Merger

Prudential PLC
12 March 2001



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO
AUSTRALIA, CANADA OR JAPAN



For immediate release

12 March 2001



 MERGER OF PRUDENTIAL AND AMERICAN GENERAL TO CREATE INTERNATIONAL INSURANCE
                                  POWERHOUSE

SUMMARY

LONDON, UK/HOUSTON, TEXAS, USA - Prudential plc ('Prudential') and American
General Corporation ('American General') announce that they have agreed the
terms of a merger (the 'Merger') to create a top-tier international financial
services business with leading market positions in the US, the UK and Asia.


Rationale for the Merger


  * Creates a major international force in retail financial services with
    leading positions in the US, the UK and Asia

  * Significantly enhanced combined US presence

  * Provides scale and financial resources to accelerate growth and maximise
    value creation in our chosen markets

  * Highly complementary multi-product, multi-distribution channel business
    models

  * Diversification of business enhances quality of earnings


Other key highlights


  * Pro forma combined market capitalisation of £30.8 billion (US$45.3
    billion) based on closing prices and exchange rates on 9 March 2001


  * Pro forma investment funds under management of £229 billion (US$336
    billion)


  * Merger ratio of 3.6622 Prudential shares for each American General
    share, implying a value of US$49.52 per American General share and a total
    fully diluted equity value of £18.1 billion (US$26.5 billion) based on the
    ten day trailing average closing prices on 9 March 2001

  * Prudential shareholders to own approximately 50.5% and American General
    shareholders to own approximately 49.5% of the enlarged group on a fully
    diluted basis

  * Prudential plc will be the holding company for the combined group

  * Prudential's US operations, Jackson National Life ('JNL') and PPM
    America to be integrated with American General's operations

  * Integrated board and management team: six representatives of American
    General to join the enlarged Prudential board of 18 directors

  * Sir Roger Hurn to continue to be Chairman of Prudential and Jonathan
    Bloomer to continue as the Group Chief Executive. As a result of the
    Merger, Robert M. Devlin, Chairman and Chief Executive Officer of American
    General, will be invited to join the Prudential board as Deputy Chairman,
    and Chairman and Chief Executive Officer of North American Operations,
    reporting to Jonathan Bloomer


  * Transaction to be effected by a US statutory merger which is expected to
    be tax free for American General shareholders


  * Pre-tax cost synergies at a rate of over £85 million (US$130 million)
    per annum by the end of 2002 at an estimated one-time cost of less than
    one full year's worth of savings

  * Merger is subject to shareholder approvals and regulatory consents and
    is targeted for completion in the third quarter of 2001


Commenting on the Merger, Jonathan Bloomer, Group Chief Executive of
Prudential, said:


'Our two companies are a great fit. We have highly complementary business
operations and we have pursued very similar strategies by broadening out our
product ranges and distribution channels. Not only will this give us a leading
position in the US, it also gives us the scale and financial strength to allow
for continued expansion and faster growth in the other regions of the world in
which we operate. We look forward to working with Bob Devlin and his team to
implement our shared vision, capture new commercial opportunities and deliver
long term value to our shareholders.'


Robert M. Devlin, Chairman and Chief Executive Officer of American General,
said:


'Today, American General has taken a bold step toward realising our strategic
vision: to become a world leader in financial services through our merger with
Prudential. I look forward to working with Jonathan Bloomer and the Prudential
team to make this vision a reality. As part of an international financial
services powerhouse, we will benefit from increased scale and financial
resources that will provide a solid foundation for accelerated growth and
profitability. It is also important to recognise that this merger is greater
than just the size and scale it creates. It also represents an outstanding
strategic fit for two organisations that share a common purpose for the future
- to create superior returns for our shareholders, financial solutions for our
customers around the world, and outstanding opportunities for our employees.'


Details of the Merger are set out in Part I of this announcement. Information
on Prudential is contained in Part II and information on American General is
contained in Part III. Summary pro forma combined financial information is set
out in Appendix 1.


Prudential is being advised by UBS Warburg. American General is being advised
by Morgan Stanley Dean Witter.


UBS Warburg and Cazenove & Co. are acting as joint brokers to Prudential.

All Prudential corporate news releases can be accessed at Prudential's web
site: www.prudential.co.uk. All American General corporate news releases can
be accessed at American General's web site: www.americangeneral.com.

There will be a conference call today for wire services at 7.45am (London
time) on [phone]. This conference call will be hosted by Jonathan
Bloomer, Group Chief Executive of Prudential and Robert M. Devlin, Chairman
and Chief Executive Officer of American General.


A UK analysts' conference will be held at 9.30am (London time) and a press
conference will be held at 11.15am (London time) today at the offices of
Prudential plc, Laurence Pountney Hill, EC4R 0EU. A webcast of the
presentation and the presentation slides will be available on the group's
website, www.prudential.co.uk. A US analysts' conference will be held at
9.00am (EST) today at The St Regis, Two East 55th Street at Fifth Avenue, New
York City which will be broadcast live on American General's website at
www.americangeneral.com.




This summary should be read in conjunction with the full text of this
announcement.

Enquiries:
Prudential plc                     American General Corporation
Rebecca Burrows (Investors)        Kenneth A. Brause (Investors)

[phone]                   [phone]

Andrew Crossley (Investors)        John E. Pluhowski (Media)

[phone]                   [phone]

Geraldine Davies (Media)

[phone]




UBS Warburg Ltd., which is regulated in the United Kingdom by The Securities
and Futures Authority Limited, is acting for Prudential plc in connection with
the Merger and for no one else and will not be responsible to anyone other
than Prudential plc for providing the protections afforded to customers of UBS
Warburg Ltd., or for providing advice in relation to the Merger.


This announcement has been approved by UBS Warburg Ltd., for the purposes of
Section 57 of the Financial Services Act 1986. This does not constitute a
recommendation regarding the Prudential ordinary shares. The value of an
investment may go down as well as up. Investors or potential investors should
seek advice from an independent financial adviser as to the suitability for
the individual concerned.


This announcement does not constitute an offer or invitation to purchase any
securities. Any such offer will only be made in documents to be published in
due course and any such acquisition should be made solely on the basis of
information contained in those documents.


Prudential plc and American General Corporation will be filing a proxy
statement/prospectus and other relevant documents concerning the proposed
transaction with the SEC. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/
PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ON THE PROPOSED
TRANSACTION. Investors will be able to obtain the document free of charge at
the SEC's website (www.sec.gov). In addition, the proxy statement/prospectus
and other relevant documents concerning the proposed transaction and filed
with the SEC may be obtained free of charge by contacting Prudential plc,
Laurence Pountney Hill, London EC4R 0HH, England, Attention: Investor
Relations (tel. [phone]), and American General Corporation, 2929
Allen Parkway, Houston, Texas, 77019, Attention: Investor Relations (tel. (+1
713) 522-1111).

American General Corporation and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from stockholders of
American General Corporation. The directors and executive officers of American
General Corporation include: J. Evans Attwell, Brady F. Carruth, W. Lipscomb
Davis Jr., J. Edward Easler II, Larry D. Horner, Richard J.V. Johnson, Morris
J. Kramer, Michael E. Murphy, Michael J. Poulos, Robert E. Smittcamp, Anne M.
Tatlock, Robert M. Devlin, Mark S. Berg, James P. Corcoran, David W. Entrekin,
Frederick W. Geissinger, John A. Graf, John V. LaGrasse, Rodney O. Martin Jr.,
Nicholas R. Rasmussen, Gary D. Reddick and Richard W. Scott. Collectively, as
of 28 February 2001, the directors and executive officers of American General
Corporation beneficially owned approximately 2% of the outstanding shares of
the common stock of American General Corporation. Stockholders may obtain
additional information regarding the interests of such participants by reading
the proxy statement/prospectus when it becomes available.





PART I - DETAILS OF THE MERGER

 1. Principal Terms


    The Merger will be effected in accordance with the terms of an Agreement
    and Plan of Merger dated as of 11 March 2001 (the 'Merger Agreement')
    which has been unanimously approved by the boards of both companies. Under
    the terms of the Merger, pursuant to which American General will merge
    with a subsidiary of Prudential through a US statutory merger, each share
    of common stock of American General will be exchanged for 3.6622 new
    Prudential ordinary shares or, at the election of the American General
    shareholder, 1.8311 American Depositary Shares ('ADSs'). This merger ratio
    implies a value of US$49.52 for each American General share and a total
    fully diluted equity value of £18.1 billion (US$26.5 billion) based on the
    ten day trailing average closing prices on 9 March 2001. Prudential
    shareholders will own approximately 50.5% and American General
    shareholders will own approximately 49.5% of the combined company on a
    fully diluted basis.


    Prudential will retain its primary listing on the London Stock Exchange
    with ADSs listed on the New York Stock Exchange. Prudential will apply for
    the new Prudential ordinary shares to be issued to American General
    shareholders in connection with the Merger to be listed on the London
    Stock Exchange and for the ADSs to be listed on the New York Stock
    Exchange.


    The combined group will be headquartered in London, UK with the United
    States headquarters being in New York. The combined US business will
    continue to have substantial operations in Houston, Texas and Lansing,
    Michigan and other key locations throughout the United States.


    Prudential and American General intend to publish detailed information on
    the Merger for their respective shareholders by late second quarter of
    2001. Subject to shareholder approvals, regulatory consents, and a tax
    ruling and opinions, closing of the Merger is targeted for late third
    quarter of 2001.


    The transaction is expected to be tax free for American General
    shareholders.

 2. Financial Overview

    The combined group will be a leader in the international financial
    services marketplace. The pro forma combined market capitalisation of £
    30.8 billion ($45.3 billion), based on closing share prices and exchange
    rates on 9 March 2001, would make the group the sixth largest
    international insurance business and the 11th largest company in the FTSE
    100 index.


    On a pro forma basis for the year ended 31 December 2000, the combined
    group would have written new business annual premium equivalent of £3.2
    billion ($4.8 billion). Pro forma Prudential and American General combined
    operating profit based on a longer term rate of return and before
    amortisation of goodwill for the year ended 31 December 2000 were £1.9
    billion ($2.8 billion) on a UK GAAP, modified statutory basis.


    Set out in Appendix 1 are provisional unaudited calculations of limited
    financial information on American General's operations using the achieved
    profits basis of accounting. The actuarial methods and assumptions used as
    a basis for the provisional achieved profits financial information have
    been reviewed by Milliman & Robertson, consulting actuaries. This
    information has not been subject to audit review and is subject to further
    adjustment.


    The provisional achieved profits shareholders' funds of American General
    as at 31 December 2000, calculated on the basis set out above, would have
    been £7.6 billion (US$11.4 billion). On a pro forma combined basis as at
    31 December 2000, the combined group would have had shareholders' funds on
    an achieved profits basis of £16.4 billion (US$24.5 billion).


    On a pro forma combined basis for the year ended 31 December 2000, the
    Merger would have been earnings enhancing to Prudential's shareholders
    using operating earnings before exceptional items on a modified statutory
    basis, even before giving effect to anticipated synergies. The Merger is
    expected to generate pre-tax cost synergies at a rate of over £85 million
    (US$130 million) per annum by the end of 2002 at an estimated one-time
    cost of less than one full year's worth of savings.


 3. Background to and reasons for the Merger


    Prudential is an international retail financial services business with a
    clear strategy to be a market leader in its chosen markets of the UK, the
    US, Asia and, more recently, Continental Europe. It has adopted a
    multi-channel, multi-brand approach to delivering a variety of products to
    meet the savings and financial security needs of an increasingly
    sophisticated customer base. Prudential has made a number of successful
    acquisitions to enhance its position. It has also demonstrated that it is
    capable of building new businesses such as egg, the UK's leading financial
    services e-commerce brand. Prudential has a strong commitment to
    maximising shareholder value through driving growth in existing and new
    markets.


    American General is an integrated financial services company focusing on
    asset accumulation, life insurance and consumer lending, primarily in the
    US. Like Prudential, American General has successfully delivered strong
    shareholder returns by adopting a multi-channel, multi-product approach
    focused on providing lifetime solutions to its customers and through a
    strong commitment to efficiency in operations and capital management.


    Both companies have targeted growth sectors where they believe they can
    earn attractive returns on capital and have made a number of acquisitions
    which they have successfully integrated to expand their businesses
    further.

    In recent years, the global insurance and asset accumulation industries
    have been going through significant consolidation. As a result, these
    industries are beginning to be led by companies which have sufficient
    scale and financial strength to command leading market positions. Against
    this background, Prudential and American General believe that, although
    they are both successful companies in their own right, they can deliver
    faster growth and greater value creation immediately and in the long term
    by combining their businesses.


    The combined group will be the sixth largest global insurance company in
    terms of market capitalisation with leadership positions in
    demographically attractive markets. Prudential and American General
    believe that the enhanced international scope, together with the resulting
    larger capital base, will ensure that the combined group is well
    positioned to capitalise on the outstanding growth opportunities that
    exist in the North American, Asian and European markets.


    The US is the world's largest life insurance and retirement services
    market. Nearly a quarter of the US population is aged between 45 and 65
    years old. This so-called 'baby boom' generation is entering the period of
    their highest net savings years. Prudential and American General strongly
    believe that the US market has highly attractive characteristics and an
    established investment culture which the combined group, as a leader in
    these key markets, will be well placed to capitalise on.


    The combined American General and JNL businesses will be the number one
    provider of annuities in the US with leading positions in variable, fixed
    and equity linked annuities. In addition, the complementary nature of
    their product offerings should improve the overall quality of earnings of
    the combined business (for example, offering both tax-qualified and
    non-tax qualified annuities). Similarly, there is very little overlap in
    the distribution platforms of American General and JNL, which will enhance
    the combined group's ability to access different customer segments.


    The combined group's management team has a proven track record in
    integrating acquisitions successfully and delivering value to
    shareholders.

 4. Merged group board and headquarters


    The Prudential board will continue to be chaired by the current Prudential
    Chairman, Sir Roger Hurn. Jonathan Bloomer, the current Prudential Group
    Chief Executive, will be Group Chief Executive of the combined group.


    As a result of the Merger, Robert M. Devlin, Chairman and Chief Executive
    Officer of American General, will be invited to join the Prudential board
    as Deputy Chairman, and Chairman and Chief Executive Officer of North
    American Operations, reporting to Jonathan Bloomer. John A. Graf, Senior
    Vice Chairman - Asset Accumulation and Rodney O. Martin Jr., Senior Vice
    Chairman - Financial Services of American General will be invited to join
    as executive directors, and Michael J. Poulos, Anne M. Tatlock and Larry
    D. Horner will be invited to join as non-executive directors. At the same
    time as the Merger Agreement was entered into the three American General
    executive directors to be appointed to the Prudential board entered into
    amendment agreements in relation to their existing service contracts with
    American General. Further details of these service contracts and amendment
    agreements will be available in the public documentation to be distributed
    in due course.

    The enlarged Prudential board will comprise 8 executive directors and 10
    non-executive directors.


    The combined group's headquarters will be in London, UK with the United
    States headquarters in New York. The US business will continue to have
    substantial operations in Houston, Texas; Lansing, Michigan; and other key
    locations throughout the United States.

 5. Merger Agreement

Under the terms of the Merger Agreement, pursuant to which American General
will merge with a subsidiary of Prudential through a US statutory merger, each
share of common stock of American General will be exchanged for 3.6622 new
Prudential ordinary shares or, at the election of the shareholder, 1.8311 new
Prudential ADSs.


The Merger Agreement sets out the conditions to the closing of the Merger. It
also contains certain termination rights, mutual representations and
warranties and various covenants relating to the operation of the businesses
of Prudential and American General in the period until closing.


The Merger Agreement requires Prudential and American General to effect the
Merger unless any one of the conditions to the implementation of the Merger is
not satisfied or waived by 31 December 2001 subject to extension for a period
of 30 days to obtain regulatory consents. The Merger Agreement also provides
for termination rights and termination fees to be paid by one party to the
other in certain circumstances.

Principal conditions

The conditions to the implementation of the Merger include necessary
Prudential and American General shareholder approvals, receipt of certain
regulatory approvals and appropriate tax opinions and rulings and the absence
of any governmental order prohibiting the Merger.


Termination rights


The circumstances in which either party is able to terminate the Merger
Agreement include:


  * If either Prudential or American General shareholders do not approve the
    Merger;

  * If the board of the other party withdraws or adversely modifies its
    approval or recommendation of the Merger;

  * If there is a material breach of representation, warranty or covenant by
    the other party that is not cured or is incapable of being cured;

  * If the other party's board recommends a superior acquisition offer for
    that party; or

  * Closing not having occurred by 31 December 2001, subject to a 30 day
    extension for finalising regulatory approvals.

Termination payments


  * The parties have agreed that American General will make a payment to
    Prudential of up to US$600 million (£408 million) if the Merger Agreement
    is terminated in specified circumstances following the making by a third
    party of a bid for American General, including:

  * If American General's board withdraws its recommendation of the Merger
    or recommends the competing bid;

  * If American General's shareholders reject the Merger;

  * The parties have agreed that Prudential will make a payment to American
    General of up to £236 million (US$347 million) if the Merger Agreement is
    terminated in the same circumstances relating to Prudential;

  * A portion of any termination fee will be payable on the relevant
    termination, with the remainder payable on consummation of another
    transaction or the paying company agreeing to another transaction within 9
    months.


 1. Dividends


    Between signing and closing both companies will continue to pay dividends
    in line with their existing dividend policy. In addition, shortly prior to
    closing, American General will pay a special dividend to its shareholders
    intended to equalise dividends of the two companies between signing and
    closing and give American General shareholders the benefit of the
    Prudential dividend rate as if they had become Prudential shareholders on
    12 March 2001.


    The combined group intends to maintain a progressive dividend policy.
    Prudential intends to continue paying two semi-annual dividends per year.


 2. Accounting and Reporting Implications


It is expected that the Merger will be accounted for using merger accounting
under UK GAAP although this is not a condition of the Merger Agreement. Under
US GAAP, the Merger will be treated as a purchase. Prudential will continue to
have a December financial year end. The accounts of the group will be
published in pounds sterling and will be prepared in accordance with UK GAAP.
A reconciliation to US GAAP will be provided in the group's SEC filing. The
combined group will continue to report on a semi-annual basis.




The following pounds sterling and US dollars exchange rates have been used in
this announcement:

                                                                          US$/£
Average rate for the year ended 31 December 2000                         1.5158
Closing rate as at 31 December 2000                                      1.4938
Average rate for the ten days ended 9 March 2001                         1.4589
Closing rate as at 9 March 2001                                          1.4691








PART II

INFORMATION ON PRUDENTIAL

Group Overview


  * Established in London in 1848, Prudential is a leading international
    financial services group with funds under management of £165 billion at 31
    December 2000, and around 22,000 employees worldwide.


  * Total group-wide insurance and investment sales for the full-year ended
    31 December 2000 were £13.9 billion, up 13 per cent on prior year.
    Statutory basis operating profit grew by 8 per cent in 2000 to £840
    million. Over 50 per cent of the group's new business revenue and over 60
    per cent of its new business achieved profits in 2000 came from outside of
    the UK.


  * Standard & Poor's financial strength rating for Prudential is AAA.


  * In June 2000, Prudential listed its ADRs on the New York Stock Exchange
    and floated a minority stake in egg, its internet financial services
    company, on the London Stock Exchange.

UK and Europe


  * In the UK, Prudential is one of the largest life insurance companies and
    pension annuity providers. Prudential has built a powerful multi-brand
    business model through:

  * Acquisition of Scottish Amicable Life in September 1997, expanding
    Prudential's distribution through intermediaries;


  * Acquisition of M&G, one of the UK's largest retail fund managers, in
    April 1999; and

  * Launch of egg, the UK's leading internet financial services brand, in
    October 1998;


  * Continued development of Prudential branded businesses and products such
    as stakeholder pensions.

  * The financial strength of the group's main UK long-term fund is rated
    AAA by Standard and Poor's and Aaa by Moody's.

  * In Europe, Prudential has entered into strategic distribution
    arrangements with CNP Assurances in France and Signal Iduna in Germany. In
    January 2001, Prudential also announced the launch of a new product in
    France, Prudential Europe Vie, an additional distribution agreement in
    France with Centre Francais du Patrimoine (the largest multi-product
    broking network in France), and the opening of a Paris-based branch.

United States


  * Prudential owns Jackson National Life ('JNL'), the 20th largest life
    insurance company in the United States, based on total assets.

  * Since it was acquired by Prudential in 1986, JNL has been transformed
    from a single product line provider into a multi-channel, multi-product
    provider. This has been achieved by pursuing a strategy of broadening its
    product range and distribution reach through both organic growth and
    strategic acquisitions. In 2000, JNL continued to drive forward its
    strategy with the self-financed acquisitions of Highland Bancorp and IFC
    Holdings.


  * In 2000 Standard and Poor's raised its insurer financial strength rating
    on JNL and Jackson National Life of New York to AAA. The rating from
    Moody's is Aa3.

Asia


  * Prudential first established its presence in Asia in 1923 and now has
    businesses in 11 countries across the region. It continues to pursue a
    strategy of broadening its customer base, distribution reach and product
    range, and is the leading private mutual fund provider in India. It also
    has top 5 positions in Hong Kong, Singapore, Malaysia, Vietnam and the
    Philippines.

  * Building professional agency distribution remains one of Prudential's
    core strengths in the region, and it is widening its distribution channels
    with a growing number of bank distribution arrangements.

  * In 2000, Prudential acquired an 89 per cent interest in Taiwanese mutual
    fund provider, Core Pacific Securities Enterprise Trust, and launched a
    joint venture with China International Trust & Investment Corporation
    (CITIC) in Guangzhou, China. It acquired Orico Life Insurance Co. Ltd in
    Japan in February 2001.

Financial Summary

                                                             2000  1999       %
                                                                         Change
                                                             (£m)  (£m)
New business achieved profits                                 613   603      +2
Statutory basis operating profit before amortisation of       840   776      +8
goodwill
Statutory basis profit before tax                             947   750     +26
Shareholders' funds - achieved profits basis                8,833 8,342      +6
Insurance and investment sales (£bn)                         13.9  12.3     +13
Insurance and investment funds under management (£bn)         165   170      -3



PART III

INFORMATION ON AMERICAN GENERAL

Overview


  * American General, founded in 1926, is a diversified financial services
    organisation headquartered in Houston, Texas. It has 16,000 dedicated
    employees and is a leading provider of retirement services, life
    insurance, consumer loans, and investments to over 12 million customers.
    With total assets in excess of US$120 billion, American General is the
    second largest publicly-traded life insurance company in the United
    States.

  * American General has developed a powerful multi-brand, multi-channel
    business model and it has established leading positions in a number of its
    product areas in the United States:


  * The third largest writer of annuities;

  * The leading provider of fixed annuities;

  * The second largest issuer of life insurance policies;

  * The seventh largest life insurer by new life premium sales; and

  * A leading provider of real estate and consumer loans through the third
    largest consumer finance branch network in the United States.


Business Operations


  * American General's operations are organised into two strategic business
    groups - financial services and asset accumulation - through which the
    group's operating divisions are managed:


  * The Retirement Services Division is a leading provider of retirement
    products and services, and markets its products through two major
    distribution channels. This Division is managed through the asset
    accumulation business group. Tax-qualified annuities and mutual funds are
    sold by its 1,900 financial advisers to employees of educational, health
    care, government entities and other non-profit organisations.
    Non-qualified annuities are sold through 37,000 representatives of over
    300 banks and other financial institutions, as well as through 22,000 life
    insurance agents. Pre-tax operating earnings from the division increased
    17% from US$855 million in 1999 to US$1,002 million in 2000 representing
    39% of the group total.


  * Investment activities, also managed through the asset accumulation
    business group, are an integral part of American General's operations. In
    addition to almost US$73 billion of investments supporting its general
    account insurance and annuity liabilities at the year-end 2000, American
    General provides investment management, advisory, and administration
    services for around US$23 billion of separate account assets. It has also
    built a significant fee-based asset management capability.


  * The Life Insurance Division, which is managed through the financial
    services business group, is a leading provider of life insurance products
    used for protection, financial planning and wealth transfer. Products and
    services are distributed through independent agent distribution systems,
    which include 33,000 independent agents and strategic alliance
    partnerships with independent broker/dealers, banks, and financial
    planners, as well as around 4,500 career agents. The division reported
    pre-tax operating earnings of US$1,164 million in 2000, up 6% from
    US$1,103 million in 1999 representing 46% of the group total.

  * The Consumer Lending Division, which is also managed through the
    financial services business group, provides a wide variety of consumer
    lending products, including mortgages, consumer loans, retail sales
    finance, and credit-related insurance, to over 2 million customers. These
    products are marketed through American General's network of over 1,300
    branches as well as through an internet-based lending system which was
    introduced in 2000. Pre-tax operating earnings increased by 10% from
    US$351 million in 1999 to US$385 million in 2000, representing 15% of the
    group total.








Financial Summary (US GAAP basis)

                                               2000         1999       % Change
                                             (US$m)       (US$m)
Revenue and Deposits                         22,368       20,232            +11
Operating Earnings                            1,310        1,179            +11
Net Income                                    1,003        1,131            -11
Operating Return on Equity (%)                 16.7         16.0            n/a
Total Assets (excl. SFAS 115)               120,360      116,876             +3
Adjusted Shareholders' Equity                 8,123        7,724             +5





APPENDIX 1

The information set out below has been prepared for illustrative purposes only

Pro forma summarised financial information for Prudential and American General
for the year ended 31 December 2000
                                               Prudential      American     Pro
                                                                General   forma
                                                     (£m)
                                                                   (£m)    (£m)
                                                 (Note 1)      (Note 2)   (Note
                                                                             3)

New business - annual premiums                        569           852   1,421
New business - single premiums                     13,354         4,558  17,912
New business (APE) (Note 4)                         1,904         1,308   3,212
New insurance business (APE)                        1,528         1,308   2,836
Value added by new business before tax (Note          613           500   1,113
5)
Achieved profits shareholders' funds (Note 5)       8,833         7,600  16,433
Analysed as:
-     long term business                            7,875         9,800  17,675
-     goodwill                                      1,611           500   2,111
-     other net assets                              1,082           866   1,948
-     total net assets before borrowings           10,568        11,166  21,734
-     net core debt                               (1,735)       (3,566) (5,301)
                                                    8,833         7,600  16,433
    -     achieved profit basis shareholders'
    funds (Note 9)

Modified statutory basis operating profit             840         1,070   1,910
(Note 6)
MSB operating profit eps (Note 6)                   31.5p           n/a   35.3p
Investment funds under management (£bn)               165            64     229

Pro forma summarised financial information for Prudential's US business and
American General for the year ended 31 December 2000

                                      Prudential's     American     Pro forma US
                                                       General         business
                                      US business
                                                          (£m)             (£m)
                                             (£m)
                                         (Note 1)     (Note 2)         (Note 3)

New business - annual premiums                 25          852              877
New business - single premiums              4,830        4,558            9,388
New business (APE) (Note 4)                   508        1,308            1,816
Value added by new business before            221          500              721
tax (Note 5)
Achieved profits shareholders' funds        2,756        7,600           10,356
(Note 5)
Modified statutory basis operating            466        1,070            1,536
profit (Note 6)
US GAAP pre-tax income (Note 7, 8)            406        1,104            1,510
US GAAP shareholders' equity (Note 7)       1,962        5,235            7,197
US GAAP total assets (US$bn)                   45          120              165
Investment funds under management              30           64               94
(US$bn)


    Note:

    1.     Extracted from the Prudential preliminary results announcement on
    22 February 2001.


 2. American General results above have been translated at an average exchange
    rate of £1:$1.5158 and a year end exchange rate of £:$1.4938.

 3. No adjustment has been made to include synergy benefits or the costs of the
    merger.

 4. Annual premium equivalent (APE) is a UK industry measure calculated as
    annual premiums plus 1/10th single premiums.

 5. American General's achieved profit information in respect of long term
    business represents provisional calculations using a methodology
    consistent with the draft guidance issued by the Association of British
    Insurers in 1995; and with economic assumptions consistent with
    Prudential's own US business, including a discount rate of 8.5% p.a. and
    an allowance for cost of capital. All amounts other than for long term
    business are based on American General's US GAAP results. American
    General's US GAAP information has been extracted from their audited 2000
    results and estimated adjustments have been made to eliminate
    inconsistencies with UK GAAP using a methodology consistent with that used
    for Prudential's own US business.

 6. Based upon a longer term rate of investment return and before amortisation
    of goodwill. American General's US GAAP information has been extracted
    from their audited 2000 results and estimated adjustments have been made
    to eliminate inconsistencies with UK GAAP using a methodology consistent
    with that used for Prudential's own US business.

 7. Represents Jackson National Life, excluding US broker dealer and fund
    management operations.

 8. Income before charge for dividends on preferred securities.

 9. Shareholders' funds for American General exclude own shares of the American
    General parent company held by American General as treasury shares.







APPENDIX 2

This press release includes certain statements that are neither reported
financial results nor other historical information. These statements are
forward-looking statements within the meaning of the safe-harbor provisions of
the US federal securities laws. Because these forward-looking statements are
subject to risks and uncertainties, actual future results may differ
materially from those expressed or implied by the statements. These statements
are generally identified by the words 'expect', 'intend', 'believe' and other
similar expressions. Many of these risks and uncertainties relate to factors
that are beyond the companies' ability to control or estimate precisely, such
as future market conditions, currency fluctuations, the behaviour of other
market participants and the action of governmental regulators. In particular,
statements regarding the consummation of the transaction are subject to risks
that the closing conditions to the transaction will not be satisfied,
including the risk that regulatory approvals will not be obtained, that the
stockholders of either company will not approve the merger, that a superior
acquisition proposal will be made for either company, or that tax-free
treatment for US purposes for the Prudential shares and ADSs to be received by
the American General shareholders cannot be achieved. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date of this document. The companies do not undertake any
obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date of these
materials.


In addition, statements regarding the expected benefits of the transaction are
subject to the risk that expected synergies will not be achieved and to the
general risks associated with the companies' businesses, as described in their
filings with the US Securities and Exchange Commission, including American
General's Form 10-K for the year ended 31 December 1999 and subsequent Forms
10-Q and Forms 8-K and Prudential's Forms 6-K.