Prudential PLC announces Inherited Estate

Market Wire, November, 2007

08.31am, Wednesday 28 November 2007



Update on possible Reattribution of the Inherited Estate of the Prudential
With-ProfitS Sub-Fund

In March 2007, Prudential plc (Prudential) announced it was considering a reattribution of the inherited estate held in the With-Profits Sub-Fund (WPSF) of The Prudential Assurance Company Limited (PAC) if it was in the best interests of policyholders and shareholders. Prudential continues to explore the possibility of a reattribution.

No decision has yet been taken to proceed with reattribution and policyholders need take no action at this stage.

Nick Prettejohn, Prudential UK CEO, said: "This is an extremely complex process. We are providing Peter Bloxham, the nominated Policyholder Advocate (PHA), with detailed briefings regarding both the life fund and inherited estate and we are also discussing our progress with the FSA.

"We aim to be in a position to determine whether reattribution is in the best interests of policyholders and shareholders in the first half of 2008."

Since March, Mr Bloxham has established his own independent office and engaged legal and actuarial advisers to assist him with his due diligence. His main task of reviewing and analysing Prudential's with-profits business is underway, with a programme of regular meetings with both Prudential and with the FSA. The PHA's office is also preparing plans for consulting with policyholders should the reattribution proceed.

Peter Bloxham said: "I am pleased to report that we have made progress and I am confident that if Prudential does proceed to appointment we will be ready to move quickly to the consultation stage."

ENDS



Enquiries:


Media                                         Investors/Analysts
Jon Bunn                   44 20 7548 3559    James Matthews    44 20 7548 3561
William Baldwin-Charles    44 20 7548 3719

Notes to Editors:


1.  Policyholders with questions on the reattribution proposals can call
    Prudential's dedicated Reattribution Service Centre on 0845 300 2641,
    8am - 6pm Monday to Friday. Alternatively policyholders can write to
    Prudential, Stirling, FK9 4UE. More information on the proposed
    reattribution process can be found at  www.pru.co.uk/reattribution 

2.  The Policyholder Advocate has established a website at
     www.prupolicyholdersadvocate.com 

3. Eligibility

In order to protect the interests of existing policyholders of Prudential's With-Profits Sub-Fund should reattribution proceed, the Eligibility Date has been set at the close of business on 14 March 2007, the day before we announced our intention to explore the possibility of a reattribution of the inherited estate.

To be eligible to benefit from this possible reattribution, policyholders must:

(i)   have held an eligible policy in the With-Profits Sub-Fund as
      at the Eligibility Date;

(ii)  and continue to hold that policy at the effective date of the
      reattribution.

New with-profits policies taken out after 14 March 2007 will not carry any interest in any possible future distribution of the inherited estate in the With-Profits Sub-Fund and therefore will not qualify for any payment from this potential reattribution of the inherited estate, should it occur.

Further details on eligibility can be found on Prudential's UK website at http://www.pru.co.uk/existing_customers/wp_subfund/

1. About the Inherited Estate and reattribution

The inherited estate - or 'estate' as it is often called - is money that has built up in the With-Profits Sub-Fund over many years from a number of sources, including contributions from shareholders. It is essentially an amount of money in excess of the amount we expect to pay out to existing policyholders. It is available to support current and future business by providing the benefits associated with smoothing and guarantees, permitting investment flexibility for the fund's assets and maintaining the solvency of the fund. Reattribution of the inherited estate benefits policyholders in the With-Profits Sub-Fund in the short term, by way of a payment, in return for giving up the possibility of sharing in any potential future distribution from the estate. Reattribution will occur only if it is in the interests of policyholders and shareholders.

2. FSA Guidelines on Reattribution

The FSA's Conduct of Business Rules include rules and guidance on the process which a regulated firm, such as Prudential, should adopt if it is seeking to reattribute an inherited estate. They can be found in full in COB 20.2.39 to COB20.2.52. Under these rules, a firm must nominate, then appoint an independent Policyholder Advocate. After his appointment, the policyholder advocate should consult with policyholders in order that he can adequately represent them in negotiations with the firm on the details of the proposed reattribution scheme. Following the conclusions of the negotiations, the PHA should write a report on the negotiations which the firm should send to policyholders with the proposed reattribution scheme. By their nature, these activities need to be sequential and are likely to stretch over a period of time.