Prudential UK Strongly Supports FSA Proposals on Future of With-Profits

PRUDENTIAL UK STRONGLY SUPPORTS FSA PROPOSALS ON FUTURE OF WITH-PROFITS Prudential UK strongly supports the FSA's proposals on the future operation of With-Profits funds and products in the UK. These proposals make it clear that participants in the With-Profits marketplace must meet criteria that will enable consumers to make an informed choice about the financial strength and performance of the company into which they place their money and trust. Prudential looks forward to participating in all the further consultations over the next 12 months. Prudential UK considers that With-Profits Bonds enable investors to look for a return that is likely to be higher than that of a cash based deposit account, yet without the full risk to capital of investing solely in the stock market. The amount invested in the Prudential With- Profits fund currently stands at just over £60 billion and the total amount in With-Profits funds in the UK stands at around £400 billion. Regarding the future role of actuaries, Prudential believes that the Appointed Actuary and the actuarial function performs a valuable role, and we look forward to participating in the consultation process that will follow on this issue. Mark Wood, Chief Executive, UK and Europe said: "We strongly support these proposals by the FSA which, when implemented, will introduce a uniformly high standard of governance and disclosure across the industry. "The financial strength and performance of companies will be ever-more important and we believe that there will be significant opportunities for strong players like Prudential. The full impact of these proposals, when implemented, may lead to some companies deciding to withdraw from this market." Enquiries to Media Investors/Analysts James Murray Rebecca Burrows Head of Media Relations Director of Investor Relations Prudential UK Prudential plc T: 020 7334 6363 T: 020 7548 3537 Notes to editors 1. Prudential is one of only 11 insurance companies worldwide with a AAA financial strength rating from both Standard and Poor's and Moody's. 2. The table below shows the investment mix of the Prudential with- profits fund. End 2001 End 2000 % % Equity shares - UK shares 38 47 - Non-UK shares 14 14 Fixed interest 28 20 Cash 3 5 Property 15 14 Alternative investments 2 - Total 100 100 3. Investment Returns - better than the FTSE in 2001 The underlying investment return on the Prudential with-profits fund was minus 3.5 per cent in 2001 compared with the decline of 16.2 per cent in the FTSE 100 index and a decline of 15.4 per cent in the FTSE all share index. Returns on the with-profits fund in recent years have been as follows: Year 1997 1998 1999 2000 2001 Gross Return % 19.8 12.6 19.3 3.0 -3.5 Prudential is the trading name of the Prudential Assurance Company Limited (which is also used by other companies within the Prudential group of companies.) The Prudential Assurance Company Limited is registered in England and Wales. Registered office at 142 Holborn Bars, London EC1N 2NH. Registered number 15454 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/05/28/20020528BIT01020/wkr0001.doc http://www.waymaker.net/bitonline/2002/05/28/20020528BIT01020/wkr0002.pdf