Interim Results - Part 1

PRUDENTIAL CORPORATION PLC
29 July 1999

Part 1

1999 INTERIM RESULTS 

* Record inflow of new funds of over £11 billion
* New business profits up 31% to £275 million
* Increased investment in egg: and launch of e-card and 
  unit trust supermarket
* Investment in egg: and restructuring of UK businesses 
  reduces statutory operating profit
* Underlying operating profit up 8%
* Dividend up 10% to 7.7 pence per share

Sir Peter Davis, chief executive of Prudential, said:
'We are pleased with the achievements made in the first half of the 
year.  It has been a very busy time across the Group and we have made 
considerable progress towards our strategic objectives.    Jackson has 
performed strongly again and achieved record sales.   In Asia we've 
grown our business and also made real advances in establishing our 
presence in key countries.  

'In the UK we have seen growth in our IFA businesses, the addition to 
the group of M&G, which gives us a very strong profile in the important 
and growing unit trust market, and the outstanding success of egg:. 
Together with the moves we have undertaken to restructure and re-
engineer our traditional Prudential businesses, these initiatives will 
help us to maintain our leadership in the rapidly changing financial 
services sector.

'In the past few years we have delivered superior investment returns to 
our shareholders.   However, we have done much more than that - we have 
also restructured the Group significantly so that it is now much better 
placed for the future.   We set out to widen our product range and to 
broaden our distribution reach.   By a combination of acquisition and 
organic developments we have built a powerful multi-brand model and we 
are well positioned to deliver long-term out-performance.'  

Enquiries:
Jeremy Reynolds/Kevin Russell                            Carys Walshe
Media Relations                                          Investor Relations
Prudential                                               Prudential
0171 548 3721/3723                                       0171 548 3823


1999 UNAUDITED INTERIM RESULTS
                                                  Half year
                                                ended 30 June      Full year

Results summary                                1999£m  1998£m      1998£m 
--------------------------------------------------------------------------
                            
Operating profit before amortisation of goodwill 
(including longer term investment returns) 
Prudential Retail Financial Services            196       180 *      333
Retail IFA                                       44        39         92
Corporate Pensions                               15        10         22
Prudential M&G Asset Management                  27        25         28
egg: and Prudential Banking                     (69)      (9)        (77)
--------------------------------------------------------------------------

Total UK operations                             213      245 *       398
Jackson National Life                           219      197         411
Prudential Asia                                   7        4          13
Shareholders' other income                      (12)       6  *       38
Re-engineering costs                            (55)       -           -
--------------------------------------------------------------------------
Total continuing operations                     372      452 *       860
Discontinued operations                           -        6           8
--------------------------------------------------------------------------
Operating profit before amortisation of 
goodwill                                        372      458 *       868
Amortisation of goodwill                        (14)       -           -
Short-term fluctuations in investment returns    11       41 *        24
Profit on business disposals                      -        -         249
--------------------------------------------------------------------------
Profit before tax 
(including actual investment returns)           369      499       1,141
--------------------------------------------------------------------------

Earnings per share
Based on operating profit    
after tax before amortisation of goodwill      14.0p    17.3p *     33.7p
Based on profit after tax - basic              14.0p    19.2p       45.3p
Based on profit after tax - diluted            13.9p    19.0p       45.0p
--------------------------------------------------------------------------

Dividend per share                              7.7p     7.0p       21.0p
--------------------------------------------------------------------------

Achieved profits basis shareholders' funds     £8.2bn   £7.4bn      £7.5bn
--------------------------------------------------------------------------

Insurance and investment
funds under management                         £157bn   £130bn      £128bn
Banking funds under management                 £7.4bn   £1.0bn      £2.2bn
--------------------------------------------------------------------------

*Restated for change in basis of recognition of investment returns, as 
explained in note (j) on page 10


Profit before tax includes actual investment returns.  The Company believes  
that operating profit before amortisation of goodwill, which includes longer- 
term investment returns, better reflects the Group's underlying performance. 
An abridged statutory profit and loss account is set out on page 9.  
Supplementary achieved profits results are shown on pages 11 to 14.

The dividend will be paid on 25 November 1999 to shareholders on the register
at the close of business on 24 September 1999.  A scrip dividend alternative
will be offered to shareholders.


CHAIRMAN'S STATEMENT

In the first half of 1999, Prudential has made further substantial 
progress towards delivering its strategic objectives. In the UK we have 
strengthened our position in the retail savings and investment market 
with the acquisition of M&G, we have built egg: into the leading e-
commerce financial brand, and we initiated a major re-structuring of our 
UK operations. Overseas, we became the first UK insurance company to be 
invited to apply for a life licence to trade in China, and we continue 
to reap the benefits of our diversified product range and distribution 
strategy in the US and elsewhere in Asia.

The health of our business is demonstrated by the new funds we received 
in the first half of this year.  During this period the group has taken 
in over £11 billion of new funds.  This is well in excess of any 
previous six month total and includes £5.9 billion of insurance and 
investment product sales and £5.2 billion of net banking deposits.  
These are significant in-flows and demonstrate both the scale and scope 
of Prudential.

Our results for the half-year reflect the investments we are making.  
The modified statutory basis result shows operating profit before 
amortisation of goodwill of £372 million compared with £458 million in 
1998.  The 1999 result however includes a £69 million investment in 
egg:, and an exceptional item of £55 million of  re-structuring costs 
for our UK operations.  Excluding these items, underlying profit growth 
from our continuing operations was up 8 per cent.  Investment funds 
under management now stand at £157 billion with an additional £7 billion 
of banking assets.

Given the strength of our underlying performance and our confidence in 
the future prospects of the business, the Board has decided to increase 
the interim dividend by 10 per cent to 7.7 pence per share.
 
With the market for financial products and services changing rapidly, 
Prudential has acted decisively to keep the initiative and maintain its 
strong position. Earlier this year we announced the Board's decision to 
appoint Sir Peter Davis, currently group chief executive, to succeed me 
as chairman when I retire next May.   Jonathan Bloomer, currently group 
finance director, was appointed deputy group chief executive in May and 
will succeed Peter as chief executive next May.   These appointments 
will maintain our strategic direction and momentum.  We have also 
welcomed two new non-executive directors with very valuable relevant 
experience to our Board: Bridget Macaskill, chief executive officer of 
OppenheimerFunds  Inc. in New York and Rob Rowley, finance director of 
Reuters Group plc.  They have much to contribute to our business and I 
look forward to working with them.

The Board of Prudential Corporation plc proposes to change the corporate 
name of the Company by dropping the word 'Corporation' to become 
'Prudential plc'.  This move will help to modernise the name in the UK 
and simplify it in those countries where Prudential wishes to expand.

GROUP CHIEF EXECUTIVE'S REVIEW

INTRODUCTION

Our commitment to our shareholders is to maximise the value over time of 
their investment.  We do this by investing for the long term to produce 
superior products and services, leading to superior financial returns. 
The actions we are taking will increase the value generated by our 
existing operations whilst the re-engineering of our businesses will 
equip us to meet the changing demands of our customers and the financial 
services marketplace.  We are progressing both by organic initiatives 
and through acquisitions.

The record level of new funds in the first six months of this year is a 
clear indication of the current health of the group.  Total sales of 
insurance and investment products are up 40 per cent at £5.9 billion and 
we have taken net retail deposits of £5.2 billion.
We have made good progress with the implementation of our value based 
management programme which explicitly aligns how we manage, measure and 
reward performance with our commitment to shareholders to maximise the 
value of their investment.  This programme is now firmly embedded in our 
UK business units and we intend to roll it out to our overseas 
operations later this year.

UK OPERATIONS

It is clear that changes in legislation, technology, customers' 
behaviour and competitive pressures will result in significant change in 
the UK retail financial services market.  The Government's proposed 
introduction of stakeholder pensions in 2001 will accelerate the trend 
towards high volume, low margin products.  The launch of ISAs and the 
proposals for Pooled Pension Investment also echo the global trend 
towards exposed investment products whilst the advance of the internet 
will come to alter distribution channels radically - not just for retail 
financial services, but for all products. With the actions we have taken 
in the last two years, we are confident that we can compete in this 
environment.

In 1998 we restructured our UK operations into discrete, customer-facing 
businesses each with their own management teams focused on specific 
markets or products.  We also brought in some talented senior management 
from outside the group. In June of this year, we announced a major re-
engineering of Prudential Retail Financial Services.  As we stated at 
the time, this will realise annualised savings of £200 million by 2002 
of which £30 million will be attributable to shareholders. The cost will 
be £150 million, of which £55 million will be borne by shareholders. 

Our acquisition of M&G earlier this year has given us a powerful and 
valuable brand in the fast-growing unit trust market and we have seen 
heartening early results.  This reflects our twin-track strategy of 
developing both insurance and investment products.  

In egg: we have succeeded in establishing the UK's leading financial 
services e-commerce brand in only ten months and have the opportunity to 
lead the sector into the internet world.  The business has far surpassed 
our original plans: in just nine months egg: has attracted deposits of 
£6.7 billion, and almost 550,000 customers. egg: also has had a 
catalytic effect on other Prudential businesses and is not the only 
business in the group which will be internet based.

In egg: we have a tremendous opportunity to become the financial 
services site of choice and have a first-mover advantage upon which we 
intend to capitalise.  We are currently working on five major 
initiatives, including a significant internet credit card development 
which we will be announcing in the autumn and, subject to regulatory 
approval, a supermarket for unit trusts with on-line share dealing 
facilities.

We are delighted and excited by the success of egg:.  The business 
gives us real potential to generate significant long-term shareholder 
value.

PRUDENTIAL  RETAIL FINANCIAL SERVICES 
Profits from Prudential Retail Financial Services increased by 9 per 
cent to £196 million in the first half of the year.  Our long-term 
business reported profits up £4 million to  £164 million whilst profits 
from general insurance increased by 60 per cent to £32 million. The 
latter reflects favourable market conditions and the benefits of our UK 
restructuring and our value based management programme.
Insurance and investment product sales through the direct salesforce 
totalled £1.1 billion, up by 18 per cent on the previous year.  Within 
this total, there has been a shift towards single premium bond products 
and away from regular premium pensions and other products.  We have seen 
this increase in sales despite a 32 per cent reduction in the size of 
the direct sales force as productivity has grown significantly. Our 
salesforce also continues to sell increased volumes of Prudential 
branded mortgages.  Total mortgages arranged during the first six months 
of the year of £338 million compares with £224 million in 1998.
Sales of annuities, which are sold through the direct salesforce and 
through IFAs, reached a record level of £744 million in the first half 
of the year.  As with our general insurance business, our annuity 
operation has benefited from the increased management focus  within our 
new UK structure and from the greater emphasis on creating shareholder 
value.  The smaller, specialised and focused businesses enable us to 
pursue commercial opportunities far more vigorously and effectively. For 
our annuities business, these opportunities include the development of 
with-profit annuities and entry into the bulk annuity market: in July we 
secured two contracts representing total premiums in excess of £1 
billion

RETAIL IFA BUSINESS

Our Retail IFA business continues to show strong growth, with sales up 
32 per cent at £1.4 billion. The increase in sales is a result of the 
continuing strength of Prudence Bond, which remains the most successful 
product of its type in the UK. Total sales of insurance and investment 
products through the IFA channel (including corporate pensions, 
annuities and M&G) were up 44 per cent to £2.2 billion. 

Product innovation has continued with the introduction of a new 
investment proposition for pension products, giving investors access to 
six of the UK's leading investment houses and the UK's largest with-
profits fund.  The concept of fund management choice was carried through 
into the launch in April of Scottish Amicable's ISA.

EGG AND PRUDENTIAL BANKING

Our investment in egg: and Prudential Banking totalled £69 million at 
the half year.  Of this amount, only £14 million relates to the cost of 
the egg:  interest rate guarantee and should be seen as an investment 
in marketing and customer acquisition.  The balance of the investment 
represents net interest margin less operating expenses and development 
spend of a further £15 million on additional technology and new 
products.

Deposits for egg: and Prudential Banking now total £7.4 billion with 
net in-flows for egg: in the first half of 1999 of £5.2 billion.  As 
expected, the move to internet-only applications in April has slowed the 
rate of in-flows, but new money is still being received at a steady 
rate, with almost £500 million received in June.

On the other side of the balance sheet, we are successfully building our 
mortgage book and at 30 June had £1.1 billion of mortgages, of which 12 
per cent were egg: branded.  Mortgage sales through our direct 
salesforce have been growing steadily and the monthly sales rate now 
exceeds £100 million.

We now have over 600,000 banking customers, of whom almost 550,000 are 
egg: customers.  These are generally affluent and financially aware and 
have an average balance of approximately £17,000.

The outstanding success of egg: means that we are scaling up our 
investment as egg: is built at a faster rate than planned but, we 
believe, with increased long-term value creation.  We now forecast a 
total investment in egg: and Prudential Banking in 1999 of between 
£140-150 million.  Despite the increased scale of egg: we still expect 
to break even in 2001.

PRUDENTIAL M&G ASSET MANAGEMENT

The acquisition of M&G has added a new dimension to our fund management 
activities. We have announced our intention to combine our retail and 
institutional fund management activities into a single regulated body, 
Prudential M&G Asset Management, with Michael McLintock as its chief 
executive. Within this we will have two separate business streams: PPM, 
which is responsible for our internal and institutional fund management, 
and M&G, which is responsible for retail fund management. 

With these two brands, we have unprecedented access to both 
institutional and retail investment markets and the strengthened skill 
base to maximise the benefits to our customers. We will achieve new 
operational efficiencies, for example  by bringing together finance, 
compliance, back office, IT and central dealing functions.

We have also reorganised our overseas fund management operations.  PPM 
America now reports to Bob Saltzman, alongside Jackson National Life and 
PPM Asia  reports to Mark Tucker alongside Prudential Asia.

Profits from Prudential M&G Asset Management were £27 million.  This 
includes a strong first time contribution from M&G of £18 million for 
the two months since acquisition.  M&G's early performance has been 
encouraging, with sales through IFA and direct channels of £162 million, 
and strong investment performance.

PPM's result of £16 million is down £11 million on last year. This 
result is impacted by PPM's underperformance against benchmark in the 
second half of 1998 for our key with-profits fund.

The first half of 1999 has seen a much improved investment performance 
from PPM. The with-profits life fund outperformed its peer group 
benchmark while both pooled and segregated funds have delivered above 
median performance.

JACKSON NATIONAL LIFE

Operating profits from Jackson National Life totalled US$354 million, an 
increase of 9 per cent.  This increase reflects a 10 per cent growth in 
US GAAP operating income to US$330 million and unchanged average 
investment gains of US$24 million.  The increase in US GAAP operating 
income results from increased assets and marginally wider spreads.  With 
total invested assets of over US$36 billion, Jackson is firmly 
positioned as one of the top 20 US life insurers.
Sales of both retail and wholesale products continue their healthy 
growth with total single premium sales up 33 per cent at US$3.3 billion.  
This growth has been attained thanks to the diversity of our product 
range and our determination to seek out new markets.
Total annuity sales are up 32 per cent at US$1.7 billion.  Within this 
total, sales of variable annuities have more than doubled to US$941 
million, reflecting the strong equity market and successful sales 
promotions. These strong variable annuity sales have more than offset 
the 19 per cent decline in fixed annuity sales to US$508 million, due to 
lower US interest rates.  An increase in these rates would, however, 
increase sales of these products.
The trend towards equity-orientated investment products in the US is 
continuing and Jackson's impressive sales performance in the first half 
of 1999 shows that we are now attracting a meaningful share of that 
market. We remain interested in increasing our world-wide position in 
investment products and mutual funds. 

PRUDENTIAL ASIA

It has been an eventful and encouraging six months in Prudential Asia.  
Performance has been strong with total premiums having grown four-fold 
to £325 million and profits up £3 million at £7 million.  The increase 
in sales reflects a 75 per cent increase in insurance premiums to £100 
million and mutual fund sales in India by our joint venture company, 
Prudential ICICI, of £225 million 
During the period, we have been laying foundations for future expansion 
in China, Vietnam and Taiwan. These are markets with huge potential for 
growth, combining a strong savings culture with large populations. A 
highlight of the year so far has been the Chinese government's 
invitation to apply for a life insurance licence.  We are currently in 
negotiations over the city to which the licence will apply and with 
potential joint venture partners.
This year we have successfully launched our bancassurance channel with 
Standard Chartered Bank in Singapore and Hong Kong.  Development of this 
initiative is progressing well.
We have also applied for a life licence in Vietnam and in Taiwan we are 
investigating a wide range of options, ranging from acquisition to the 
establishment of a new wholly-owned shareholder business.

SUPPLEMENTARY ACHIEVED PROFITS BASIS RESULTS

On the achieved profits basis of reporting, group operating profit 
before amortisation of goodwill and tax was £572 million in the first 
half of 1999.   Of this amount, the contribution from long-term 
businesses was £647 million, an increase of 34 per cent.  Profit from 
new business increased by 31 per cent to £275 million whilst profit from 
business in force increased by 36 per cent to £372 million.

UK Operations

Profit from new business for the group's UK operations grew by 11 per 
cent to £145 million.  This primarily reflects the strong growth in 
sales volumes partially offset by the reduction in the rate of expected 
future investment returns which was implemented at the end of 1998.  
Profit from business in force increased by 63 per cent to £210 million.  
1998's in force result included an £84 million charge for the 
shareholders' portion of last year's increase in the pension mis-selling 
charge.  The provision of £1.1 billion is unchanged in 1999.

Jackson National Life

At Jackson, profit from new business increased by 52 per cent to £96 
million, primarily reflecting the 32 per cent increase in premiums and 
the reduction in discount rate implemented at the end of 1998.  The 
growth was also assisted by an increased proportion of GIC sales from 
higher value longer-term funding agreements.  Profit from business in 
force increased by 15 per cent to £152 million, largely due to good 
spread margin experience.

Prudential Asia

Profit in Prudential Asia before regional development costs increased by 
55 per cent to £51 million as profit from new business more than doubled 
to £34 million.  The strong contribution from new business principally 
reflects a combination of higher sales, an increased focus on higher 
value products and the increased stake in the group's Malaysian 
operation.  Profit from business in force was unaltered at £17 million. 

SHAREHOLDERS' CAPITAL AND RESERVES

The acquisition of M&G has moved the group's balance sheet from a net 
cash position to a more appropriate level of gearing.  Total shareholder 
funds on an achieved profits basis are over £8.2 billion at the half 
year, with balance sheet gearing of 19 per cent.

Our discussions with the FSA on the unattributed assets within our life 
fund continue and we remain committed to seeking resolution.

MILLENNIUM

The Millennium issue is the potential problem arising from computer 
software developed to recognise only two digits instead of four and, if 
not corrected, being unable to distinguish the year 2000 from 1900.

Since mid-1996 we have had eight programmes under way to deal with the 
Millennium.  M&G was included in our review process when it was 
acquired. These programmes are monitored centrally through a dedicated 
Millennium team reporting to our group executive committee.

The repair or replacement and testing of critical IT systems and 
equipment was completed for four programmes by the end of June 1999 and 
is expected to be complete for all others by the end of July 1999. 
External consultants have been hired to verify independently that the 
detailed and thorough testing procedures we have put in place have been 
completed successfully and on schedule.

Although we do not anticipate any serious disruption to our operations, 
we are developing contingency plans and transition plans. These are 
currently in preparation and are due to be completed and tested by 
September 1999. Our contingency plans are intended to minimise the risks 
posed to us by third parties and through possible systems errors despite 
the intensive testing completed as part of the systems assurance 
process.  We have identified the critical business processes, considered 
how these processes may be disrupted and are preparing response plans 
and options to address these potential disruptions.

It is difficult to separate discrete Millennium expenditure from the 
group's general systems enhancements and development spend.  However, it 
is estimated the group's total incremental cost relating solely to 
Millennium will be in the range of £150 to £175 million. 

CONCLUSION 

In the last few years we have delivered superior investment returns to 
our shareholders.  However, we have done much more than that: we have 
also significantly restructured the business so that it is now much 
better placed for the future.  We set out to widen our product range and 
to broaden our distribution reach.  By a combination of acquisition and 
organic developments we have built a powerful multi-brand model and we 
are well positioned to deliver long-term out-performance. We could not 
have done this without the enthusiastic response of the people 
throughout Prudential who have grasped the need for change with energy 
and commitment.

SEGMENTAL ANALYSIS

                                Half year ended 30 June

                                                            Operating profit
                                                            before
                                                Gross       amortisation of
                         New business          premiums     goodwill
                           premiums            written      (including longer
                       Single    Regular                     term investment
                                                                gains)

Results Analysis
by Business Area      1999  1998  1999  1998   1999   1998     1999     1998
                                                  (£ Million)
-----------------------------------------------------------------------------
UK operations
Prudential Retail
 Financial Services   1,271  979    81   108   1,856  1,729     196     180 *
Retail IFA            1,289  969    68    62   1,817  1,453      44      39
Corporate Pensions      442  305    28    21     688    647      15      10
Prudential M&G
Asset Management        158   -      4    -      176     -       27      25
egg: and Prudential
Banking                  -    -      -    -       -      -      (69)     (9)
-----------------------------------------------------------------------------
Total
UK Operations         3,160  2,253  181  191   4,537  3,829     213     245 *

-----------------------------------------------------------------------------

Jackson National Life  2,049  1,507   12   14   2,217  1,687     219     197
-----------------------------------------------------------------------------

Prudential Asia

Long-term business
and investment
products                289    38     36   35     491    214      14      8
Development expenses     -      -      -    -      -      -       (7)    (4)
-----------------------------------------------------------------------------
Total                   
Prudential Asia         289    38     36   35     491    214       7      4
-----------------------------------------------------------------------------

Shareholders' other
income
Investment return
and other income         -      -      -    -      -     -        70     74 *
Interest payable         -      -      -    -      -     -       (63)   (49)
Corporate expenditure    -      -      -    -      -     -       (19)   (19)
-----------------------------------------------------------------------------
Total                    
Shareholder's other income-     -      -    -      -     -       (12)     6 *
-----------------------------------------------------------------------------
Re-engineering costs     -      -      -    -      -     -       (55)     -
-----------------------------------------------------------------------------

Total operating profit
before amortisation of
goodwill for continuing 
operations             5,498  3,798   229   240   7,245  5,730   372   452  *
-----------------------------------------------------------------------------



Results Analysis by Activity
-----------------------------------------------------------------------------
Long-term business    5,085  3,693   220   231   6,655  5,457   455    410
Investment products     413    105    9     9      429    114    5      (2)
General business         -     -      -     -      161    159    32     20  *
Investment management    -     -      -     -       -      -     16     27
Banking                  -     -      -     -       -      -    (69)    (9)
Shareholders' other
income                   -     -      -     -       -      -    (12)     6  *
Re-engineering costs     -     -      -     -       -      -    (55)     -
-----------------------------------------------------------------------------
Total operating profit
before amortisation of
goodwill for
continuing operations   5,498  3,798   229   240   7,245  5,730   372   452 *

*   Restated for change in basis of recognition of investment returns,
   as explained in note (j) on page 10.

HOLDING COMPANY FUNDS STATEMENT
                                                Half year
                                              Ended 30 June         Full year
                                             1999 £m   1998 £m       1998 £m
-----------------------------------------------------------------------------
Operating profit after tax before
amortisation of goodwill                       272       336  *        654
Dividends                                     (150)     (136)         (407)
Reinvested in businesses                      (159)     (141)         (260)
-----------------------------------------------------------------------------
Funds available to holding company             (37)       59  *        (13)
New investment in businesses                 (2,202)     (177)        (265)
Disposal of businesses                          -          -           481
New share capital subscribed                    20         7            15
Timing differences and other items             (60)      (50) *       (175)
-----------------------------------------------------------------------------
Holding company net cash movement            (2,279)     (161)          43
-----------------------------------------------------------------------------

*  Restated for change in basis of recognition of investment returns,
as explained in note (j) on page 10.


MOVEMENT IN NET CASH BALANCES

                                                  Half year
                                                 Ended 30 June     Full year
                                               1999 £m   1998 £m    1998 £m
-----------------------------------------------------------------------------
Holding company cash less shareholders'
borrowing at beginning of period                  453       405       405
Holding company net cash movement (as above)   (2,279)     (161)       43
Exchange translation gains (losses)               (40)        8         5
-----------------------------------------------------------------------------
Holding company cash less shareholders'
borrowings at end of period                    (1,866)      252       453
-----------------------------------------------------------------------------
Represented by:
Holding company cash and short-term
investments                                       135     1,622     1,826
Borrowings - Holding company                   (1,842)   (1,220)   (1,223)
           - Jackson National Life               (159)     (150)     (150)
-----------------------------------------------------------------------------
                                               (1,866)      252       453
-----------------------------------------------------------------------------


MOVEMENT IN SHAREHOLDERS' CAPITAL AND RESERVES

                                                    Half year
                                                  Ended 30 June     Full year
                                                1999 £m   1998 £m    1998 £m
-----------------------------------------------------------------------------
Profit for the period                               272       372        880
Exchange movements                                   89       (28)       (50)
Goodwill on disposals
of subsidiaries                                      -         -          28
New share capital subscribed                         20         7         15
Dividends                                          (150)     (136)      (407)
-----------------------------------------------------------------------------
Net movement in shareholders' 
capital and reserves                                231       215        466
Shareholders' capital and reserves at the
beginning of period                               3,249     2,783      2,783
-----------------------------------------------------------------------------
Shareholders' capital and reserves at end
of period                                         3,480     2,998      3,249
-----------------------------------------------------------------------------


ABRIDGED STATUTORY PROFIT AND LOSS ACCOUNT

                                                    Half year
                                                   Ended 30 June    Full year
Results summary                                   1999£m  1998£m    1998£m
-----------------------------------------------------------------------------
General business 
technical result                                   32       20 *        39
Long-term business technical result
   Continuing operations                          449      410 *       832
   Acquisitions                                     6        -           -
   Discontinued operations                          -        6           8
Investment products
   Continuing operations                           (7)      (2)        (15)
   Acquisitions                                    12        -           -
Banking                                           (69)      (9)        (77)
Re-engineering costs                              (55)       -           -
Amortisation of goodwill                          (14)       -           -
Other non-technical results included 
in operating profit                                 4       33 *        81
-----------------------------------------------------------------------------

Operating profit based on longer term 
investment returns                                358      458 *       868
Short-term fluctuations in investment returns      11       41 *        24
Profit on business disposals                        -        -         249
-----------------------------------------------------------------------------
Profit on ordinary activities before tax 
(including actual investment returns)             369      499       1,141
Tax                                               (97)    (127)       (261)
-----------------------------------------------------------------------------
Profit for the period                             272      372         880
Dividends                                        (150)    (136)       (407)
-----------------------------------------------------------------------------
Retained profit for the period                    122      236         473

Basic Earnings per share
Based on operating profit after tax before 
amortisation of goodwill of £272m(336m* and £654m)14.0p    17.3p *    33.7p
Adjustment of amortisation of goodwill           (0.7)p      -          -
Adjustment from post-tax longer-term investment
returns to post tax actual investment returns     0.7p      1.9p *     0.8p
Adjustment for profit on business disposals        -         -        10.8p
-----------------------------------------------------------------------------
Based on profit for the period 
of £272m (£372m and £880m)                       14.0p     19.2p      45.3p
-----------------------------------------------------------------------------
Average number of shares                         1,949m   1,941m     1,942m
-----------------------------------------------------------------------------
Diluted earnings per share
-----------------------------------------------------------------------------
Based on profit for the period 
of £272m (£372m and £880m)                       13.9p     19.0p      45.0p
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Average number of shares                         1,964m   1,954m     1,955m
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Dividend per share                                 7.7p     7.0p      21.0p
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  * Restated for change in basis of recognition of investment returns, as 
  explained in note (j) on page 10.

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