SOURCE: Prudential plc

February 20, 2007 02:04 ET

Prudential Plc announces another Excellent Year For Prudential's 4.4 Million With-Profits Customers

LONDON, UK -- (MARKET WIRE) -- February 20, 2007 --Embargo: 07.00am Tuesday 20 February 2007

                       4.4 MILLION WITH-PROFITS CUSTOMERS


--   Prudential's 4.4m with-profits customers continue to reap the
     rewards of investing over the long-term in the Prudential 
     With-Profits Fund ("the Fund")

--   Consistent and prudent investment management approach resulting 
     in strong returns in Prudential's Fund over many years

--   Excellent returns that help customers plan for their retirement
     with greater certainty:
     -    Prudential has increased year-on-year payouts by more 
          than 10 per cent across the majority of policies
     -    Annual bonus rates maintained in 2007
     -    With-profits payout values boosted by up to 17.5 
          per cent
     -    With-Profits Annuities income increased by up to 15 per 
          cent for the coming year
     -    All maturing Prudential endowments will meet repayment 
          targets in 2007 and an estimated 96 per cent of Scottish 
          Amicable endowments are expected to do the same

--   GBP2.5 billion added to policy values

Prudential's Investment Performance Excels in 2006:
--   Prudential's Life Fund generates 12.4 per cent return in 2006.
     Investment performance over 5 years of 63.8 per cent and over 
     10 years of 161.9 per cent, out-performing the funds of our 
     major competitors who have declared to date in 2007

--   Significantly better returns in 2006 from Prudential's Fund 
     compared with the average sector returns of: Balanced 
     Managed Funds; Distribution Funds; and Cautious Managed 

--   Prudential's with-profits products have also significantly
     out-performed against cash and building society accounts

--   Prudential's investment management  has provided "dazzling 
     performance over the past few years" (Source: Cazalet 
Gary Shaughnessy, Managing Director, Life and Pensions at Prudential, said: "By prudently managing our With-Profits Fund, we have consistently delivered substantially better returns than the vast majority of bank and building society accounts while at the same time limiting the risk customers face when investing directly in the stock market. Another year of strong returns means that yet again, our policyholders are benefiting from investing with Prudential over the long-term."

What has Prudential delivered for investors?

Prudential's 4.4 million with-profits policyholders are today looking at the prospect of being more secure in their retirement as the company increases their policy values by up to 17.5 per cent. This follows a very strong investment return in Prudential's Life Fund in 2006 of 12.4 per cent (before tax and charges). The majority of policyholders will see their policy values increase by more than 10 per cent.

We believe Prudential's with-profits investments continue to provide solid long-term growth prospects for investors through increased payouts for all policies maturing in 2007 when compared with their value 12 months ago - further evidence that holding long-term investments over their full term is sensible for the vast majority of investors.

Policies in 2007 show increases compared with their position a year ago:

--   10 year Prudence Bond -  With-Profits Bond - 
     (GBP10,000 single premium) up 10.9 per cent

--   15 year Personal Pension (GBP200 per month regular premiums) 
     up 11.4 per cent

--   20 year Personal Pension (GBP200 per month regular premiums)
     up 11.8 per cent

--   25 year Prudential With-Profits Mortgage Endowment 
     up 11.8 per cent

--   25 year Scottish Amicable With-Profits Mortgage Endowment 
     up 12.7 per cent
Notes: Both mortgage endowment examples based on GBP50 p.m. regular premiums, male aged 30 at start of contract

: All figures are after deduction of tax (where relevant) and charges.

As in previous years, Prudential continues to show the 12-month growth achieved for individual policyholders, as this is a more relevant measure than showing them a comparison with a policy that matured a year earlier.

Prudential's customers have benefited from the financial strength, diversity and outstanding investment performance of its With-Profits Fund, compared with other cautious investments as follows:

Prudence Bond's performance relative to alternative investment products

Investment Product                    Total Payout  Annualised

Prudential With-Profits Bond             GBP17,772        5.9%
(10 year, GBP10,000 single premium)
Average building society account         GBP12,015        1.9%
Average balanced managed unit trust      GBP18,698        6.5%
  Average balanced managed               GBP16,593        5.2%
  unit-linked life fund
    Notes 5 and 8

Prudential's Personal Pension performance relative to alternative investment

Investment Product                    Total Payout  Annualised 

Prudential With-Profits                 GBP119,401        8.4%
Individual Pension                     
(20 year term, GBP200
per month regular premiums)
Average building society account         GBP67,066        3.2%
Average balanced managed unit trust     GBP119,127        8.3%
Average balanced managed                GBP114,352        8.0%
unit-linked pension fund
      Note 5, 8 and 9

How does Prudential compare?

Prudential's with-profits investments continue to hold their own against the alternatives available to investors and at a level of risk that is often significantly lower than other actively managed multi-asset investments.

In 2006, Prudential's Fund return of 12.4 per cent represented a significant out-performance over the average sector returns of: Balanced Managed Funds 9.1 per cent; Distribution Funds 5.9 per cent; Cautious Managed Funds 6.8 per cent; and cash at 3 per cent. This performance demonstrates that investing in with-profits with Prudential works.

Source: Financial Express average life fund sector fund performance and Financial Express FINEX 90 day deposit performance, both between 31/12/2005-31/ 12/2006

However, this year's announcement is not just about the results in 2006. Over 5 years, our Fund has outperformed the FTSE 100 and FTSE All-Share indices, as well as the UK Average Cash and Fixed Interest Fund benchmarks. Take a look at the facts:

Fund / Index                      Total return over 5 years

Prudential With-Profits Fund      63.8%
FTSE All Share (total return)     50.2%
FTSE 100 (total return)           41.1%
UK Average Life Fund              22.6%
UK Average Cash Fund              13.9%
Note 6

Similarly, the Fund has performed exceptionally well over a 10-year period (161.9 per cent) when measured against the funds of our major competitors in the UK who have declared bonuses so far this year and the FTSE 100 and FTSE All-Share indices.

We believe our investment performance and the values we are adding to plans stand out from the competition. For example, a typical payout for a 25-year endowment maturing in 2007, on a male life (age 30 next birthday at outset, non-smoker, paying GBP50 a month) would be worth:

-- GBP49,492 if invested with Prudential

-- GBP43,451 if invested with Norwich Union, and

-- GBP38,054 in a Standard Life plan

Source: Prudential, Norwich Union and Standard Life 2007 Bonus Announcements

Gary Shaughnessy continued: "Our longstanding customers continue to enjoy the benefits of investing with Prudential across different market conditions. Consistency is important to them and our investment performance over five and 10 years has continually outperformed a number of market indices and the vast majority of other with-profits funds.

"This demonstrates clearly that with-profits, by being invested in an actively managed, well-run and financially strong fund, can produce good returns for the cautious investor. Our customers have done exceptionally well, not only when compared to investing in with-profits with other companies, but against alternative multi-asset investments, and crucially, at a lower level of risk than direct investments in the UK stock market."

When compared with values being paid by many other major providers this year, Prudential customers are better off up to the tune of: GBP40,481 on 20-year individual pension; GBP1,259 on the 10-year surrender value of a single premium with-profits bond; and GBP11,438 on a maturing 25-year with-profits endowment. Note 7

This strong performance is in a large part due to Prudential's skilled investment management; its prudent stewardship of the Fund; the freedom, through sustained financial strength, that allows it to invest in 'real' assets and in turn review the asset mix to reflect its views on markets. This focus on maintaining the financial health of the Fund is central to the rigorous management process that Prudential applies to with-profits investing.

Ned Cazalet, Cazalet Consulting, and a leading industry commentator said: "The Pru's WP Fund has turned in a dazzling performance over the past few years. On the investment front, the Pru has got some big market calls right, and its tactical asset allocation decisions have paid-off, big time, leading to massive investment out-performance relative to its peers, with the knock-on effect showing up in its market-bucking bonus payments - we score it 9 out of 10."

In July 2006 Prudential retained its top ranking in the WM Life Fund Survey. The Prudential with-profits fund took the top spot, making it the best performing fund in the WM UK Life Fund Universe. The WM Life Fund Survey is compiled on a quarterly and annual basis by WM, the independent fund-performance service provider. This ranking consolidates the superior position achieved in previous years, with Prudential retaining its top spot over 10 years.

James Smith, of Investment Week, wrote: "Prudential is one of the few to win plaudits for performance and major asset allocation calls on its multi-billion with-profits portfolio. After all, how many fund management groups can claim a demonstrable track record in asset allocation that incorporates correct calls on the dotcom bubble and subsequent market recovery?"

(Source: Investment Week - 29/01/07)


Full details of Prudential's 2007 bonus announcement can be downloaded from:



Or contact the Prudential UK press office on:

Darragh Leeson   Tel:   0207 150 2600 Mobile: 07801 856011
Steve Colton     Tel:   0207 150 3136 Mobile: 07771 531525
Juliette Emblem  Tel:   0207 150 2657 Mobile: 07802 486414

The information contained in Prudential UK's press releases is intended solely for journalists and should not be used by consumers to make financial decisions. Full consumer product information can be found at

Forward-Looking Statements

This statement may contain certain "forward-looking statements" with respect to certain of Prudential's plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements containing the words "believes", "intends", "expects", "plans", "seeks" and "anticipates", and words of similar meaning, are forward-looking. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Prudential's control including among other things, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities, the impact of competition, inflation, and deflation; experience in particular with regard to mortality and morbidity trends, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which Prudential and its affiliates operate. This may, for example, result in changes to assumptions used for determining results of operations or re-estimations of reserves for future policy benefits. As a result, Prudential's actual future financial condition, performance and results may differ materially from the plans, goals, and expectations set forth in Prudential's forward-looking statements. Prudential undertakes no obligation to update the forward-looking statements contained in this statement or any other forward-looking statements it may make.

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