Restructure Proposals

Prudential PLC
13 February 2001



Embargo: 09.00 Hrs GMT on Tuesday 13 February 2001


           PRUDENTIAL ANNOUNCES RESTRUCTURING OF DIRECT SALES FORCE

                   AND CUSTOMER SERVICE CHANNELS IN THE UK

Prudential plc announced today changes to its direct sales channels and
customer service operations in the UK. These changes include:


  * An expanded customer service offering through the telephone, the
    internet and the workplace;

  * Greater accessibility for customers to a comprehensive product range;
  * A smaller face-to-face sales force focusing on financial planning
    services; and
  * Rationalisation of back-office administration and support functions.

The changes, which are being implemented in order to continue to meet changing
customer needs and to ensure Prudential operates cost-effectively as a scale
player in the UK marketplace, represent a further evolution of the group's
business model in the UK to improve its service offering to over six million
customers.

Prudential is shifting its focus from a large direct sales force to
alternative distribution channels. The current direct sales model of 1400
sales consultants will be replaced by a smaller specialist force of qualified
advisers providing a face-to-face financial planning service. This team is
expected to grow to around 250 advisers. In addition, a team of 100
consultants will provide information and advice on pensions and other products
to customer groups within corporate business clients, small and medium
enterprises (SMEs) and affinity groups.

Prudential also has considerable experience of delivering customer services
and generating new sales through remote channels and the group will continue
to invest significantly in enhancing its telephone and internet services.
Prudential's current integrated advertising, website and telephone help line
campaign, publicising the group's stakeholder pension offering, received 3000
contacts from SMEs in the first week, 40 per cent of which were through the
website. In its General Insurance business, all customer service needs and the
handling of claims, as well as over 70 per cent of its current general
insurance sales, are conducted over the telephone.

As a result of these changes, Prudential anticipates that after allowing for a
number of redeployment opportunities, 2000 jobs will become redundant within
the sales force, sales support operations and in central back-office and
administration support functions. These job reductions will take effect over a
12 month period following which, Prudential's UK insurance operations
(including Scottish Amicable) will employ 9,500 staff in the UK, down from
today's figure of 11,500.

The group expects to incur a restructuring charge of £110 million from these
changes, of which £13 million will impact directly on shareholders. However,
from 2002, Prudential expects to achieve annual gross cost savings of around £
135 million, of which £15 million will be directly attributable to
shareholders.

Jonathan Bloomer, Prudential's Group Chief Executive, said: 'The UK
marketplace is experiencing dramatic change which presents enormous
opportunities and long-term potential for Prudential. I am confident that by
transforming our business model we are well placed to take advantage of these
opportunities going forward. The changes we have announced today will help us
to deliver exceptional customer service and long-term value creation as a
profitable player of scale in the UK.

'Following last year's restructuring of our UK operations, this refocusing of
our face-to-face channel and enhancement of our remote operations will enable
us to better meet the changing needs of our customers and build upon our
advantages of scale, financial strength and our strong brand.'

In the future, customers will benefit through lower costs and simpler ways to
purchase products. They will be able to reach Prudential through a range of
channels which offer greater transparency with enhanced customer service, in
particular:

  * Prudential is accelerating developments in remote communication channels
    such as telephone services, the internet and direct mail campaigns to
    increase contributions and the number of products owned by each customer.
  * A team of specialist financial planners, expected to grow to 250
    advisers, will provide a personalised face-to-face financial planning
    service for customers with more complex financial needs.
  * Customer groups within corporate business clients, SMEs and affinity
    groups will be able to access Prudential products and services through its
    expanded worksite marketing service. This will grow to 100 advisers
    conducting face-to-face presentations to groups, supported by remote
    services.
  * A simple financial healthcheck service will be available on-line or over
    the telephone from 2002. This will provide financial decision-making tools
    to help customers assess their individual needs, supported by a customer
    helpline and an adviser line.
  * The recent selection of Prudential as the preferred supplier for the
    British Chambers of Commerce (BCC) and the Trades Union Congress (TUC)
    stakeholder pension schemes demonstrates that the company is well
    positioned to benefit from the opportunities presented by the introduction
    of stakeholder pensions. Over 50 of the 61 Approved or Accredited BCC
    Chambers plus 12 Associate Chambers, representing 90,000 employers, have
    indicated that they will be supporting the Chambers' Stakeholder Scheme.
    Trade unions representing over 4.7 million individuals have expressed
    their support for the TUC Stakeholder Scheme which has a potential market
    reach of over 10 million individuals.
  * Distribution of products to IFAs will be increased through the setting
    up of a new company, Scottish Amicable Financial Services, that will
    distribute through a combined sales force, both Scottish Amicable and
    Prudential-branded products, including new products from Prudential
    Annuities.

Prudential anticipates that, by 2003, the revenue levels previously generated
by the direct sales force will be replaced by a number of the initiatives
outlined above.

John Elbourne, Chief Executive of Prudential UK Operations, added: 'The drive
for lower pricing in the UK means that it is no longer economic for us to
maintain a large salaried face-to-face sales force. Technology is
revolutionising our industry and customers are accessing financial products
and financial advice in different ways.

'Research tells us that face-to-face contact still plays a role in our
communication with customers where more complex transactions are involved but
there is an increasing trend for customers to seek alternative channels where
their needs are more straightforward.

'We will take every step to minimise the number of reductions through natural
turnover and redeployment and to ensure the best possible transition and
support for everyone affected. We have started a consultation process with
employee representatives over these proposals.'

                                    -Ends-

For further information, please contact:
Media                                           Analysts
Geraldine Davies - 020 7548 3911                Rebecca Burrows - 020 7548 3537

Steve Colton/Tina Christou - 020 7548 3721/3719

Notes to Editors:

 1. There will be conference calls today for:

      + Wire services at 9.30 GMT on 020 8240 8241
      + Analysts at 10.15 GMT on 020 8240 8242
        (a recording of this call will be available for the next 14 days on
        020 8288 4459, access code: 623822)
      + Media at 11.45 GMT on 020 8240 8243


        These calls will be hosted by Jonathan Bloomer, Group Chief Executive
        and John Elbourne, Chief Executive, UK Operations.

 1. Prudential's UK insurance operations currently have 11,500 employees within
    three business units: Prudential Financial Services, Prudential
    Intermediary Business and Prudential Insurance Services. Prudential
    Financial Services is responsible for all direct distribution of
    Prudential-branded products; Prudential Intermediary Business for all
    distribution of products via the Independent Financial Adviser market; and
    Prudential Insurance Services, for all administration and legacy products
    under the Prudential brand and the General Insurance business.
 2. In 2000, the new premiums generated by the direct sales force in the UK
    were
    £115 million on an APE* basis (excludes DSS rebates, internal vestings and
    pension top-ups). This represents 6 per cent of Prudential group's sales
    in that year.

    *Annual Premium Equivalent (APE) sales comprise regular premium sales plus
    one tenth of single premium sales.
 3. This announcement affects the direct sales force of 1,800 financial
    consultants, managers and branch and sales support positions in addition
    to 700 positions in central back-office administration and support
    functions. Prudential will minimise the number of reductions through
    natural turnover and approximately 500 redeployment opportunities in the
    alternative channels and expanded remote services. The positions affected
    are spread across the country and will not therefore have a significant
    impact on any one geographic area.
 4. Headcount of Prudential Direct Sales Force since 1991 (year average):

    1991 - 9,296

    1994 - 6,485

    1997 - 4,904

    1998 - 3,728

    1999 - 2,675

    2000 - 1,641

 5. The direct sales force currently provides financial advice and a Prudential
    product range that includes general insurance, mortgages, savings,
    investment protection products such as life cover, with profit bonds and
    distribution bonds, pensions and pension top-ups, unit trusts and ISAs.
    All these products will continue to be made available through the
    financial planning service, and remote channels such as the telephone and
    through information on the internet.
 6. Prudential already undertakes a significant part of its customer service
    offering through its remote operations. In the UK, Prudential handles an
    average of one million calls from new and existing customers per month
    through its telephone centres.
 7. At least half of Prudential Annuities' business is transacted over the
    telephone. The establishment of a combined IFA sales force distributing
    both Scottish Amicable and Prudential branded products will provide
    further opportunities to the Annuities business.
 8. Customers can find out more information about Prudential's stakeholder
    pension by visiting www.pru-stakeholder.co.uk or calling 0845 070 3333.
 9. Prudential's Life Fund is ranked AAA by Standard and Poors.
10. Prudential customers who have questions relating to these changes should
    call Prudential on 0845 075 33 44.