technical provisions (net of reinsurance) and fund for future
         appropriations, less shareholders' accrued interest                   (123,105)     (127,250)      (125,215)
 Banking business liabilities                                                   (10,045)       (8,172)        (8,457)
 Minority interests                                                                (117)         (124)          (118)

 Total net assets                                                                  8,053         9,053          8,150

 Shareholders' Capital and Reserves
 Share capital                                                                       100           100            100
 Share premium                                                                       541           524            533
 Statutory basis retained profit                                                   3,467         3,714          3,317
 Shareholders' capital and reserves - statutory basis                              4,108         4,338          3,950
 Additional reserves on the achieved profits basis                                 3,945         4,715          4,200

 Shareholders' capital and reserves - achieved profits basis                       8,053         9,053          8,150

 Note
         Balance sheet comparatives for 30 June 2001 have been restated to 
         reflect the implementation of FRS19 on deferred tax. As a consequence, 
         the provision for deferred tax at 30 June 2001 has increased by 
         £1,974m. This increase in provision is matched by reductions of £1,880m 
         in the fund for future appropriations, £51m in shareholders' capital 
         and reserves, less £3m reduction in the shareholders' accrued interest 
         in the long-term business, and £46m in technical provisions. These
         adjustments relate almost wholly to deferred tax on unrealised 
         appreciation on investments that it was previously inappropriate to
         recognise under the partial provisioning method under SSAP 15.

 ACHIEVED PROFITS BASIS RESULTS

                                                                                     Half Year
                                                                                   ended 30 June
                                                                                           Restated Full Year
 Movement in Shareholders' Capital and Reserves                                    2002 £m  2001 £m   2001 £m

 Profit (loss) for the period after minority interests                                201      256      (217)
 Exchange movements                                                                 (139)      167         53
 New share capital subscribed                                                          19       26         42
 Dividends                                                                          (178)    (172)      (504)
 Net (decrease) increase in shareholders' capital and reserves                       (97)      277      (626)

 Shareholders' capital and reserves at beginning of period
   As originally reported                                                           8,150    8,833      8,833
   Prior year adjustments on implementation of FRS 19 on                                -     (57)       (57)
  deferred tax
   As restated                                                                      8,150    8,776      8,776

 Shareholders' capital and reserves at end of period                                8,053    9,053      8,150

 Comprising
 UK Operations:
   Long-term business                                                               3,446    4,095      3,656
   General business                                                                     -      130          -
   M&G                                                                                354      350        329
   Egg                                                                                382      390        380
                                                                                    4,182    4,965      4,365

 US Operations                                                                      2,637    3,002      2,817
 Prudential Asia                                                                    1,153      901      1,089
 Prudential Europe                                                                     92       90         90
 Other operations (including central goodwill and borrowings)                        (11)       95      (211)

                                                                                    8,053    9,053      8,150

 ACHIEVED PROFITS BASIS RESULTS

 Basis of Preparation of Results

 The achieved profits basis results for 2002 and the 2001 Full Year have been 
 prepared in accordance with the guidance issued by the Association of British 
 Insurers in December 2001 'Supplementary Reporting for long-term insurance 
 business (the achieved profits method).'

 Under this guidance, the basis for setting long-term expected rates of return 
 on investments and risk discount rates are, for most countries, set by 
 reference to period end rates of return on fixed income securities. This 
 'active' basis of assumption setting has been applied in preparing the results 
 of the Group's UK, US, and European long-term business operations. For the
 Group's Asian operations, the active basis is appropriate for business written 
 in Japan and Korea and for US dollar denominated business written in Hong Kong.

 An exception to this general rule is that for countries where long-term fixed 
 income markets are underdeveloped, investment return assumptions and risk 
 discount rates should be based on an assessment of long-term economic 
 conditions. Except for the countries listed above, this basis is appropriate 
 for the Group's Asian operations.

 For previous periods, the achieved profits basis results for all of the Group's 
 operations were calculated by using expected long-term equilibrium rates of 
 return and discount rates. Comparative results for the 2001 Half Year have not 
 been restated for the new guidance.

 The key economic assumptions are set out below:                             Half Year      Half Year   Full Year
                                                                               2002           2001        2001
 UK Operations
 Pre-tax expected long-term nominal rate of investment return:
    UK equities                                                                7.5%           8.0%        7.5%
    Overseas equities                                                     7.5% to 7.8%        8.0%   7.5% to 7.8%
    Property                                                                   7.5%           8.0%        7.5%
    Gilts                                                                      5.0%           6.0%        5.0%
    Corporate bonds                                                            6.0%           7.0%        6.0%
    PAC with-profits fund assets
    (applying the rates listed above to the investments held by the fund)      7.1%           8.0%        7.1%
    Expected long-term rate of inflation                                       2.6%           2.5%        2.6%
 Post-tax expected long-term nominal rate of return:
    Pension business (where no tax applies)                                    7.1%           8.0%        7.1%
    Life business                                                              6.3%           7.4%        6.3%
 Risk discount rate                                                            7.7%           8.5%        7.7%

 Prudential Europe
 Risk discount rate                                                            7.7%           8.5%        7.7%

 US Operations (Jackson National Life)
 Expected long-term spread between earned rate and rate credited to            1.75%          1.9%        1.75%
 policyholders
 Risk discount rate                                                            7.5%           8.5%        7.7%

 Prudential Asia
 Weighted pre-tax expected long-term nominal rate of investment return         7.2%           8.0%        7.3%
 Weighted expected long-term rate of inflation                                 3.0%           3.2%        3.0%
 Weighted risk discount rate                                                   9.9%           10.4%       10.1%

 The Prudential Asia weighted economic assumptions have been determined by 
 weighting each country's assumptions by reference to the Achieved Profits basis 
 operating results for new business written in the relevant period.

 ACHIEVED PROFITS BASIS RESULTS

 Additional Notes on the Supplementary Achieved Profits Basis Results

(1) The achieved profits basis results for the 2002 and 2001 Half Years are 
    unaudited. The results for the 2002 Half Year have been prepared using the 
    same principal assumptions as were used for the 2001 Full Year. The results 
    for the 2001 Full Year have been derived from the achieved profits basis 
    supplement to the Company's statutory accounts for that year. The
    supplement included an unqualified review report from the auditors.

(2) The achieved profits basis results include the results of the Group's 
    long-term insurance operations on the achieved profits basis. The operating 
    profit from new business represents the profitability of new long-term 
    insurance business written in the period. The operating profit from business 
    in force represents the profitability of business in force at the start
    of the period with, for Asia, the statutory basis results of non-insurance 
    operations. These results are combined with the statutory basis results of 
    the Group's other operations, including unit trusts, mutual funds and other 
    non-insurance investment management business. In the directors' opinion, the 
    achieved profits basis provides a more realistic reflection of the
    performance of the Group's long-term insurance operations than results under 
    the statutory basis.

(3) The proportion of surplus allocated to shareholders from the UK with-profits 
    business has been based on the present value of 10%. Future bonus rates have 
    been set at levels which would fully utilise the assets of the with-profits 
    fund over the lifetime of the business in force.

(4) The Company completed the transfer of its UK general business operations to 
    Winterthur Insurance and Churchill group, its UK subsidiary, on 
    4 January 2002 for a consideration of £353m. After allowing for the costs of 
    sale and other related items, the profit on sale was £355m before tax.

(5) The Company adopted FRS 19 on deferred tax in its 2001 Full Year financial 
    statements. Comparative figures for the 2001 Half Year in this Report have 
    been restated accordingly.

(6) The interim dividend of 8.9p per share will be paid on 28 November 2002 to 
    shareholders on the register at the close of business on 13 September 2002. 
    A scrip dividend alternative will be offered to shareholders.

(7) An analysis of long-term business gross premiums written and investment 
    product sales by product provider is set out below:

                                         Long-term business            Investment products              Total
     Half Year ended 30 June          2002 £m          2001 £m     2002 £m           2001 £m   2002 £m         2001 £m
     UK Insurance Operations            4,331            3,907           -                 -     4,331           3,907
     M&G                                    -                -         620               579       620             579
     Total UK Operations                4,331            3,907         620               579     4,951           4,486
     Jackson National Life              3,048            2,806           -                 -     3,048           2,806
     Prudential Asia                      855            1,034       6,669             3,423     7,524           4,457
     Prudential Europe                     92               97           -                 -        92              97
     Group Total                        8,326            7,844       7,289             4,002    15,615          11,846

(8) An analysis of banking business liabilities is set out below:

                                                                                         30 June           31 December
                                                                                     2002 £m   2001 £m         2001 £m
     Egg                                                                               9,172     7,385           7,589
     US Operations                                                                       873       787             868
                                                                                      10,045     8,172           8,457
     Comprising:
                   Banking deposit balances                                            8,335     6,891           6,520
                   Debt securities issued and other liabilities                        1,710     1,281           1,937
                                                                                      10,045     8,172           8,457

 STATUTORY BASIS RESULTS
                                                                                     Half Year
                                                                                    ended 30 June
                                                                                            Restated        Full Year
 Summarised Consolidated Profit and Loss Account                                  2002 £m    2001 £m          2001 £m
 Operating profit before amortisation of goodwill and exceptional items:
       Continuing operations                                                          317        327              550
       Discontinued UK general business operations                                      -         35               72
                                                                                      317        362              622
 Amortisation of goodwill                                                            (49)       (47)             (95)
 Short-term fluctuations in investment returns                                      (152)      (105)            (480)
 Merger break fee (net of related expenses)                                             -        338              338
 Profit on sale of UK general business operations                                     355          -                -
 Profit on ordinary activities before tax (including actual investment returns)       471        548              385
 Tax                                                                                 (50)      (183)             (21)
 Profit for the period before minority interests                                      421        365              364
 Minority interests                                                                     1         19               25
 Profit for the period after minority interests                                       422        384              389
 Dividends                                                                          (178)      (172)            (504)

 Retained profit (loss) for the period                                                244        212            (115)

 Basic Earnings Per Share
 Based on operating profit after tax and related minority interests before
 amortisation of goodwill and exceptional items of £227m (£258m and £460m)          11.4p      13.1p            23.3p
 Adjustment for amortisation of goodwill                                           (2.5)p     (2.4)p           (4.8)p
 Adjustment from post-tax long-term investment returns to post-tax actual
 investment returns (after related minority interests)                             (5.0)p     (3.4)p          (15.6)p
 Adjustment for post-tax merger break fee (net of related expenses)                     -      12.1p            16.8p
 Adjustment for post-tax profit on sale of UK general business operations           17.3p          -                -

 Based on profit for the period after minority interests of £422m (£384m and        21.2p      19.4p            19.7p
 £389m)

 Average number of shares                                                          1,986m     1,976m           1,978m

 Diluted Earnings Per Share
 Based on profit for the period after minority interests of £422m (£384m and        21.2p      19.4p            19.6p
 £389m)
 Average number of shares                                                          1,987m     1,982m           1,982m

 Dividend Per Share                                                                  8.9p       8.7p            25.4p

 Movement in Shareholders' Capital and Reserves
 Profit for the period after minority interests                                       422        384              389
 Exchange movements                                                                 (105)        129               52
 New share capital subscribed                                                          19         26               42
 Dividends                                                                          (178)      (172)            (504)
 Net increase (decrease) in shareholders' capital and reserves                        158        367             (21)
 Shareholders' capital and reserves at beginning of period
       As originally reported                                                       3,950      4,020            4,020
       Prior year adjustments on implementation of FRS 19 on deferred tax               -       (49)             (49)
       As restated                                                                  3,950      3,971            3,971

 Shareholders' capital and reserves at end of period                                4,108      4,338            3,950

 Note
       The tax charge, earnings per share and movement in shareholders' capital 
       and reserves for the 2001 Half Year have been restated for the
       implementation of FRS 19 on deferred tax.

 STATUTORY BASIS RESULTS

 Operating Profit before Amortisation of Goodwill and Exceptional Items
                                                                                         Half Year
                                                                                       ended 30 June        Full Year
 Results Analysis by Business Area                                                   2002 £m   2001 £m        2001 £m
 UK Operations
 UK Insurance Operations                                                                 215       208            435
 M&G                                                                                      34        40             75
 Egg                                                                                       1      (63)           (88)
 Total                                                                                   250       185            422
 US Operations
 Jackson National Life                                                                   140       209            282
 Broker dealer and fund management                                                        10        11             16
 Total                                                                                   150       220            298
 Prudential Asia
 Long-term business and investment products                                               16        22             44
 Development expenses                                                                   (11)      (10)           (19)
 Total                                                                                     5        12             25
 Prudential Europe
 Long-term business                                                                        3         2              5
 Development expenses                                                                    (5)      (11)           (29)
 Total                                                                                   (2)       (9)           (24)
 Other Income and Expenditure
 Investment return and other income                                                       12        24             51
 Interest payable on core structural borrowings of shareholder financed operations      (67)      (60)          (118)
 Corporate expenditure:
       Group Head Office                                                                (17)      (20)           (39)
       Asia Regional Head Office                                                        (14)      (12)           (24)
 Total                                                                                  (86)      (68)          (130)
                                                                                         317       340            591
 UK re-engineering costs                                                                   -      (13)           (41)
 Operating profit from continuing operations before amortisation of
 goodwill and exceptional items                                                          317       327            550

 Notes on the Statutory Basis Results

 (1)   The statutory basis results for the 2002 and 2001 Half Years are 
       unaudited. The results for the 2002 Half Year have been prepared using
       the same accounting policies as were used in the 2001 statutory accounts. 
       The results for the 2001 Full Year have been derived from those accounts. 
       The auditors have reported on the 2001 statutory accounts and the 
       accounts have been delivered to the Registrar of Companies. The auditors' 
       report was not qualified and did not contain a statement under section 
       237 (2) or (3) of the Companies Act 1985.

 (2)   The long-term business profit of the UK Insurance Operations has been 
       calculated assuming that the shareholder proportion of surplus allocated 
       to shareholders from the with-profits business of The Prudential 
       Assurance Company Limited remains at 10%. Provision has been made for 
       possible reductions in bonus rates arising from the fund valuation at 
       31 December 2002.

 (3)   The statutory tax charge for the Half Year ended 30 June 2002 of £50m 
       (Half Year 2001 £183m) comprises £38m (£123m) UK tax and £12m (£60m) 
       overseas tax.




 FUNDS FLOW

                                                                                     Half Year
                                                                                   ended 30 June             Full Year
 Holding Company Funds Statement                                               2002 £m      2001 £m            2001 £m
 Statutory basis operating profit after tax and related minority interests
      before amortisation of goodwill and exceptional items                        227          258                460
 New share capital subscribed                                                       19           26                 42
 Capital received from businesses                                                   95            -                  -
                                                                                   341          284                502
 Capital received from sale of UK general business operations                      386            -                 80
 Merger break fee (net of related expenses and tax)                                  -          240                332
                                                                                   727          524                914
 Acquisition of new businesses                                                       -        (139)              (162)
 Reinvestment in existing businesses                                             (146)        (167)              (537)
 Timing differences and other items                                               (49)         (71)              (132)
                                                                                   532          147                 83
 Dividends                                                                       (178)        (172)              (504)

 Holding Company net funds movement                                                354         (25)              (421)


                                                                                      30 June              31 December
 Movement in Net Borrowings                                                    2002 £m      2001 £m            2001 £m
 Net core structural borrowings at beginning of period                         (2,133)      (1,697)            (1,697)
 Holding Company net funds movement (as above)                                     354         (25)              (421)
 Exchange translation gains (losses)                                                12         (34)               (15)
 Net core structural borrowings at end of period                               (1,767)      (1,756)            (2,133)

 Represented by:
 Holding Company cash and short-term investments less short-term borrowings        288           24                 19
 Core structural borrowings of shareholder financed operations:
         Central funds                                                         (1,891)      (1,419)            (1,980)
         Jackson National Life                                                   (164)        (178)              (172)
 Accrued expenses and tax on merger break fee                                        -        (183)                  -

                                                                               (1,767)      (1,756)            (2,133)

Independent Review Report by KPMG Audit Plc to Prudential plc extracted from the
Interim Report 2002

'Introduction

We have been instructed by the Company to review the financial information set
out on page 10 and pages 16 to 18 prepared on a modified statutory basis and the
financial information set out on page 9 and pages 11 to 15 prepared on an
achieved profits basis, and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.

KPMG Audit Plc

Chartered Accountants

London

23 July 2002'




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