Prudential Plc New Business Results For The 9 Months To 30 Sept 2006

Market Wire, October, 2006

Embargo: 07.00am Thursday 19 October 2006

PRUDENTIAL PLC NEW BUSINESS RESULTS FOR THE 9 MONTHS TO 30 SEPT 2006

All figures compared to 2005 at constant exchange rates unless stated,

New business for the first nine months of the year:

                      APE1          Growth    PVNBP1       Growth

                      Nine months             Nine months

Insurance:
Total Group           GBP1,803      11%       GBP13,902    6%
                      million                 million
Prudential UK retail2 GBP485        11%       GBP3,954     10%
                      million                 million
Total UK              GBP664        (4%)      GBP5,744     (7%)
                      million                 million
Jackson               GBP467        15%       GBP4,633     14%
                      million                 million
Prudential            GBP673        29%       GBP3,525     22%
Corporation Asia      million                 million
Asset Management:

M&G                   Record net fund inflows of GBP5.1 billion,
                      up 87%
Asia
                      Record net fund inflows of GBP1.6 billion,
                      up 65%

1 See notes 1 and 2 in Notes to Editors

2 UK Retail sales include all products except bulk annuities and credit life sales

Mark Tucker, Group Chief Executive said:

"The Group is in robust health with excellent prospects for continued profitable growth.

"We continue to see strong growth in APE new business premiums across our retail life insurance businesses with Asia up 29%, Jackson retail up 25% and the UK retail up 11%. Overall, APE for new business sales across the Group was ahead 11% to GBP1.8 billion.

"Our asset management businesses - M&G in the UK and Europe, and our businesses across Asia - again delivered record inflows.

"Egg, however, was adversely affected by a marked deterioration in industry wide consumer behaviour in this quarter. We now expect Egg to report an operating loss in the second half of 2006."

Commentary on Third Quarter 2006 New Business Results

UK Insurance and Banking operations

Prudential's UK retail insurance operations have continued to perform well in the first nine months of 2006 with retail APE sales of GBP485 million up 11 per cent on 2005 driven primarily by the growth in pensions and individual annuity sales. Total APE sales for the UK insurance business in the first nine months of 2006 fell 4 per cent on 2005 to GBP664 million (GBP5.7 billion on a PVNBP basis) because of lower sales in the bulk annuity market. Total sales in the third quarter have increased by 13 per cent on the corresponding period in 2005.

Corporate pension APE sales increased 23 per cent due in part to the continuing shift from defined-benefit to defined-contribution pension schemes but also due to the impact of A-Day. Individual pension sales increased 8 per cent due to increased activity following A-Day. As part of its commitment to this market, Prudential launched a new self-invested personal pension (SIPP) in August 2006.

Individual annuity sales grew by 15 per cent, driven primarily by increased internal vestings and new partnership agreements. The annuity partnership with Royal London announced earlier this year came into effect in September. This agreement allows Prudential to provide annuity quotes to all Royal London customers with maturing pensions originally written under various brands within the Royal London Group. Sales of with-profit annuities continued to grow strongly (up 127 per cent), benefiting from the favourable comparison of their returns with conventional annuity rates. Prudential's continued outstanding performance in the annuities market was recognised with the Moneywise Best Annuity Provider Award for the third year running.

With-profits and offshore bond sales increased by 29 per cent and 73 per cent respectively, reflecting Prudential's financial strength and outstanding life fund investment returns as well as an increase in consumer appetite for these investment products. Its strategy of targeting higher value intermediary sales led to reduced sales of unit-linked bonds.

Prudential believes the lifetime mortgage market will continue to grow, reflecting the increasing need for many consumers to supplement their retirement income. In response to this, it is introducing a new sales team to sell its Property Value Release Plan. The team will be recruited by the end of this year to visit prospective clients and offer specialist advice on Prudential's lifetime mortgage product.

Prudential launched its new Flexible Protection Plan in July 2006. This is an innovative new protection product, which is designed to provide customers with wider cover than traditional products.

After a slow first half in 2006, activity within the wholesale bulk annuity market has picked up in the third quarter, however, Prudential's sales for the first nine months have remained lower than the corresponding period last year. Prudential has seen increased competition in the bulk annuity market during 2006 and although it remains committed to this market it will only participate where there is an acceptable return on risk adjusted capital.