Interim Results

Prudential PLC
26 July 2001

PART 1

EMBARGO: 0700 hrs, Thursday 26 July 2001

PRUDENTIAL INTERIM RESULTS AND NEW BUSINESS SALES, FIRST HALF 2001

  * Total group insurance and investment sales £10 billion, up 44 per cent
    on first half 2000.
  * Record group new business achieved profit £342 million, up 8 per cent on
    first half 2000.
  * Achieved basis operating profit £677 million (before UK re-engineering
    costs), up 16 per cent on first half 2000.
  * Total group funds under management £168 billion, as at 30 June 2001.
  * Dividend increases 6.1 per cent to 8.7 pence per share.

Jonathan Bloomer, group chief executive of Prudential plc, comments:
'Prudential's new business sales and interim profit results clearly show
another strong group performance. I am particularly pleased that this result
has been achieved against a back-drop of an increasingly competitive
environment and adverse market conditions in some areas. These results
demonstrate that the business is in good shape for the future.

We will maintain our strategy of developing an international retail financial
services business by broadening our geographic presence, distribution
channels, and range of products. We continue with our stated ambition for
sustainable growth as we seek to expand the business by organic means, through
joint ventures, and by acquisition.'

                                    -Ends-

Media Enquiries: Analyst/Investor Enquiries:
Geraldine Davies  [phone]     Rebecca Burrows [phone]
Steve Colton      [phone]     Andrew Crossley [phone]
Tina Christou     [phone]

Notes to Editors:

1. A presentation to analysts will take place at 10.00am on Thursday 26 July
at Laurence

Pountney Hill, London EC4R 0HH.

A webcast of the presentation slides will be available on the group's website,


        www.prudential.co.uk/plc.

        There will be a conference call for international investors at 2:30pm
        (dial in telephone number: [phone], US callers 1 303 267
        1006). A recording of this call will be available for replay for one
        week by dialling: UK: 020 8288 4459, access code 651912; US: 1 303 804
        1855, access code 1132247.

2. A Press Conference will take place at 11.45am, at Laurence Pountney Hill,
London EC4R 0HH. If journalists wish to attend, please call the Press Office in
advance on
020 7548 3304.

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


        3. A broadcast of an interview with Jonathan Bloomer (in video/audio/
        text) will be available on www.cantoscomms.com and
        www.prudential.co.uk/plc from 8.00am on 26 July 2001.

4. Total number of Prudential plc shares outstanding at end of June 2001 was
1,991,352,052.


 PRUDENTIAL PLC 2001 UNAUDITED INTERIM RESULTS


                                            Half year
                                          ended 30 June              Full year
 Results Summary                        2001          2000             2000 £m
                                          £m            £m

 New Business

 Long-term insurance and
investment products

        Single premiums                9,681         6,709              13,354
        Regular premiums                 351           253                 569

         Insurance                                                     
         products                      6,045         5,571              10,439
         Investment                                                     
         products                      3,987         1,391               3,484

        Total                         10,032         6,962              13,923  
                              
                                      

           Annual premium                             
          equivalent (4)               1,319           924               1,904


 Achieved Profits Basis Results (1)

 Operating profit before tax

 UK Insurance Operations
        Long-term                        377           329                 708
        business
        General business                  35            35                  33
                                         412           364                 741
 M&G                                      40            69                 125
 Egg                                    (63)          (81)               (155)

 UK Operations                           389           352                 711
 US Operations                           238           208                 226
 Prudential Asia                         134            77                 213
 Prudential Europe                         5             9                  17
 Other income and expenditure           (89)          (60)               (138)
(including development
expenses)                                
                                         677           586               1,029
 UK re-engineering costs                (24)            -                   -

 Total operating profit before           653           586               1,029
 tax (2)

Analysed as operating profit
from:
        Long-term business
         New business                    342           317                 613
         Business in                     401           304                 544
         force
        Other operations                (90)          (35)               (128)

                                         653           586               1,029
 Operating earnings per share (2)      23.4p         21.3p               38.2p

 Profit on ordinary activities           364           545                 728
 before tax
 Shareholders' funds                  £9.1bn        £8.9bn              £8.8bn  
  
                                       


 Statutory Basis Results
 Operating profit before tax (2)         362           425                 840
 Operating earnings per share (2)      13.4p         15.7p               31.5p


 Dividend per share                     8.7p          8.2p               24.5p


 Insurance and investment funds       £168bn        £156bn              £165bn
 under management                                


 Banking deposit balances under       £6.9bn       £7.9bn              £7.6bn
 management                                      










 Notes

 (1)  The achieved profits basis results include the results of the Group's
      long-term insurance operations on the achieved profits
      basis 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.

 (2)  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 merger  
      break fee, net of related expenses. The directors believe that operating
      profit, as adjusted for these items, better reflects underlying
      performance. Profit on ordinary activities before tax includes these
      items together with actual investment returns and profit on business
      disposals.

 (3)  Further achieved profits basis information and an abridged statutory
      profit and loss account are included within this announcement.

 (4)  Annual premium equivalents are calculated as the aggregate of regular
      new business premiums and one tenth of single new business premiums.

 (5)  The financial information included in the results summary of this
      announcement has been extracted from the Company's
      Interim Report to shareholders which contains an independent review
      report by KPMG Audit Plc.

 (6)  The dividend will be paid on 29 November 2001 to shareholders on the
      register at the close of business on 21 September
      2001. A scrip dividend alternative will be offered to shareholders.




GROUP OVERVIEW

In the first half of 2001, Prudential plc delivered a strong financial
performance, demonstrating the group's commitment to increasing the breadth
and depth of the business worldwide.

The overall strength of the business is clearly demonstrated by our group-wide
sales in the first half, with a record inflow of new insurance and investment
funds of £10 billion, up 44 per cent on the same period last year. Sales on an
annual premium equivalent basis were £1,319 million, 43 per cent ahead of same
period last year.

New business achieved profit was at an all time high at £342 million, 8 per
cent ahead of the same period last year. This was mainly due to strong sales
growth in the UK, and across the Asia region, including first time
contributions from its new operations. Fifty eight per cent of our new
business achieved profit now comes from outside the UK and Europe.

Total group achieved basis operating profit (before UK re-engineering costs of
£24 million) was £677 million, up 16 per cent on the same period last year.
The re-engineering costs relate to the closure of the UK direct sales force.

Group total new funds inflow in the first half of 2001 of £10.9 billion was 31
per cent above new funds inflow in the first half of 2000 of £8.3 billion.

Our banking operations, Egg and Jackson Federal Bank, have grown retail assets
by £900 million in the first half of 2001. Our total funds under management at
the end of June 2001 were £168 billion.

Modified statutory basis operating profit for the first six months of 2001 was
£362 million, down £63 million on the prior year. This primarily reflects: the
effect of the continued fall in world equity markets on our income; our
investment in Japan; development expenditure for initiatives in Europe; and
the cost of the closure of the UK direct sales force.

Dividend

The Board has increased the interim dividend by 6.1 per cent to 8.7 pence per
share.

Driving the Business Forward

We will maintain our strategy of developing an international retail financial
services business by broadening our geographic presence, distribution
channels, and range of products. We continue with our stated ambition for
sustainable growth as we seek to expand the business by organic means, through
joint ventures, and by acquisition.

The new business sales and interim profits show a strong group performance and
the success of our strategy. This result has been achieved against a back-drop
of an increasingly competitive environment and adverse market conditions in
some areas. These results show that the business is in good shape for the
future.

The proposed merger with American General was in line with our strategy,
although clearly of a much larger scale. It demonstrated our focus on growth
opportunities on an international platform and would have radically increased
our scale and market share in the United States. Combined with our rapid
expansion in Asia, the exciting potential in Europe and our strong position in
the UK, it would have greatly accelerated the Group's overall scale and
position. Despite the fact that we did not complete this particular merger,
our ambition to grow the business in the US remains. This focus on growth is
how we intend to deliver long-term value to our shareholders.



UNITED KINGDOM

Prudential is a scale operation with some of the biggest financial services
brands and customer bases in the UK. Over the last five years, our domestic
business has undergone a transformation.

Five years ago we had a total of 16,500 UK employees, of which 5,000 were in
the direct sales force, and we only operated under one brand. We now have a UK
business model with multiple brands, enhanced delivery channels both direct
and through intermediaries, and a broad product range.

In 1997 we acquired Scottish Amicable, to increase distribution via the
intermediary channel. In 1999 we acquired M&G, now our UK and European
investment manager, to increase our retail unit trust presence and product
diversification in this important and rapidly growing market. Just over five
years ago we created Prudential Bank, aiming to capture maturity monies. In
1998 we took the concept of banking to a higher level, with the establishment
of Egg. With over 1.7 million customers, Egg is now widely acknowledged as the
UK's leading digital financial services provider.

With over four million new customers gained through channels added since 1996,
Prudential has continued to change, innovate and evolve across the UK
business, diversifying both products and distribution.

In the first half of 2001, the UK businesses recorded strong sales results in
the key product areas, where we have leading market positions. UK sales
(excluding M&G) were £2,816 million, 7 per cent above 2000, and on an annual
premium equivalent basis £427 million, 10 per cent above the first half of
2000.

Total achieved operating profit (before UK re-engineering costs) for our UK
Insurance long-term businesses was up 15 per cent to £377 million (new
business achieved profit was up 14 per cent to £140 million). This is mainly
due to strong sales of annuities and pensions. In particular, we have seen a
good result from our bulk annuity business.

In the UK we have very strong positions in a number of product lines,
specifically:

Annuities

Prudential has a leading market position in the UK annuities market, with a 22
per cent market share. Our annuity funds under management total £13 billion,
and more than doubled in the last five years.

Our customers now have greater and different expectations for retirement and
this has led us to create a new breed of annuity that offers more flexibility,
control and transparency. We have led the way in launching such a product, the
Flexible Retirement Income Account, in April 2001.

We have a fully established bulk annuity business, with sales of £352 million
in the first half of 2001, compared to £30 million in the first half of last
year. We remain fully committed to this market and will actively compete as
the Defined Benefit market changes and schemes continue to pursue the buy-out
option, a market we estimate of about £10 billion over the next few years.

We can now write new bulk annuity business within a shareholder-financed
operation, Prudential Retirement Income Ltd (PRIL). This enables shareholders'
funds to participate directly in the future growth opportunities in the bulk
annuity market, rather than participating indirectly through the 90:10
Prudential Assurance Company life fund. Scope still remains for the
shareholder financing of other annuity businesses and we shall continue to
investigate these opportunities.

Pensions

Our focus in the pensions market has been one of our traditional areas of
strength: pension provision to large corporates and local authorities. Our
concentration has been on securing schemes with access to large numbers of
employees and where premium income will materialise quickly, resulting in more
profitable business.

Of the 12 million people in the UK who are members of an occupational pension
scheme, Prudential is the provider of Defined Contribution (DC) arrangements
to companies or authorities which employ over 20 per cent of these people.

Of the 10 million people in the UK who are not in occupational pension
schemes, around seven million have started individual pensions. The Prudential
group provides nearly one in four of these (23 per cent).

In the first half of 2001, we have secured new DC pension schemes which cover
over 55,000 employees. We have gained a significant number of tenders as a
replacement provider to Equitable Life's AVC business. In the last six months,
our share of the local authority AVC market has risen from 25 per cent to 46
per cent and we now provide AVCs to 45 local authorities, 20 of which have
appointed us within the last six months, who together employ 200,000 people.

Stakeholder pensions present a further opportunity for us to grow our pensions
business. There are still some five million working people in the UK today who
do not have any provision over and above that provided by the State.

The strength of our brand has attracted many small and medium sized
enterprises (SMEs) directly to our stakeholder products. These have all
designated over the telephone or online, which clearly improves the future
economic potential. To date over 9,000 small businesses have directly
registered with us. These SMEs employ over 340,000 people, and we have
attracted a higher proportion of those in medium sized enterprises, than those
in the very small enterprise segment.

With Profit Bonds and Investment Products

We manage over £15 billion of funds for more than 500,000 With Profit Bond
customers, and have around 25 per cent of the market by funds under
management. The sales of Prudence Bond in the second quarter of 2001 improved
on that of the first quarter. Recent product enhancements and initiatives to
improve the attractiveness, and maintain profitability of the product, are
underway.

On Investment products, our retail funds include a number of leading fixed
income and equity funds. We are the second largest unit trust manager in the
UK, with over £16 billion retail unit trust funds under management, giving us
a market share of over 6 per cent. Within this £16 billion, our £5 billion of
ISA/PEP funds under management represent over 6.5 per cent of the whole UK's
non-cash ISA/PEP market.

With Egg and Cofunds, we also have stakes in two leading fund supermarkets,
which between them have already captured more than £220 million of funds.

Restructuring

In February, we announced changes to our direct sales channels and customer
service operations in order to continue to meet changing customer needs and to
ensure that we continue to operate cost-effectively as a scale player in the
UK market. These changes included the closure of the direct sales force, and
an expanded customer service offering through remote channels such as the
telephone, the internet and the workplace.

The development of this business is not just about bringing down cost, it is
about revenue generation. During the first half of the year, we have built up
our service related sales proposition. This will help us offset the decline in
sales through the direct sales force. Some 59 per cent of individual pension
top-up sales in the first half of 2001 were through remote channels.

The strong UK sales and interim profits achieved during the first six months
of 2001 highlight that the benefit of the recent restructuring is already
feeding through, ensuring a healthy business going forward. As the UK market
changes we will continue to focus on key strategic areas, maintaining a
structure and cost base that matches market developments in the UK.

M&G

M&G was acquired by Prudential in 1999. It is responsible for managing £120
billion of funds and is one of the largest retail unit trust managers in the
UK.

Total sales were £499 million compared to £656 million in the first half of
last year, mainly due to a special offer to former M&G shareholders which
yielded £105 million in May 2000. Excluding this one-off item, gross sales
were down 9 per cent due to the current adverse market sentiment for equities
which was partially offset by increased fixed income sales. However net sales
in the first half of the year increased to £119 million from £27 million, in
the same period last year. M&G has performed creditably in a difficult market
environment and its share of retail sales has increased by 15 per cent over
the first six months of 2000.

Total operating profit for the first six months of the year was £40 million,
down from £69 million in the same period of 2000. This fall in operating
profit was due to the transfer of M&G's Life and Pensions business to Scottish
Amicable last year and the sale of our institutional equity business, and
falling stock markets in 2001, and investment in new operations in both
Cofunds and Europe which totalled £10 million. M&G has not recognised any
performance related fee in respect of its management of the life fund at the
half year, despite being 1.5 per cent above the long-term strategic benchmark
for the year to date. M&G do not anticipate this fee at the half-year stage.

When we purchased M&G, we set out three key areas of focus for the business
going forward: managing the smooth integration of M&G with PPM; improving fund
performance; and given this platform, achieving an increase in sales.

The integration with PPM has been successfully completed and despite testing
market conditions, M&G is delivering strong performance in a number of its
equity and fixed interest funds, in addition to the life fund which has
continued to outperform its benchmark during 2001.

M&G's strong position in fixed interest is reflected in sales of fixed
interest products increasing in the first half by 15 per cent to £276 million.
This demonstrates the benefit to M&G of having a diversified fund portfolio,
particularly at a time when investor appetite for equities is low. Recent
industry research (conducted by Tulip Financial Research) shows more high net
worth individuals invested with M&G than any other fund manager. M&G has also
made progress throughout its refocused wholesale division, maintaining strong
performance in the life fund and continuing to win new institutional fixed
income mandates at attractive fees.

M&G is also investing in related areas, such as Cofunds, the fund supermarket
for intermediaries, which was launched five months ago and already has over £
120 million of funds under management.

Following M&G's establishment as the group's European asset management
business, it is now seeking to maximise opportunities for sales growth in the
UK, in Europe, where it plans to launch at the beginning of 2002, and in Asia,
where Prudential Corporation Asia will be selling M&G investment funds in a
number of countries.

EGG

Since Prudential launched Egg in 1998 as a division of Prudential Banking, it
has grown into one of the UK's leading digital financial services brands.
Today Prudential retains a 79 per cent stake in Egg, the remainder of which
was floated in a public offering in June 2000.

Egg reported its half-year results on 24 July. A pre-tax loss for the period
of £63 million (down from £81 million in the first half of 2000) was in line
with expectations. Customer acquisition continued to grow rapidly with 370,000
net new customers joining Egg, leading to a total customer base of 1.72
million. Retail assets grew by 21 per cent to £4.5 billion and card balances
now exceed £1.5 billion.

The results show that Egg is on track to achieve a break-even position for the
existing UK business during the fourth quarter of 2001.

EUROPE

Prudential Europe was established in 1999 and is responsible for spearheading
Prudential's expansion into continental Europe. We currently have operations
in France and Germany where we have established strategic alliances with
strong local partners. During the first half of 2001, we continued to increase
our range of products, services and distribution channels, and build on our
existing partnership agreements.

In France, we opened a Paris-based branch in January, launched Prudential
Europe Vie, an innovative equity-backed life insurance product that builds on
the success of Prudence Bond in the UK, and signed an additional distribution
agreement with Centre Francais du Patrimoine, the largest multi-product
broking service in France. Sales of Pru Vie are currently running at FF 10
million per week.

In Germany, we re-launched the Vorsorge critical illness product which has
innovative features. At the end of May we launched our online insurance broker
service, Quinner AG, and in early July, we launched two new mutual funds which
were developed jointly with DWS Investment GmbH, a subsidiary of the Deutsche
Bank Group. These are funds of funds (Dachfonds), and are the first
Prudential-branded products to be available on the German market.

Total sales of £36 million in the first six months of the year were up 89 per
cent on the same period last year, principally due to the success of
Prudential Europe Vie in France. Total achieved operating profit was down from
£5 million in the first half of 2000 to a loss of £6 million in the first six
months of 2001, principally due to increased development expenditure. New
business achieved profit decreased by £1 million to £3 million, due to lower
sales and higher acquisition costs in Germany which were partially offset by
profits from sales of Pru Vie.

Prudential plans to enter Europe in other ways over the course of the next
year. M&G intends to start selling mutual funds in Germany in 2001 and Egg is
exploring commercial partnerships with a number of European businesses. Egg
has recently joined forces with Microsoft in a European strategic alliance,
the first stage of which will be to provide a fund supermarket in the UK
available via MSN.



USA - JACKSON NATIONAL LIFE

Jackson National Life is one of the top 20 life companies in the United
States, in terms of total assets. Since Prudential acquired the business it
has been transformed into a market-leading provider in its chosen product
lines. In 1995 JNL was largely a life and fixed annuity provider, with these
products accounting for 96 per cent of sales. Since this time the current
management team has broadened both the product range and distribution
capability, enabling JNL to write business in any economic environment.
Reflecting this diversification, the percentage of total sales accounted for
by fixed annuities and life has dropped to 34 per cent, with 66 per cent of
retail sales being equity-based (i.e. variable annuities and equity linked
indexed annuities (ELIs), sold through banker brokers, agents and
institutions).

In the first half of 2001, new business achieved profit decreased by 31 per
cent to £93 million, largely reflecting a change in sales mix and the impact
of more conservative new business profit assumptions reflecting the tougher
more competitive economic climate currently being experienced in the US.
However, business in-force almost doubled to £134 million, largely due to a
positive lapse experience variance achieved against our more conservative
assumptions, following the negative experience variance of £71 million in the
first half of 2000.

Sales of individual fixed annuities have increased to £814 million, up 54 per
cent on half year 2000, in a volatile market. This reflects the successful
execution of JNL's strategy to provide diversified products through multiple
distribution brands.

Variable annuity sales have been significantly adversely affected by the
continuing volatility in the US equity markets in recent months. Sales of £447
million were recorded, 57 per cent lower than the first half of 2000. This
decline in sales reflects the recent turmoil in equity markets and the fierce
competition from companies chasing top line growth at the expense of product
profitability. The S&P 500 had its worst year in more than a quarter of a
century and the NASDAQ suffered its worst ever decline, down 39 per cent.

Sales of stable value products have increased by 30 per cent to £1,205 million
in the first half of 2001. These sales figures include £1,055 million of
European Medium Term Notes or Global MTN-sourced funding agreements, up 40 per
cent on first half of 2000.

Despite mixed results in the first six months, mainly due to tough market
conditions, JNL remains a leading player in the equity linked index and fixed
annuity markets, and maintains its top 10 position within the stable value
market. Our top 10 net sales position in the variable annuity market in the
first quarter has been achieved in tough market conditions, and while this
ranking is lower than the position held in fixed annuities and ELIs, it
reflects our strategy of pricing for profitability, rather than for market
share.

In the second half of 2001, JNL will continue to develop its product range,
and enhance its distribution channels to further benefit from the largest
financial services market in the world.



PRUDENTIAL CORPORATION ASIA

During the first half of 2001, Prudential Corporation Asia (PCA), has
continued its impressive growth across the region. PCA is now very well placed
to capture a significant part of the anticipated growth in Asia's high
potential retail financial services market.

Six years ago Prudential's Asian presence was confined to just Singapore, Hong
Kong and Malaysia. Today we have a strong regional presence, with 20
operations in 11 countries. We have in place the infrastructure, the people
and the organisational depth to enable us to leverage synergies across the
region, particularly powerful strengths when entering new countries and
launching new products.

Total insurance sales of £642 million, in the first six months of 2001, were
up 213 per cent on the first six months of 2000. Achieved basis operating
profit in Asia, before regional development expenses, increased by 74 per cent
to £134 million, driven by a 89 per cent increase in profit from new business,
up to £106 million. The strong contribution from new business principally
reflects strong sales growth across all territories (insurance sales growth of
124 per cent on an annual premium equivalent basis).

New business achieved profit margins are now 50 per cent (60 per cent at HY
2000). This reflects a planned and managed shift in the new business mix,
including increased proportions from countries with lower margins (Taiwan and
Japan), and a higher proportion of single premium business (ie CPF related
business in Singapore, where single premium sales are a feature of the first
half of this year only). Across the region, country by country, margins for
regular and single premium business have either been sustained or have
improved.

As part of our expansion strategy in Asia, we acquired Orico Life in Japan, in
February 2001. Japan is the second largest life insurance market in the world.
Orico Life is an operationally and financially sound, modern life insurance
company with excellent growth potential. The business was re-launched under
the name PCA Life at the beginning of July. The company has operations in 11
locations throughout Japan and offers a wide range of insurance options
including term, savings and protection products. With the significant changes
currently taking place in the Japanese life insurance market, PCA Life
provides us with a very strong platform to apply our distribution management
and product innovation skills to build scale rapidly.

Our purchase of Allstate's Indonesian and Philippine operations has just
completed regulatory formalities. Although relatively small, these
acquisitions complement our existing operations.

In line with our strategy of expanding our successful unit trust operations
across the region, we have recently launched Prudential Unit Trusts in
Malaysia and Singapore. These new operations are the latest additions to PCA's
existing network of mutual funds businesses in India, Japan and Taiwan.

In Vietnam, PCA continues its impressive growth as the largest foreign life
insurer with over 9,000 agents. In our other new life markets of China and
India, we have made a very good start with rapidly growing agent numbers. We
were also the first foreign company to launch unit-linked products in China in
May.

Building superior quality multi-channel distribution continues to be high
priority. We also continue to add complementary alternative distribution
through the ongoing roll out of our successful bank distribution model. In the
first half of 2001, the proportion of sales on an annual premium equivalent
basis, through bancassurance channels, increased three times over last year.

We are beginning to see a slowdown in some Asian economies, particularly
export-led economies. While we will clearly watch developments, we believe
that there are enormous opportunities for strong players, like Prudential,
with a diversified business and a long-term commitment to the region, to
continue to sustain profitable growth.



ACHIEVED PROFIT BEFORE TAX

Achieved basis operating profit before amortisation of goodwill was £653
million, up 11 per cent on the same period last year. Included in this result
are UK re-engineering costs of £24 million associated with the closure of our
direct sales force, announced in February 2001, made up of the £13 million
direct cost to shareholders and £11 million shareholders' share of the £97
million cost borne by the life fund.

The result also includes development costs of £33 million relating to
investment in our long term businesses, including £22 million in Asia,
comprising the rebranding and relaunch of our new operation in Japan as PCA
Life, together with other investments in the region; and £11m of investment in
Europe. Looking to the second half of the year, we expect similar levels of
development expenditure for Europe and M&G, and a slight increase for our
businesses across Asia, particularly Japan.

Achieved profit on ordinary activities before tax fell £181 million to £364
million. This was mainly due to negative short-term fluctuations in investment
returns of £580 million, of which £399 million relates to the UK life fund and
£116 million to Jackson National Life. The fluctuations represent the variance
between our expected long term return and the actual return arising in the
period, and principally reflects the fall in equity markets experienced around
the world in the last six months.

Profit before tax also includes the merger break fee of £338 million received
from American General Corporation, net of related expenses comprising external
advisors' fees and staff retention payments in the United States.



STATUTORY BASIS PROFIT BEFORE TAX

Statutory basis operating profit before amortisation of goodwill for the first
six months of 2001 was £362 million, down £63 million on the prior year. This
reflects a £10 million decrease in profit from our UK Insurance Operations,
reflecting the impact of lower terminal and reversionary bonuses in light of
weaker equity markets in the UK, and a £29 million decrease in M&G's profits,
offset by a lower loss of £63 million in Egg, compared with a loss of £81
million for the same period last year. Also contributing to the result are a £
10 million fall in profit from our US operations reflecting the impact of
economic conditions on our investment book and a reduction in variable annuity
fees, and a £9 million fall in profit from Asia due to higher development
expenses.

Under the statutory basis, UK re-engineering costs reflect the £13 million
direct cost to shareholders.

Statutory basis profit on ordinary activities before tax of £548 million
includes negative short-term fluctuations in investment returns of £105
million, principally arising in Jackson National Life and on assets supporting
the UK General Insurance operation, and the merger break fee mentioned above.

Shareholders' Funds

Total achieved profits basis shareholders' funds were £9.1 billion at 30 June
2001 (31 December 2000: £8.8 billion). We maintain long-term triple A
financial strength ratings from both Moody's and Standard and Poor's.

SUMMARY

The broad international spread of our business has allowed us to retain our
focus on adding value at the same time as increasing sales. This, together
with the active management of our capital, maintains our sound financial
position.

The benefits of our strategy of diversification by product and distribution
channel internationally are clear. As much as the strategy itself, it is our
ability to execute it successfully across the group which underpins these
results.


 NEW BUSINESS PREMIUMS BY PRODUCT DISTRIBUTOR


                                                              Annual Premium
                        Single             Regular            Equivalents
                        Half year          Half year          Half year
                        ended 30     Full  ended 30     Full  ended 30     Full
                           June      year     June      year    June       year
                       2001   2000   2000  2001  2000   2000  2001  2000   2000
                         £m     £m     £m    £m    £m     £m    £m    £m     £m
 UK Operations
 Prudential 
 Intermediary Business           
 Individual pensions    130     97    196    33    21     54    46    31     74
 Corporate pensions      33     55     94     8     8     15    11    14     24
 Life                   834    861  1,660    16    19     36    99   105    202

 Annuities              601    272    652     -     -      -    60    27     65
 Investment products     46     21    101     1     2      3     6     4     13
                      1,644  1,306  2,703    58    50    108   222   181    378
                       

 Department of Social    55     51     59     -     -      -     6     5      6
 Security rebates
 Total                1,699  1,357  2,762    58    50    108   228   186    384
                       

 Prudential Financial
 Services
 Individual pensions     20     19     30    20    20     34    22    22     37
 Corporate pensions     248    334    751    72    45     93    97    78    168
 Life                   171    273    534     8    16     28    25    43     82
 Annuities              327    312    602     -     -      -    33    31     60
 Investment products     15     26     43     3     6     12     5     9     16
                        781    964  1,960   103    87    167   182   183    363

 Department of Social   175    175    175     -     -      -    17    17     18
 Security rebates
 Total                  956  1,139  2,135   103    87    167   199   200    381
                             


 M&G
 Individual pensions      -     19     28     -     1      2     -     3      5
 Life                     -      -      1     -     -      -     -     -      -
 Investment products    492    627  1,050     7     9     16    56    72    121

 Total                  492    646  1,079     7    10     18    56    75    126

 Total UK Operations  3,147  3,142  5,976   168   147    293   483   461    891
                       


 Jackson National Life

 Fixed annuities        814    528  1,056     -     -      -    81    53    106

 Equity linked index    139    245    409     -     -      -    14    25     41
 annuities
 Variable annuities     447  1,040  1,709     -     -      -    45   104    171
                             

 Guaranteed Investment  150    168    365     -     -      -    15    17     36
Contracts
 GIC 
 - European Medium    1,055    755  1,291     -     -      -   105    75    129
Term Notes             

 Life                     -      -      -    11    13     25    11    13     25
 Total                2,605  2,736  4,830    11    13     25   271   287    508
                       

 Prudential Asia
 Insurance products     479    123    275   163    82    229   211    94    256
 Investment products  3,423    700  2,259     -     -      -   342    70    226
                       

 Total                3,902    823  2,534   163    82    229   553   164    482
                       

 Prudential Europe
 Insurance products      27      8     14     9    11     22    12    12     23
 Group Total
 Insurance products   5,705  5,335  9,901   340   236    538   910   770  1,528
                       

 Investment products  3,976  1,374  3,453    11    17     31   409   154    376
                       

 Total                9,681  6,709 13,354   351   253    569 1,319   924  1,904
                                           


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.

Annual premium equivalents are calculated as the aggregate of regular new
business premiums and one tenth of single new business premiums.



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