Bonus announcement

Prudential PLC
22 February 2005


Embargo: 07.00 22 February 2005


                  Prudential with-profits bonus overview 2005

                 Prudential shows strength with buoyant bonuses


  • Total bonus rates increased or maintained on all unitised plans, and good
    year-on-year increases in the value of nearly all with-profits policies

  • Exceptionally strong investment-return on the Prudential with-profits fund
    of 13.4% (before tax and charges)

  • This compares to the FTSE 100 index (Total Return) of 11.25%

  • Over the last five years, the with-profits fund has delivered a pre-tax
    return of 20.7%, compared with a negative total return of -19.5% for the
    FTSE 100 index over the same period

  • Policies paying out in 2005 show strong increases compared with their
    position a year ago:

      • 10-year Prudence Bond (£10,000 single premium) up 7.9% on its 9-year
        value in 2004
      • 15-year Personal Pension (£200 per month regular premiums) up 7.75% on
        its 14-year value in 2004
      • 20-year Personal Pension (£200 per month regular premiums) up 10.7% on
        its 19-year value in 2004
      • 25-year With-Profits Endowment (£50 per month regular premiums based
        on male aged 30 at start of contract) up 11.1% for Prudential and 13.8%
        for Scottish Amicable on its 24-year value in 2004

        Note - All figures are after deduction of tax and charges

  • Annual bonus rates are being maintained for all business

  • With-profits annuities total bonus increased to 7.12% (6.35% in 2004)

  • Buoyant performance enables Prudential to add £2.2 billion to policy
    values

  • The with-profits fund of Prudential is the UK's largest, with more than
    £73 billion under management and has 5.5 million policyholders (inclusive of
    the Scottish Amicable Insurance Fund)

  • Prudential mortgage endowments maturing in 2005 will meet repayment
    targets and we've seen a significant improvement in Scottish Amicable
    policies meeting repayment targets
  • A 25-year savings endowment has delivered an annualised return of 8.7% net
    of tax and charges, well ahead of comparable returns for deposits



  • Prudential remains committed to maintaining a fair Market Value Reduction
    (MVR) policy. This currently allows customers to withdraw £25,000, free of
    any MVR adjustment, in any 12-month period, assuming the money has been in
    the same with-profits fund for at least five years.

David Belsham, Actuarial Director, Prudential Assurance, said:

'We are now seeing the benefit of long-term prudence. We took early action to
protect policyholders' funds by switching out of equities ahead of the prolonged
bear market and policyholders are now benefiting from the strong returns earned
on Prudential's with-profits fund.

'This year's bonus declaration shows that with-profits continues to be an
attractive investment for policyholders when provided by a financially strong
and well managed fund, such as Prudential.'

Mark Wood, Chief Executive, Prudential UK and Europe, said:

'We know from talking to our customers that many people are still looking for
attractive returns, but are not prepared to take on the risk associated with
investing directly in the stock market.

'As a result, we are confident about the future of the with-profits market and
we believe with-profits continues to offer a valuable way of saving. Our
financial strength enables us to compete strongly in this market.'

Prudential established its independent with-profits committee in January 2005.
This committee assesses effectively and appropriately how the company balances
the rights and interests of policyholders and shareholders in relation to its
with-profits funds, and whether Prudential complies with its Principles and
Practices of Financial Management.

The committee comprises three members, all of whom are independent of
Prudential. They are:

  • Andreas Whittam Smith, First Church Estates Commissioner and the founding
    Editor of The Independent newspaper;

  • Michael Arnold, a Principal and Head of the Life practice in the London
    office of Milliman; and

  • Jeremy Goford, until recently Principal of Tillinghast-Towers Perrin and
    President of the Institute of Actuaries.

The committee has overseen the approach to, and the setting of, the 2005 bonus
declaration.

Full details of Prudential's 2005 bonus announcement are available from:

  • the Prudential UK Press Office

  • www.pru.co.uk/presscentre

  • www.headlinemoney.co.uk

Enquiries to:

Media

James Murray          Tel:     [phone]     Mobile: [phone]

Anthony Frost         Tel:     [phone]     Mobile: [phone]

Paul Keeble           Tel:     [phone]     Mobile: [phone]

Analysts / investors

Marina Lee-Steere     Tel:     [phone]








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