PRUDENTIAL PLC

1
PRUDENTIAL PLC JONATHAN BLOOMER GROUP CHIEF
EXECUTIVE MERRILL LYNCH CONFERENCE 10 OCTOBER
2002
Strength Opportunity Through Diversity
2
AN INDUSTRY WITH COMPELLING DEMOGRAPHICS
Western Markets

• Increased longevity male life expectancy 66
  years in 1950, 75 year in 2000
• Ageing populations median age 38 years in 2000,
  rising to 45 years in 2030
• Large baby boomer generations percentage of
  elderly in United States will increase to 20 by
  2010
• Increased affluence

Funding for retirement is a growing issue
Source An Ageing World, US Census Bureau,
November 2001
3
AN INDUSTRY WITH COMPELLING DEMOGRAPHICS
Emerging Markets
Population (m) China 1,266 India 1,007 Indo
nesia 210 Japan 127 Vietnam 78 Philippines 81
Thailand 63 S Korea 47 Malaysia 23 Taiwan 22 H
ong Kong 7 Singapore ___4 Total 2,935

• High savings rates
• Increasing urbanisation
• Improving education standards
• Rapidly-growing middle classes
• Young populations median age 27 years in 2000,
  rising to 37 years in 2030

Funding for retirement is a growing issue
Source An Ageing World, US Census Bureau,
November 2001
4
PRUDENTIAL PLC GROUP OVERVIEW

• Focus on medium and long term savings
• A leading international retail financial services
  player
• UK/Europe
• US
• Asia
• Scale and resources for future growth
• Balancing short-term and long-term strategies to
  deliver value to our shareholders

5
CLEAR BENEFIT FROM STRONG POSITIONS IN
INTERNATIONAL MARKETS
APE sales by region
NBAP by region
2002 H1
397m
927m
1999 H1
778m
275m
UK Europe US Asia
6
FUNDAMENTALS
DESPITE DIFFICULT EQUITY MARKET CONDITIONS

• Financially sound, with AAA ratings from SP and
  Moodys
• Inevitable beneficiary of the flight to quality
• Outstanding international portfolio of businesses
• Long-term industry demographics are compelling
• Underlying performance of the business remains
  strong

7
BUSINESS MODEL
IN EVERY MARKET WHERE WE OPERATE

• Scale presence
• Product expansion
• Multi-channel distribution
• Low cost base/scale economics
• Balance of growth and return on capital

8
GROUP STRUCTURE
UK Europe
USA
Asia
9
UK OPERATIONS
UK Europe
USA
Asia
10
UK MARKET INDUSTRY DYNAMICS
27BN ANNUAL SAVINGS SHORTFALL

• Medium and long term savings
• Focus on pensions, annuities, with-profit bonds
• 7 million customers
• Excellence in fund management
• Fixed income retail mutual funds
• 550,000 retail customers
• Worlds largest digital bank
• 2.3 million customers

11
UK LIFE INSURANCE OPERATIONS STRATEGY

• Focus on high-growth medium to long term savings
• Leading positions in key profitable product areas
  
• Continuing to diversify distribution channels
• Reinvesting in the UKs leading life insurance
  brand
• Transformation of cost base

12
ONE OF THE STRONGEST LIFE FUNDS IN THE UK
Asset mix at 30th June 2002

• Form 9 ratio of 11 at 30 June 2002
• No use of
• future profits
• subordinated debt
• contingent loans
• financial reinsurance
• Resilience scenario
• fall in equity values 17
• fall in property values of 20
• rise in bond values of 8

incorporating FSA resilience rules of 28.6.02.
13
LOW COST BASE ESSENTIAL TO COMPETE PROFITABLY
2001
2003
2004
2002
m
200

• Total annual savings of 200m from 2004
• One-off cost of c170m
• 65m positive impact on new business achieved
  profit by 2004

200
175
Annual Savings
165
150
145
100
85
100
50
10m
0
Transition Costs
(50)
(40)
(40)
(40)
(40)
November 2001 target
Revised June 2002 target
(90)
(90)
(100)
Measured in 2001
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MG SUSTAINING GOOD FUND MANAGEMENT PERFORMANCE
ABOVE AVERAGE PERFORMANCE IN DIFFICULT CONDITIONS
MG's position out of top 40 fund managers

• Life fund out-performance is key competitive
  advantage
• Solid 2 year records established and maintained
• Building on this base to improve key 3 year
  positions
• Strong individual performers within the fund range

Source The Research Department - group weighted
performance over rolling periods (MG unit trusts)
15
EGG SUSTAINABLE PROFITABILITY
customer profitability
customer growth
Total customers up to 2.31 million
Acquisition costs falling
Revenue per customer continues to grow - up 10
in the half year
16
US OPERATIONS
UK Europe
USA
Asia
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US MARKET DYNAMICS

• 70 of the worlds retirement assets
• Demographics remain very attractive
• 102 increase in elderly population from 2000 to
  2030
• life expectancy is increasing
• workers are retiring younger
• Traditional retirement funding is disappearing
• future retirees unlikely to receive Social
  Security
• retirement plans moving from Defined Benefit to
  Defined Contribution

Sources An Aging World, US Census Bureau,
November 2001 The White House
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JACKSON NATIONAL LIFE STRATEGY
SCALE PLAYER IN CHOSEN SEGMENTS

• Leading player in annuities market
• Successfully diversified product lines to suit
  different economic environments
• Access to strong and growing distribution
  channels
• Competitive advantage through low cost structure
• Growth organically and by selected acquisitions

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STRONG SALES IN A DIFFICULT ENVIRONMENT
VARIABLE ANNUITIES Successful launch of
Perspective II
FIXED ANNUITIES Continued strong growth
20
ASIAN OPERATIONS
UK Europe
USA
Asia
21
TREMENDOUS LONG-TERM POTENTIAL IN ASIA

Life Penetration

• Regional economies showing signs of recovery
• structurally stronger than 97/98 crisis
• Compelling demographics remain
• vast populations with emerging middle classes
• low levels of state-sponsored benefits
• increasing urbanisation

Penetration, 19991
12
10
S Korea
Japan
8
Taiwan
6
Hong Kong
4
India
Singapore
Malaysia
China
2
Thailand
Philippines
Indonesia
0
Vietnam
1,000
10,000
100,000
Per Capita GDP2, US (log scale)
1. Source Swiss Re 2. Source CIA
1bn in new business premiums

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UNIQUE OPPORTUNITY FOR MEDIUM AND LONG TERM
SAVINGS

Percent of holdings by asset class

• The opportunity
• existing levels of wealth
• strong long-term economic growth projections
• high personal savings rates
• affinity for deposits now changing

Other/Misc
Mutual Funds
Equities
Fixed Income Securities
Pensions
Life Insurance
Cash/Deposits
44
8
22
5
63
35
26
3
3
4
1
50
Average Income per household (USk)
Source Central Banks, World Bank, SEC Division
of Investment Management
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ASIAN OPERATIONS
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LEADING REGIONAL LIFE INSURANCE PLAYER
Number of markets with top 5 position

• AIG

6-8
Prudential

• Manulife

• Allianz

4-5

• NY Life

• ING

• Great Eastern

2-3

• Cathay Life

• Aegon
• Aviva
• Mass Mutual
• US Prudential
• RSA
• Sun Life

• Zurich

• Axa

0-1
1-2
3-6
7-8
9

Number of market presences/licences
Source PCA analysis
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STRONG TRACK RECORD OF DELIVERING VALUE

• Established markets continuing strong growth
• Increasing scale in vast markets of North Asia
  and Greater China
• Rapidly building greenfield operations
• Building on bancassurance success and continuing
  to diversify distribution
• Increasing scale and profitability of mutual fund
  operations
• Managing life portfolio for sustained
  profitability

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ASIA MODEST CAPITAL REQUIREMENT
NET CAPITAL FLOWS
274

• Total net capital 1994 to 1H02 723m
• 100-150m per annum expected going forward
• More mature businesses increasingly repatriating
  capital

144
158
76
32
22
11
7
(1)
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2002 INTERIM RESULTS HIGHLIGHTS

• 36 increase in total sales of 13.7bn
• 2 increase in APE insurance sales to 926m
• 50 increase in net sales of investment products
  to 826m
• 16 increase in new business achieved profits to
  397m
• Group margin increased to 43, from 38 at 2001
  year-end
• Dividend increased 2.3 to 8.9p
• Strong free asset ratio of 11

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DRIVING THE BUSINESS FORWARD

• Internationally-diversified retail financial
  services group
• AAA financial strength
• Resources to deliver continued growth in sales
  and profits
• Focus on profitability and return on capital
• Good start towards doubling the value of the
  group

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QUESTIONS