Prudential PLC PRU Prudential plc - 3rd Quarter 2012 IMS

  Prudential PLC (PRU) - Prudential plc - 3rd Quarter 2012 IMS

RNS Number : 0531R
Prudential PLC
14 November 2012




NEWS RELEASE


                                                                             


PRUDENTIAL PLC


GROUP COMMUNICATIONS


12 ARTHUR STREET


LONDON EC4R 9AQ


TEL 020 7220 7588


FAX 020 7548 3725


www.prudential.co.uk

14 November 2012



PRUDENTIAL PLC THIRD QUARTER 2012 INTERIM MANAGEMENT STATEMENT



· PRUDENTIAL DELIVERS STRONG  PERFORMANCE WITH YEAR-TO-DATE NEW  BUSINESS 
PROFIT UP 13 PER CENT TO £1.7 BILLION AND SALES UP 14 PER CENT TO £3.1 BILLION
IN A CHALLENGING ENVIRONMENT



· ASIA YEAR-TO-DATE NEW  BUSINESS PROFIT UP 15  PER CENT TO £828  MILLION 
DRIVEN BY SOUTH EAST ASIA



· US YEAR-TO-DATE NEW BUSINESS PROFIT UP 10 PER CENT TO £683 MILLION WITH
CONTINUED FOCUS ON PRICING DISCIPLINE



· UK YEAR-TO-DATE  NEW BUSINESS  PROFIT UP 17  PER CENT  TO £227  MILLION 
REFLECTING PRODUCT MIX



· ASSET MANAGEMENT  YEAR-TO-DATE NET INFLOWS  AT £12.3 BILLION  LED BY  A 
RECORD PERFORMANCE FROM M&G



· RESILIENT BALANCE SHEET; IGD SURPLUS ESTIMATED AT £4.1 BILLION



^                            YTD 2012 YTD 2011 % change
^                                            
Group New Business Profit ^1,2  £1,738m  £1,535m     13%
Group APE sales ^              £3,078m  £2,704m     14%
Margin - APE % ^                   56%     57%     -1pt
^                                            
Investment Net Flows^3         £12.3bn   £3.4bn    263%



IGD Surplus^4 £4.1bn £3.9bn 5%  



^                          Q3 2012 Q3 2011 % change 
^                                                  
Group New Business Profit ^    £597m   £466m       28%
Group APE sales ^            £1,048m   £880m       19%
^                                             
Investment Net Flows^3        £7.0bn  £0.5bn         -



Tidjane Thiam, Group Chief Executive, said:



"Prudential has continued to perform strongly in the third quarter of 2012  in 
a global macroeconomic environment that remains turbulent.



"We are in the right markets, with  the right business models and continue  to 
make good  progress  across  our  businesses  and  chosen  markets.  We  have 
increased new business profit, our preferred growth metric, for 13 consecutive
quarters year-on-year since the third quarter of 2009. In the third  quarter, 
Group new business  profit grew  by 28 per  cent year-on-year  with group  APE 
sales increasing  by 19  per cent  with all  businesses contributing  to  this 
performance.



"In Asia, year-to-date new business profit increased by 15 per cent and 23 per
cent on a 'like-for-like'^5 basis and APE  sales grew by 16 per cent. In  the 
discrete third quarter, new business profit grew  by 11 per cent (16 per  cent 
on a 'like-for-like basis'^5) while APE grew by 6 per cent. We took a  number 
of initiatives in the  third quarter to manage  our business mix  pro-actively 
giving up  volume for  value. In  North Asia  (Korea, Taiwan)  we have  taken 
decisive action not to  provide capital-intensive guaranteed products  driving 
down APE by  26 per  cent. In  Malaysia, we  have refocused  the business  on 
higher value, lower volume protection business, driving a 20 per cent fall  in 
APE. Outside these three  markets, APE growth in  the discrete third  quarter 
was strong at 19 per cent.



"We have seen these trends continue in October with 16 per cent APE growth for
Asia.  Overall,  our  powerful   multi-channel  distribution  platform,   our 
continued  focus  on  health  and  protection  products  and  our   geographic 
diversification position  us well  to  continue to  grow profitably  and  with 
discipline in the most attractive Asian markets.



"In the US we continue to balance cash and capital generation, sales  volumes, 
risk and earnings to  deliver value and maintain  internal rates of return  in 
excess of our hurdle rates. In the first nine months, Jackson has achieved  a 
10 per cent increase in new business profit to £683 million with APE up 15 per
cent to £1,133 million.



"In the third quarter, we have seen very strong variable annuity sales  levels 
as a  result of  high consumer  demand, moving  us close  to our  annual  risk 
appetite earlier than expected. Therefore,  we have taken proactive steps  to 
limit sales of  guaranteed variable  annuities and  we expect  total sales  of 
these products to  be between $18  billion and $18.5  billion for 2012.  This 
will ensure we achieve adequate diversification by vintage which enables us to
perform well across  economic and market  cycles. We continue  to see  robust 
sales growth in our  non-guaranteed Elite Access product  for which we have  a 
strong appetite, given its characteristics.



"In the UK we delivered new business profit of £227 million in the first  nine 
months of 2012,  up 17  per cent. We  have delivered  year-to-date growth  in 
retail sales with new business profits up 11 per cent. In our chosen  markets 
in the UK,  we generate internal  rates of return  that are commensurate  with 
those that we are achieving in the other parts of the Group. 



"Asset management has recorded net inflows of £12.3 billion led by M&G.  This 
is  our  best  ever  performance  at  the  nine  month  stage  surpassing  the 
historically high level of  net inflows achieved in  2009. M&G has  benefited 
from its strong  investment performance  and broad range  of attractive  funds 
across asset classes  as retail investors,  particularly those in  continental 
Europe, are starting to invest again  after a period of extreme risk  aversion 
observed in 2011.



"Our balance  sheet  and capital  position  continue  to be  strong  with  our 
estimated IGD surplus at the end of the third quarter at £4.1 billion.



"The global macroeconomic  environment remains  challenging with  persistently 
low government bond yields  and recently we have  also seen the IMF  downgrade 
global growth forecasts^6. Although we remain defensively positioned, we  are 
focused on  the long-term  profitable growth  opportunities available  to  us, 
particularly in South-east Asia.



"The recently announced acquisition of  Thanachart Life and 15-year  exclusive 
bancassurance agreement with Thanachart Bank in Thailand builds scale in a key
target market for us with access  to 865 branches across all our  partnerships 
making this  the fourth  largest branch  network in  a country  of 65  million 
people. This highlights  our confidence in  the longer-term profitable  growth 
prospects in Asia.



"We are  making progress  towards  the "Growth  and  Cash" objectives  we  set 
ourselves for 2013 and  remain on track to  achieve these objectives,  despite 
the considerable macroeconomic headwinds we  face. We are well positioned  to 
grow profitably over the long-term and to create value for our shareholders."



^1 Unless otherwise stated all growth rates are on a sterling basis. Growth
rates on constant currency are presented on schedule 1B of the Interim
Management Statement

^2 The assumptions used to calculate new business profit are presented in
schedule 5 to the Interim Management Statement

^3 Investment net flows excluding Eastspring Money Market Funds and
percentage change is based on unrounded numbers.

^4 Represents estimated IGD surplus after deducting the 2012 interim
dividend of £0.2 billion

^5 The 'like-for-like' basis growth figures shown above have been determined
by applying economic assumptions based on government bond yields as of 30
September 2011.

^6 IMF Global Growth Outlook, October, 2012





1. Q3 2012 Business Unit financial highlights



^                                                             
                                                                      % change
                                                                            on
New Business Profit                    % change on
^7                 YTD 2012 YTD 2011   YTD 2011 Q3 2012 Q3 2011 Q3 2011
^                                                                   
Asia ^                £828m     £719m        15%     £281m    £254m     11%
US                     £683m     £622m        10%     £241m    £164m     47%
UK                     £227m     £194m        17%      £75m     £48m     56%
Total Group
Insurance            £1,738m   £1,535m        13%     £597m    £466m     28%



                                                                      % change
                                                                            on
                                      % change on
Sales - APE         YTD 2012 YTD 2011    YTD 2011 Q3 2012 Q3 2011  Q3 2011
^                                                                   
Asia ^              £1,328m  £1,147m        16%     £429m    £404m       6%
US                   £1,133m    £988m        15%     £414m    £316m      31%
UK                     £617m    £569m         8%     £205m    £160m      28%
Total Group
Insurance            £3,078m  £2,704m        14%   £1,048m    £880m      19%



Margin - APE % ^      YTD 2012 YTD 2011 +/- pts change on YTD 2011
^                                                            
Asia ^                   62%     63%                       -1pt
US                        60%     63%                      -3pts
UK                        37%     34%                      +3pts
Total Group Insurance     56%     57%                       -1pt



                                                                      % change
                                                                            on
                                                         Q3
                                         % change on    2012               Q3
Investment Flows      YTD 2012 YTD 2011  YTD 2011^9     ^ Q3 2011  2011^9
^                                           ^    ^             ^
Gross inflows ^                               ^    ^             ^
                                                       £10.5
M&G                    £25.2bn  £19.8bn        27 %      bn   £6.4bn    64 %
Eastspring
Investments^8          £6.5bn   £6.5bn         -  £2.7 bn   £2.2bn    23 %
                                                       £13.2
Total Group ^          £31.7bn  £26.3bn        21 %      bn   £8.6bn    54 %
^                                           ^    ^             ^
Net inflows /
(outflows) ^                                  ^    ^             ^
M&G                    £11.3bn   £2.6bn       329 % £6.4 bn £(0.3)bn     - 
Eastspring
Investments^8          £1.0bn   £0.8bn        35 % £0.6 bn   £0.8bn   (22) %
Total Group ^          £12.3bn   £3.4bn       263 % £7.0 bn   £0.5bn     - 
^                                           ^    ^             ^
Funds Under
Management (FUM)^10                          ^    ^             ^
M&G                   £216.9bn £194.4bn        12 %    ^             ^
Eastspring
Investments            £56.0bn  £49.5bn        13 %    ^             ^



^7 New business profit is calculated using end-of-period economic
assumptions. These are presented in schedules 5 of the Interim Management
Statement. The fall in long-term interest yields between September 2011 and
September 2012, have reduced the year-to-date September 2012 new business
profit by £134 million.

^8 Gross and net investment inflows excluding Eastspring Money Market Funds

^9 Percentages based on unrounded numbers

^10 Funds under management includes all external and internal
funds^

^

1.1 Asia Insurance operations



Asia ^                                                        
                                    % change on                    % change on
^               YTD 2012 YTD 2011    YTD 2011 Q3 2012 Q3 2011     Q3 2011
Sales - APE ^      £1,328m  £1,147m        16%     £429m    £404m         6%
^                                                                     
New Business
Profit ^           £828m    £719m        15%     £281m    £254m        11%
Total Margin -
APE % ^               62%     63%        -1pt                  



Profitable  growth  prospects  for   Asia's  life  insurance  markets   remain 
compelling given the sustained expansion of  the middle classes in the  region 
and the low penetration rates for long-term savings and protection  products. 
However, we  anticipate  that  industry  growth rates  may  fluctuate  in  the 
short-term as theoutlook for global economic growth softened during the  third 
quarter driven  by contracting  economic activity  in Europe  and more  modest 
growth than  expected in  the  United States.  This  impacts some  of  Asia's 
economies to  a degree  in  terms of  trade  opportunities and  can  undermine 
household confidence particularly in savings and investments that are directly
linked to  volatile  markets. These  negative  trends are  mitigated  by  the 
emphasis put by  a number  of governments  on growing  their domestic  demand, 
reducing the dependency of their economies on external markets and making them
more resilient across the global economic cycle.



Our strategy of expanding quality, multichannel distribution with an  emphasis 
on regular premium policies and a focus on covering the health and  protection 
needs of the emerging middle class across the region positions us to  continue 
to grow profitably, well into the future.



Despite the challenge of low interest rates, new business profits for the nine
months of  2012 (calculated  using active  assumptions) grew  to £828  million 
which  equates  to  a  margin  of  62  per  cent,  1  percentage  point  lower 
year-on-year. The  net  impact  of active  assumptions,  which  reflect  lower 
government bond yields  as at 30  September 2012, was  to reduce new  business 
profits by £53 million compared to the  end of September 2011, with this  fall 
being mostly offset  by a  focus on higher  margin products  and a  favourable 
geographic mix. The reported new business profit growth of 15 per cent in  the 
nine month period equates to 23 per cent on a 'like for like'^1 basis.



Our geographic diversification remains a key strength, enabling us to  deliver 
continued profitable growth from  the region as a  whole. Year-to-date APE  of 
£1,328 million has increased by 16 per  cent relative to last year mainly  led 
by strong growth in the South  Asian markets of Indonesia, Singapore and  Hong 
Kong. Prudential's third quarter  APE of £429 million  was 6 per cent  higher 
than the third quarter last year as continuing strong growth in Indonesia  (up 
20 per cent), Singapore (up  27 per cent) and Hong  Kong (up 23 per cent)  was 
partially offset by our decision not to provide low margin guaranteed products
in Taiwan (down  33 per  cent) and  Korea (down 15  per cent)  and to  refocus 
Malaysia (down 20 per cent) on protection business which is lower premium  but 
higher value.  Excluding  those  three  markets  where  we  deliberately  and 
proactively gave up volume  for value, our APE  growth for the discrete  third 
quarter was 19 per cent. We have seen continued momentum in October with  APE 
up 16 per cent for Asia.



The APE growth for South-east Asian markets  in the first nine months of  2012 
has been  achieved profitably.  In Indonesia,  Hong Kong  and Singapore,  new 
business profit grew by 19  per cent in aggregate  year-to-date and by 37  per 
cent in our nascent markets of  Thailand, Vietnam and the Philippines. In  the 
discrete third quarter  new business  profits for these  six South-east  Asian 
markets grew by 21 per cent.



Prudential is a leading  regional life insurer with  both material agency  and 
bank distribution. During  this year  we have seen  a strong  increase in  new 
business volumes from our bank partners as we continue to deepen our long-term
relationships with  partners  that  include United  Overseas  Bank  (UOB)  and 
Standard Chartered Bank  (SCB). The proportion  of APE from  this channel  has 
increased to 35 per cent year-to-date in 2012 compared to 30 per cent for  the 
prior period.  In  our agency  channel,  we  continue to  focus  on  enhancing 
activity levels and agent productivity.  The number of average active  agents, 
excluding India, has increased by 13 per cent year-on-year with 59 per cent of
APE being derived  from this  channel. India's  agency force  continues to  be 
restructured following  the regulatory  changes  that came  into effect  on  1 
September 2010.



Regular premium policies generated  92 per cent of  APE during the first  nine 
months of 2012 compared to 90 per  cent during the same period last year.  APE 
from health and protection products grew by 19 per cent to £410 million in the
year-to-date as we focussed  on these higher value  products. The product  mix 
for the  nine  month period  was  protection  at 31  per  cent,  participating 
business at 34 per cent and unit-linked at 29 per cent (2011: 30 per cent,  33 
per cent and 32 per cent respectively).



^1 The 'like-for-like' basis growth figures shown above have been determined
by applying economic assumptions based on government bond yields as of 30
September 2011.



Net insurance flows for  Asia (excluding India)  remain strongly positive  for 
both the third quarter and the  year-to-date driven by new business flows  and 
the continued growth of the in-force book. Third quarter outflows arising from
surrenders and partial withdrawals relating to shareholder-backed business are
at a  similar run-rate  to both  the first  half of  2012 and  the  equivalent 
quarter last year, when expressed as a percentage of opening liabilities.



Indonesia                                        
                            % change                   % change on

          YTD 2012 YTD 2011 on YTD  Q3 2012 Q3 2011    Q3 2011
APE          £303m    £239m     27%     £97m     £81m        20%



Indonesia is becoming one of Asia's largest and fastest growing economies  and 
Prudential continues to be a leader in the Indonesian life insurance  market. 
We are continuing to deliver record  levels of new business with  year-to-date 
growth of  27 per  cent primarily  driven by  the expansion  and  productivity 
improvements in  our  agency force.  Our  recruiting, training  and  licensing 
process continues to be  effective and has  driven a 26  per cent increase  in 
average active manpower over the year.  We are also seeing excellent  results 
from our rapidly developing bank channel where APE is up 74 per cent over  the 
prior year.



Hong Kong                                         
                            % change                   % change on

          YTD 2012 YTD 2011  on YTD Q3 2012 Q3 2011    Q3 2011
APE          £273m    £229m     19%      £96m    £78m        23%



Hong Kong has delivered a strong  performance year-to-date with APE up 19  per 
cent. Prudential  remains  the only  leading  player  in Hong  Kong  to  have 
material agency and  bank distribution  channels and both  have made  positive 
contributions. The  insurance  specialists  working with  SCB  have  delivered 
increased referrals and higher case sizes and  we have also grown the size  of 
our tied agency and increased average case sizes.



Singapore                                       
                            % change                  % change on

          YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
APE          £217m    £163m     33%     £76m    £60m        27%



Singapore continues to perform well. The bancassurance channel is growing  at 
a faster rate than agency  as each of our  major and exclusive partners  (SCB, 
UOB, Singpost and Maybank)  delivered growth rates in  excess of 40 per  cent. 
Our agency channel  continues to  grow with sales  up 9  per cent  principally 
driven by improvements in agent productivity.



Malaysia                                       
                           % change                  % change on

         YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011     Q3 2011
APE         £145m    £150m     (3)%     £47m    £59m       (20)%



In Malaysia we have taken the decision to de-emphasise high premium, but lower
value, top-ups to linked polices and endowment products and to increase  focus 
on protection. The proportion of year-to-date sales of protection business has
increased by  13 percentage  points over  2011. This  focus on  higher  margin 
products is already  bearing fruit with  new business profits  up 10 per  cent 
year-to-date offsetting  the impact  of  falling volumes.  Although  currently 
small relative  to  agency,  our  bank distribution  in  Malaysia  is  growing 
strongly, up 68 per cent compared to last year.



Other South-east Asia -
Philippines, Thailand and
Vietnam                                                       
                                         % change                  % change on

                       YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
APE                        £90m     £71m     27%     £32m    £27m        19%



Prudential's other operations comprise  the Philippines, Thailand and  Vietnam 
with new business APE sales increasing by 27 per cent in the first nine months
of 2012. The Philippines  and Thailand have  grown strongly, while  Vietnam's 
performance has  been  broadly  flat  as the  economy  faces  challenges.  The 
recently announced  acquisition and  a  fifteen year  exclusive  bancassurance 
agreement with Thanachart in  Thailand enables us to  double our market  share 
and significantly  enhances  our  growth opportunities  in  the  country.  The 
transaction is expected to complete in the first quarter of 2013.



China                                          
                        % change                    % change on

      YTD 2012 YTD 2011  on YTD Q3 2012 Q3 2011    Q3 2011
APE       £46m     £46m      -%      £13m     £11m        18%



The life insurance market  in China remains  challenging due to  macroeconomic 
pressures and regulatory changes implemented  earlier this year that  impacted 
the bank channel. However,  we have seen some  signs of stabilisation and  the 
APE for the third quarter of £13 million is 18 per cent higher than the  third 
quarter last year.



India                                         
                        % change                    % change on

      YTD 2012 YTD 2011 on YTD  Q3 2012 Q3 2011    Q3 2011
APE       £75m     £73m      3%      £22m     £26m       (15)%



InIndia, the economic environment has become more challenging and the volatile
equity markets have not been conducive  to higher agency activity levels.  The 
marked depreciation  of  the Indian  rupee  relative  to the  pound  has  also 
depressed the reported  results; on  a local currency  basis year-to-date  APE 
growth is 17 per cent, while APE in the discrete third quarter is in line with
the prior  period.  Sales of  regular  premium products  remain  robust  with 
year-to-date APE on a constant currency basis up 32 per cent on 2011.  Regular 
premium APE increased to 93 per cent of APE in 2012 (2011: 84 per cent).



Korea                                       
                        % change                  % change on

      YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
APE       £67m     £81m    (17)%     £22m    £26m       (15)%



Our business in  Korea continues  to concentrate  on high-quality  proprietary 
distribution and regular premium unit-linked business. We have chosen not  to 
compete in  the  market  for  capital-intensive  guaranteed  return  products, 
particularly in the bank channel. Agency production has remained in line with
the prior period  with the effect  of increased manpower  being offset by  the 
average case sizes which have declined due to the current economic climate.



Taiwan                                       
                         % change                  % change on

       YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
APE       £112m     £95m      18%     £24m    £36m       (33)%



Taiwan is  now  successfully focused  on  bank distribution  principally  with 
partners E.Sun and  Standard Chartered  Bank. New  business APE  in the  third 
quarter declined sharply relative to prior  year (down 33 per cent) given  our 
decision not to compete in the  market for low margin interest rate  sensitive 
products.



1.2 US operations



Insurance operations



                                       % change                    % change on

US                  YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
Sales - APE          £1,133m    £988m     15%     £414m    £316m        31%
New Business Profit    £683m    £622m     10%     £241m    £164m        47%
Margin - APE %           60%     63%    -3pts                           



Jackson continues to focus  on managing the  balance between earnings,  sales, 
capital efficiency, balance sheet  strength through strict pricing  discipline 
for both variable and fixed annuities.  Thanks to its financial stability  and 
innovative  products,  Jackson  continues  to  enhance  its  reputation  as  a 
high-quality and reliable business partner, with more advisers recognising the
benefits of working with Jackson.



Jackson delivered APE retail sales of £1,105 million in the first nine  months 
of 2012, representing a 14 per cent increase over the same period in 2011. In
addition, with modest institutional sales in 2012, total APE sales were £1,133
million. Jackson  has  achieved  these sales  levels  while  maintaining  its 
pricing discipline,  as  it  continued  to write  new  business  at  aggregate 
internal rates of return in excess of its hurdle rates.



New business profit,  our preferred  growth metric,  was £683  million in  the 
first nine months of  2012, 10 per  centhigher than the  same period in  2011 
driven by higher sales volumes.  The overall margin was  60 per cent for  the 
first nine months  of 2012, compared  to 63 per  cent for the  same period  in 
2011. The  combination of  a reduction  in the  10 year  Treasury yields  and 
spread compression has caused  a 6 point  drag on the  margin relative to  the 
same period in 2011. Pricing actions and proactive management of the business
mix have  partially mitigated  this reduction.  Notwithstanding the  negative 
impact of lower  interest rates,  the overall  profitability remains  robust. 
Variable annuity margins, although lower,  remain high relative to  historical 
levels at 65 per cent for 2012 (2011: 67 per cent).



Total retail annuity net flows were £7.0 billion for the first nine months  of 
2012, reflecting  a £1.3  billion  increase over  the  same period  in  2011. 
Annuity net flows in 2012 benefited from net flows of £400 million from  Elite 
Access, a  variable annuity  product  launched in  March  2012, which  has  no 
guaranteed  benefits  and  provides   tax  efficient  access  to   alternative 
investments. At  the  end of  the  period Jackson's  separate  account  assets 
totalled £47.2  billion and  general account  assets totalled  £38.7  billion; 
these amounts  exclude separate  and general  account assets  relating to  the 
acquisition of Reassure America Life Insurance Company (REALIC).



In the third quarter, we have  seen very strong variable annuity sales  levels 
as a  result of  high consumer  demand, moving  us close  to our  annual  risk 
appetite earlier than expected. Therefore,  we have taken proactive steps  to 
limit sales of  guaranteed variable  annuities and  we expect  total sales  of 
these products to  be between $18  billion and $18.5  billion for 2012.  This 
will ensure we achieve adequate diversification by vintage which enables us to
perform well across  economic and market  cycles. We continue  to see  strong 
sales growth in our  non-guaranteed Elite Access product  for which we have  a 
strong appetite, given its characteristics.



Jackson's hedging programme continues to  perform well, mitigating the  impact 
of  the  significant  macroeconomic  challenges  and  supporting  our  capital 
position on both an economic  and a regulatory basis. Policyholder  behaviour 
in the  first  nine  months of  2012  continued  to trend  in  line  with  our 
expectations. We continue to have strong regulatory capital levels.



On 4 September 2012, Jackson completed the acquisition of SRLC America Holding
Corp (SRLC) from Swiss Re.  SRLC was the U.S.  holding company of REALIC.  The 
acquisition helps diversify  Jackson's sources of  earnings by increasing  the 
amount of income generated from underwriting activities. REALIC was closed  to 
new business  and, therefore  this transaction  has no  impact on  APE or  new 
business profit. Jackson has begun integrating REALIC's book of business  and 
the transaction will be immediately accretive to its pre-tax earnings.



Variable annuity                                          
                                   % change                    % change on

                 YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
APE sales          £970m    £851m     14%     £359m    £262m        37%



Variable annuity APE sales of  £970 million in the  first nine months of  2012 
were higher than the same period in 2011, with £40 million of the increase  in 
APE relating to  sales of  Elite Access,  our no  guaranteed benefit  variable 
annuity. Excluding sales of Elite  Access, variable annuity sales increased  7 
per cent compared to the  same period in 2011  on a constant currency  basis. 
Jackson implemented various product and pricing initiatives in the second half
of 2012 to further optimise the balance  of value and risk and to ensure  that 
sales of  variable annuity  with discretionary  guarantees do  not exceed  the 
upper end of our risk appetite limits for the calendar year.



                                                             
Fixed index annuity                                          
                                      % change                    % change on

                    YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
APE sales               £79m     £68m     16%      £29m     £26m        12%



Fixed index annuity APE sales of £79 million in the first nine months of  2012 
increased 16 per cent from  the same period of  2011. Jackson ranked 8^th  in 
sales of fixed index annuities through the  first half of 2012, with a  market 
share of 4.7 per cent, and was also 8^th for the full year 2011 with a  market 
share of 4.6 per cent^1.



Fixed annuity                                         
                                % change                   % change on

              YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
APE              £45m     £33m     36%      £14m    £10m        40%



Fixed annuity APE sales of £45 million in the first nine months of 2012 were 4
per cent of total APE sales and 36 per cent higher than the historically low
level of fixed annuity sales in the same period in 2011. Jackson ranked 8^th
in sales of traditional deferred fixed annuities through the first half of
2012, with a market share of 3.6 per cent, compared to 13^th and a market
share of 2.1 per cent for the full year 2011^2.



Asset management operations



Curian  Capital,  a  specialised   asset  management  company  that   provides 
innovative  fee-based  separately  managed  accounts,  continued  to  generate 
positive net flows during the nine-month period, which increased total  assets 
under management to £6.4  billion at the end  of September 2012 compared  with 
£4.7 billion at the end of 2011.

^

^1 Source: AnnuitySpecs/The Advantage Compendium

^2 Source: LIMRA



1.3 UK insurance operations



UK                                                            
                                       % change                    % change on

                    YTD 2012 YTD 2011   on YTD Q3 2012 Q3 2011    Q3 2011
                                                                      
Sales - APE                                                          
Retail                £576m    £541m     6%    £191m   £160m       19%
Wholesale              £41m     £28m    46%     £14m     £0m          -
Total                 £617m    £569m     8%    £205m   £160m       28%
                                                                        
New Business
Profit               £227m    £194m    17%     £75m    £48m       56%
Margin - APE %         37%     34%   +3pts                            



Prudential competes  selectively in  the UK's  retirement savings  and  income 
market, with  a  focus  on  writing  profitable  new  business  combined  with 
sustainable cash  generation and  capital preservation,  rather than  pursuing 
top-line sales growth.

Total APE sales of £617 million were  8 per cent higher than during the  first 
nine months of 2011, principally due to higher sales of individual  annuities, 
with-profits bonds and bulk annuities which were partly offset by lower  sales 
of corporate pensions. APE  sales for the standalone  quarter of £205  million 
were up  28 per  cent, mainly  due to  higher sales  of individual  annuities, 
with-profits bonds and a bulk annuity sale. We have improved our new  business 
profitability in  the  first nine  months  of 2012,  despite  the  challenging 
economic environment and current competitive conditions in the UK marketplace.

New business profit was  £227 million for  the first nine  months of 2012,  an 
increase of 17 per cent over 2011 driven by higher sales and a more favourable
product mix. Retail new  business profit increased by  11 per cent over  2011. 
The new business margin, including bulk annuities, of 37 per cent achieved  in 
the first nine months of  2012 was up 3 percentage  points on the same  period 
last year. The retail new business margin  of 33 per cent was up 1  percentage 
point compared  to 2011.  The  negative impact  on  product margins  of  lower 
interest rates was more  than offset by a  more favourable business mix,  with 
lower sales of corporate  pensions and higher  sales of individual  annuities, 
with-profits bonds and bulk annuities (which have a higher margin).

APE sales of individual annuities of £166 million were 25 per cent higher than
for the  first nine  months of  2011.  Sales from  internal vestings  of  £104 
million, were 18  per cent higher,  due to a  combination of two  factors -  a 
higher number of customers retiring and  higher average fund values. Sales  of 
external annuities of  APE £62  million were  41 per  cent higher,  reflecting 
continued demand  for  our with-profits  Income  Choice Annuity  which  offers 
customers security with a potential for income growth.

Onshore bonds sales of APE £161 million  in the first nine months of the  year 
were up 27 per cent  on the same period  in 2011, including with-profits  bond 
sales of APE £152 million, which increased by 36 per cent. Our PruFund  range 
made up 76 per cent of with-profits bond sales. Against the first nine  months 
of 2011, PruFund sales  were 41 per cent  higher. The continued popularity  of 
PruFund is a result of consumer appetite for its range of optional guarantees,
which offer a degree of security  against potential market falls but may  also 
be  Retail  Distribution  Review  (RDR)  related.  Although  the  demand   for 
guarantees remains high, the  growth in PruFund sales  has been mainly in  the 
form of non-guaranteed business so is more capital efficient.



The RDR, one of a number of current reforms to the UK regulatory framework, is
due to be implemented on 1 January 2013. From that point onwards,  independent 
financial advisers will no longer be  able to accept commissions from  product 
providers on advised sales of  investment and savings products.  Distributors 
are therefore adjusting their business  models ahead of the implementation  of 
the new  regulatory framework.  This  is likely  to  lead to  some  short-term 
dislocation in the market. While our business is on track to be ready for  the 
onset of RDR, we expect investment  bond sales, in particular, to be  impacted 
in the latter  part of 2012  and into 2013  as distributors adapt  to the  new 
regulatory environment.

Corporate pensionssales of APE  £148 million in the  first nine months of  the 
year were 22 per cent lower than the same period last year. Sales in 2011 were
particularly high due to new defined contribution members joining our  schemes 
following closure of a number of defined benefit schemes operated by  existing 
clients. We continue to focus on securing new members and incremental business
rather than new Corporate Pensions schemes. Prudential UK remains the  largest 
provider of Additional Voluntary Contribution  plans within the public  sector 
where we now provide schemes for 68 of the 99 public sector authorities in the
UK.

Sales  of  other  products,   principally  individual  pensions,   PruProtect, 
PruHealth and offshore bonds of £101 million were 11 per cent higher than  the 
first nine  months  of  2011.  Individual  pensions  sales  (including  income 
drawdown) of APE £59 million were 9 per cent higher, reflecting the  continued 
popularity of PruFund.



In the Wholesale market, Prudential UK's aim is to continue to participate
selectively in bulk and back-book buyouts using our financial strength,
superior investment track record, annuitant mortality risk assessment and
servicing capabilities. In line with this opportunistic approach, we signed a
further bulk annuity buy-in insurance agreement in the third quarter of 2012
of APE
£14 million, in addition to the agreement signed in the first half of 2012,
bringing the total for the nine months to APE £41 million (2011: single deal
APE £28 million). We will continue to maintain our focus on value and only
participate in capital-efficient transactions that meet our return on capital
and payback requirements.



1.4 M&G



                                         % change
                                               on                     % change
                                                                            on
                                             YTD
Investment Flows^1    YTD 2012 YTD 2011  2011^2 Q3 2012 Q3 2011 Q3 2011^2
Net inflows                            ^                     ^
Retail business ^       £6.1bn   £2.6bn   134 %   £1.9bn £(0.2)bn       - 
Institutional business   £5.2bn   £0.0bn     -    £4.5bn £(0.1)bn       - 
Total ^                £11.3bn   £2.6bn   329 %   £6.4bn £(0.3)bn       - 
^                                        ^                       ^
Gross inflows total     £25.2bn  £19.8bn    27 %  £10.5bn   £6.4bn      64 %
^                                        ^                       ^
Funds under management
total                  £216.9bn £194.4bn    12 %                       ^
External funds under
management             £104.2bn  £87.3bn    19 %                       ^



Persistent  volatility  of  the  world's  markets  has  continued  to   dampen 
investors' appetite for risk.  The third quarter saw  a slight improvement  in 
sentiment but equity markets remain subdued  and there are no clear trends  in 
investor behaviour beyond a general pursuit of safety and yield.



Despite this unsupportive backdrop,  M&G has delivered a  record level of  net 
inflows in the third quarter of £6.4 billion as retail investors, particularly
in mainland Europe,  returned to  the market after  a period  of extreme  risk 
aversion last year  (third quarter  of 2011:  net outflows  of £0.3  billion). 
Total net inflows year-to-date have been  £11.3 billion, more than four  times 
higher than the £2.6 billion of asset flows in the previous year.



M&G's success  can  be attributed  to  continued strong  long-term  investment 
performance and  a  consistent  programme of  business  diversification  -  by 
product,  by   distribution  channel   and  by   country.  The   benefits   of 
diversification are most evident in the European retail funds market where M&G
now ranks second for net sales among cross-border providers^3.



Retail net fund sales  remain robust; £1.9 billion  of new inflows during  the 
third quarter took the total for  the year-to-date to £6.1 billion, more  than 
double their level this time last year. As expected, net fund sales in the  UK 
slowed in the three months to the end of September to £0.5 billion, mainly  as 
a result of our deliberate  decision in July to slow  the inflow of new  money 
into two market-leading UK corporate bond funds. Quarterly net inflows for the
first half of 2012 averaged £1.4 billion.



In the  UK, M&G  has ranked  first for  gross fund  sales for  16  consecutive 
quarters based on data at  30 September^4. Over the  first nine months of  the 
year, M&G had a  10.8 per cent  market share according to  a measure of  gross 
sales as defined by  the Investment Management Association  (IMA). It is  also 
the UK's largest  retail fund  manager with  funds under  management of  £41.4 
billion as at 30 September 2012^5.



In mainland Europe, M&G continues to attract strong flows from investors, with
net retail fund sales for the  quarter of £1.4 billion. European  distribution 
has accounted for more than half of net retail inflows since the start of  the 
year at a total of £3.5  billion, reflecting consistently strong fund  returns 
and considerable investment in  the M&G brand in  these newer markets.  Funds 
under management with European clients now exceed £12.2 billion, a 56 per cent
increase on funds under management of £7.8 billion this time last year.



Underpinning the retail business  is strong long-term investment  performance. 
Twenty-three retail funds accounting for 72 per cent of funds under management
have delivered  top or  upper quartile  returns  over the  three years  to  30 
September 2012. A high proportion  of investor contributions continue to  flow 
into conservatively  positioned funds,  most notably  the M&G  Optimal  Income 
Fund, a flexible bond  fund which ranked fourth  among European funds for  net 
sales in the  12 months to  the end of  August 2012^6. No  fewer than 11  M&G 
funds, representing all  of the main  asset classes, have  each attracted  net 
sales of £20 million or more during the three quarters.



^1 From 1 January 2012, Prudential Portfolio Managers South Africa (Pty)
Limited was no longer a subsidiary of M&G following the restructuring
transaction whereby M&G's ownership has been diluted following the
equitisation of the staff incentive scheme and reduced further by the sale of
an additional 10 per cent equity stake to an empowerment company as encouraged
under Broad Based Black Economic Empowerment legislation. Consequently, 47.2
per cent of funds under management and flows from the South African associate
company has been included in M&G's 2012 results in this announcement whereas
100 per cent had been included up to the end of 2011.

^2 Percentages based on unrounded numbers.

^3 Source: Lipper FMI. (October 2012, data as at August 2012). SalesWatch.
Thomson Reuters

^4 Source: Fundscape (Q3 issue, November 2012). The Pridham Report. Fundscape
LLP

^5 Source: Investment Management Association

^6 Source: Lipper FMI. (October 2012, data as at August 2012). SalesWatch.
Thomson Reuters



The £6.8  billion  of net  retail  inflows in  the  UK and  Europe  have  been 
partially offset  by £0.7  billion net  outflow from  funds managed  by  M&G's 
associate entity in South Africa. These redemptions were entirely from the PPM
South Africa Dividend Income Fund, which was closed on 31 March 2012 ahead  of 
the implementation of new tax legislation on 1 April 2012 which would have had
a materially adverse impact on the treatment of the distributions made by  the 
Fund to the Fund's investors. Fund flows into other retail funds of the  South 
African business, while outweighed by  the Dividend Income Fund outflows,  are 
in fact at record positive levels.



The consistency and  quality of retail  fund performance has  resulted in  M&G 
being awarded the prestigious  2012 Morningstar OBSR^7 Outstanding  Investment 
House Award. Shared this year with  First State Investments, M&G has won  this 
award  for  three  consecutive  years.  Total  external  retail  funds   under 
management at the  end of  September were  £52.0 billion  (30 September  2011: 
£41.4 billion).



In the nine  months to  30 September 2012,  net inflows  in the  Institutional 
Business were  £5.2  billion  across  M&G's range  of  diverse  fixed  income, 
property and alternative investment strategies. This represents a record level
of year-to-date net  sales, with a  single fixed income  mandate amounting  to 
£4.4 billion accounting for a  significant proportion of this total.  However, 
redemptions from this short-dated  mandate are expected  during the course  of 
2013 and 2014.



In addition  to record  quarterly inflows,  the Institutional  Business has  a 
strong pipeline of new business which has been won but which has not yet  been 
funded. Investment performance remains extremely  strong with 100 per cent  of 
actively  managed  fixed  income  funds  delivering  returns  ahead  of  their 
benchmarks  in  the  three  years   to  30  September  2012.  Total   external 
institutional funds under management at the  end of September 2012 were  £52.2 
billion (30 September 2011: £45.9 billion).



M&G's Institutional  Business  has also  been  recognised for  its  investment 
performance with multiple awards, including the UK Pensions Awards 2012  Fixed 
Income Manager  of the  Year award.  Indeed, M&G's  flagship institutional  UK 
corporate bond fund, with  assets of over £4.2  billion at 30 September  2012, 
has outperformed its benchmark^8  by 1.6^9 percentage points  a year over  the 
five year period to 30 September 2012.



Total funds under management across M&G were £216.9 billion at the end of  the 
third quarter, a 12 per cent increase on 30 September 2011. External funds now
represent 48 per  cent of  the total,  standing at  a record  level of  £104.2 
billion, a 19 per cent improvement year-on-year.



Looking to the future, we expect growth  in retail fund sales to be  strongest 
in mainland Europe following a  substantial investment in distribution  there. 
In the UK,  however, net retail  fund sales are  likely to slow  further as  a 
result of our  decision to limit  new inflows into  our two market-leading  UK 
corporate bond funds.



^7 Morningstar Old Broad Street Research Limited 2012 Outstanding Investment
House Award.

^8 The benchmark for the Fund is the iBoxx Sterling Non Gilts Index

^9 Returns are gross estimates on an offer to offer basis



1.5 Eastspring Investments



                                                                      % change
                                                                            on
                                          % change
                                                                           Q3
Investment Flows       YTD 2012 YTD 2011 on YTD^2 Q3 2012 Q3 2011  2011^2
Net inflows retail and
institutional
business^1              £1.0bn   £0.8bn     35 %    £0.6bn   £0.8bn   (22) %
^                                    ^                       ^
Gross inflows retail
and institutional
business ^1             £6.5bn   £6.5bn      -     £2.7bn   £2.2bn    23 %
^                                    ^                       ^
Funds under management
total ^                 £56.0bn  £49.5bn     13 %                      ^
External funds under
management total^1     £16.5bn  £15.1bn      9 %                      ^



Net third party year-to-date inflows of £1,033 million were driven by  inflows 
to new funds in India  and Taiwan, as well as  net inflows in Japan and  China 
which benefitted from higher equity  flows. Specifically, strong fund  raising 
was seen  in India  for its  fixed maturity  plan range,  while the  Taiwanese 
business saw a  successful launch  of the  Emerging Asian  Local Fixed  Income 
Fund. In addition Taiwan's existing range of onshore and offshore fixed income
funds have attracted significant net  inflows year-to-date. The positive  net 
flows were  partially offset  by redemptions  from institutional  business  in 
Korea. Third quarter net  inflows in 2012  were 22 per  cent lower than  the 
same period  in 2011  mainly due  to  redemptions in  September 2012  from  an 
institutional mandate.  At 30  September  2012, 67  per  cent of  funds  were 
outperforming their benchmarks over a rolling three year period.



September marked the opening  of Eastspring Investments'  first office in  the 
US, as  it aims  to capture  the increasing  interest in  Asia for  investment 
opportunities within the US institutional market.



Total funds under management of £56.0 billion  were 13 per cent higher than  a 
year ago,  driven  by  the  net inflows  and  positive  market  movements.  In 
September a  survey conducted  by Asia  Asset Management^3  ranked  Eastspring 
Investments as  the leading  retail asset  manager in  Asia (based  on  assets 
sourced from Asia ex-Japan) as at 30 June 2012.



^1 Investment  flows exclude  Eastspring Money  Market Funds  gross and  net 
inflows.  Year-to-date  net  outflows  were  £217  million  (year-to-date  net 
outflows 2011: £267  million). External funds  under management exclude  Money 
Market Funds of £4.1 billion (third quarter 2011: £4.5 billion).

^2 Percentages based on unrounded numbers.

^3 Source: September 2012, Asia Asset Management magazine



2. Financial Management



The Group remains focused on managing  proactively its balance sheet and  risk 
profile. We continue to  impose stringent stress testing  on our key  capital 
measures, ensuring we could  withstand significant market  shocks both in  the 
short and medium term.



2.1 Capital Management



A strong  balance  sheet  is at  the  heart  of  our strategy  and  is  a  key 
consideration for our customers when  they choose our products. That  strength 
gives confidence to our customers that we  will be there to serve them in  the 
long term. Strict and proactive management and allocation of capital remain  a 
core focus for our Group.



Our capital  position  remains  resilient.  We  have  continued  to  focus  on 
maintaining the  Group's financial  strength  through optimising  the  balance 
between writing  profitable new  business, conserving  capital and  generating 
cash. We estimate that  our Insurance Groups  Directive (IGD) capital  surplus 
was £4.1 billion  at 30  September 2012 (after  taking into  account the  2012 
interim dividend of £0.2  billion). This compares to  £4.2 billion at 30  June 
2012 (before taking into account the  2012 interim dividend) and £4.0  billion 
at 31 December  2011 (before taking  into account the  2011 final dividend  of 
£0.4 billion).



As at 30 September 2012 stress testing of our IGD capital position to  various 
events has the following results:

· An instantaneous 20 per cent  fall in equity markets from 30  September 
2012 levels would reduce the IGD surplus by £400 million;

· A 40 per  cent fall in equity  markets (comprising an instantaneous  20 
per cent fall followed by a further 20 per cent fall over a four week  period) 
would reduce the IGD surplus by £900 million;

· A 100  bps reduction (subject  to a  floor of zero)  in interest  rates 
would reduce the IGD surplus by £800 million;

· Credit  defaults of  ten  times the  expected  level would  reduce  IGD 
surplus by £650 million.

In addition to  our strong capital  position, on a  statutory basis the  total 
credit reserve  for  the UK  shareholder  annuity funds  also  contributes  to 
protecting our capital  position in  excess of  the IGD  surplus. This  credit 
reserve as at 30 September 2012 was  £2.1 billion, equivalent to 7.9 per  cent 
of the assets backing annuity liabilities. This represents 40 per cent of  the 
portfolio spread over swaps, compared to 33  per cent at 31 December 2011  and 
35 per cent at 30 September 2011.



The surplus of the UK with-profits fund, which represents a substantial source
of capital from both a solvency and economic perspective, is excluded from the
IGD calculation.  At 30  September 2012,  the UK  with-profits fund  inherited 
estate was estimated at £6.7 billion.  The value of shareholders' interest  in 
future transfers from the UK with-profits fund is valued at £2.2 billion.



2.2 Credit



The Group's  estimated  total  debt  securities portfolio  on  an  IFRS  basis 
(excluding holdings attributable to external unit holders of consolidated unit
trusts) comprised the following as at 30 September 2012:



                                                           Other

                                        Unit-linked shareholder

                                      and variable      backed

                        With-profit    annuity^*    business  Total
                                 £bn           £bn          £bn    £bn
UK insurance operations        48.8         6.3       26.6 81.7
US insurance operations**         -           -       33.4 33.4
Asia long-term business        1.3         2.1        5.0  8.4
Other operations                  -           -        1.9  1.9
Total                           50.1        8.4 ^        66.9 125.4



* Jackson's  variable  annuity  separate  account  assets  comprise  equity 
securities and portfolio holdings in unit trusts (including mutual funds), the
majority of which are equity based.

** Including the debt securities of REALIC acquired on 4 September 2012.



Shareholders are not  directly exposed  to value movements  on assets  backing 
with-profits or  unit-linked operations,  with sensitivity  mainly related  to 
shareholder-backed  business.  In  the  UK,  of  the  £26.6  million  of  debt 
securities backing shareholder business and other non-linked business, 74  per 
cent is rated AAA to A, 21 per  cent BBB and 5 per cent non-investment  grade. 
No defaults  were reported  in  the third  quarter of  2012  for UK  and  Asia 
shareholder-backed businesses.



The most significant area of exposure to credit risk for the shareholder is in
the US. The US insurance operation's fixed income portfolio at 30 September is
estimated  at  £33.4  billion.  Net  unrealised  gains  on  available-for-sale 
securities were  £2.9  billion  at  30 September  2012  (30  June  2012:  £2.5 
billion).



Gross unrealised losses on securities priced  below 80 per cent of book  value 
were £0.1 billion at 30 September 2012 (30 June 2012: £0.1 billion).



For US insurance operations, total amounts charged to profits relating to debt
securities as a result of impairments and sales of impaired and  deteriorating 
bonds in the third quarter of 2012  were £39 million (third quarter 2011:  £16 
million), nine months  ended 30 September  2012: £72 million  (nine months  of 
2011: £29 million).  In the third  quarter of 2012,  Jackson's total  defaults 
were £nil (third quarter 2011: £nil).



Group shareholder sovereign debt exposure

Sovereigndebt of shareholder-backed business represented 16 per cent or
£10.6billion of the Group's debt portfolio backing shareholder business at 30
September 2012. 38 percent of thiswas rated AAA and 93 per cent investment
grade.



Of the Group's holdings in Continental Europe of £582 million, 80 per cent was
AAA rated. Prudential's direct exposure to the eurozone countries continues to
be small in the context of our overall balance sheet. Shareholder exposure  to 
the eurozone sovereigns of Italy and  Spain is £49 million.The Group does  not 
have any direct sovereign debt exposure to Greece, Portugal or Ireland.



The exposure of  the Group's  shareholder funds to  sovereign debt  (including 
credit default swaps that  are referenced to sovereign  debt) at 30  September 
2012 is as follows.



                                                             Shareholder

                                                               sovereign

                                                                  debt
                                                                     £m
Continental Europe
                              Italy                                  48
                              Spain                                   1
                                                                     49
  Germany                                                           467
  Other Europe (principally Isle of Man, France and Belgium)         66
                                                                    582
United Kingdom                                                    3,411
United States                                                     3,519
Other (predominantly Asia)                                        3,051
Total                                                            10,563



Exposure to bank debt securities



Prudential expects that any second order sovereign credit exposures would most
likely be concentrated in the banking  sector. The Group's bank exposure is  a 
function of its core investment business, as well as of the hedging and  other 
activity undertaken to manage its  various financial risks. Prudential  relies 
on publicly available information to identify banks with large  concentrations 
of indirect exposure.



Prudential has a range of controls and processes to manage credit exposure. In
addition to the  control frameworks  that cover  shareholder and  policyholder 
credit risk  within  each  Business  Unit, the  Group  Credit  Risk  Committee 
oversees shareholder  credit risk  across the  Group. The  Committee  receives 
comprehensive management information,  including details  of counterparty  and 
invested credit exposure (including structured credit and loans), secured  and 
unsecured  cash  balances,  top  30  credit  exposures,  and  an  analysis  of 
shareholder exposure by industry/country and  rating. The Group Risk  function 
also continually  monitors the  portfolio for  emerging credit  risks  through 
various tools and processes.



Prudential actively mitigates  the level of  Group-wide credit risk  (invested 
credit and  counterparty)  through  a comprehensive  system  of  hard  limits, 
collateralisation agreements and centrally managed 'watch lists'.



In terms of shareholder exposure to the bank debts of Portugal, Ireland, Italy
and Spain, the  Group held £270  million at  30 September 2012.  There was  no 
direct exposure to Greek banks.



The exposure of the  Group's shareholder funds to  bank debt securities at  30 
September 2012 comprises the following:



         Bank debt securities - shareholder-backed business
                                                 Total

                           Total senior subordinated

                                 debt         debt   Total
                                     £m             £m      £m
Continental Europe
            Portugal                31            -    31
            Ireland                 16            -    16
            Italy                   12           25    37
            Spain                  160           26   186
                                   219           51   270
        Germany                     34            1    35
        Other Europe                86          283   369
                                   339          335   674
United Kingdom                     652          780 1,432
United States                    1,778          484 2,262
Other (predominantly Asia)         372          570   942
Total                            3,141        2,169 5,310





ENDS



Enquiries:



Media                               Investors/Analysts
Jonathan Oliver +44 (0)20 7548 3719 Raghu Hariharan    +44 (0)20 7548 2871
Robin Tozer     +44 (0)20 7548 2776 Richard Gradidge   +44 (0)20 7548 3860



Notes:



1 Annual  premium equivalent  (APE) sales  comprise regular  premium 
sales plus one-tenth  of single  premium insurance  sales and  are subject  to 
rounding.

2 Present Value of New  Business Premiums (PVNBP) are calculated  as 
equalling single  premiums plus  the present  value of  expected new  business 
premiums  of  regular  premium  business,   allowing  for  lapses  and   other 
assumptions made in determining the EEV new business contribution.

3 NBP assumptions for  the period are  detailed in the  accompanying 
schedule 5. All references to NBP margins  on pages 1 to 16 of this  statement 
refer to margins  on an APE  basis, calculated  as the ratio  of new  business 
profit to APE sales.

4 There will be a conference call today for the media at 09.30  (UK) 
/ 17.30 (Hong Kong)  hosted by Tidjane Thiam,  Group Chief Executive. Dial  in 
telephone number: (UK) +44 (0)203 140  0668; (Hong Kong) +852 3060 9173;  Pin: 
288152#.

5 There will be a conference  call today for analysts and  investors 
at 10.15  (UK)  / 18.15  (Hong  Kong) hosted  by  Tidjane Thiam,  Group  Chief 
Executive. Dial  in telephone  number: +44  (0)203 140  0668 /  0800 368  1950 
(Freephone UK) Pin: 765743#.  Playback (PIN: 388040#) +44  (0) 203 140 0698  / 
0800 368 1890 (Freephone  UK) (available from 12.30  (UK Time) on 14  November 
2012 until 23.59 (UK Time) on 27 November 2012).

6 High-resolution photographs  are available  to the  media free  of 
charge  at   www.prudential.co.uk/prudential-plc/media/media_library   or   by 
calling the media office on +44 (0)20 7548 2466.

7 Sales for  overseas operations  have been  reported using  average 
exchange rates for the period as shown in the attached schedules. Reference to
prior year  figures in  the commentary  is on  an actual  exchange rate  basis 
unless stated. An alternative method of presentation is on a constant exchange
rate basis shown in supplementary schedule 1B.

8 Prudential plc is  a company incorporated  and with its  principal 
place of business in England, and its affiliated companies constitute a  large 
global financial services group. It provides insurance and financial  services 
through its subsidiaries and affiliates throughout  the world. It has been  in 
existence for over 160 years and  has £363 billion in assets under  management 
(as at 30  June 2012). Prudential  plc is  not affiliated in  any manner  with 
Prudential Financial, Inc, a company whose  principal place of business is  in 
the United States of America.

9 Forward-Looking Statements

This document may contain 'forward-looking statements' with respect to certain
of Prudential's plans and  its goals and expectations  relating to its  future 
financial condition, performance, results, strategy and objectives. Statements
that are not historical facts, including statements about Prudential's beliefs
and expectations, are forward-looking  statements. These statements are  based 
on plans,  estimates  and  projections as  at  the  time they  are  made,  and 
therefore undue reliance should  not be placed on  them. By their nature,  all 
forward-looking statements involve risk and uncertainty. A number of important
factors  could  cause  Prudential's  actual  future  financial  condition   or 
performance or  other  indicated  results  to  differ  materially  from  those 
indicated in any forward-looking statement. Such factors include, but are  not 
limited to,  future  market conditions,  fluctuations  in interest  rates  and 
exchange rates,  and  the  performance of  financial  markets  generally;  the 
policies and actions  of regulatory authorities,  including, for example,  new 
government initiatives related to the financial  crisis and the effect of  the 
European  Union's   'Solvency  II'   requirements  on   Prudential's   capital 
maintenance requirements; 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; the impact  of 
changes in capital, solvency  standards or accounting  standards, and tax  and 
other legislation and regulations in the jurisdictions in which Prudential and
its affiliates operate; and  the impact of legal  actions and disputes.  These 
and other important factors may for  example result in changes to  assumptions 
used for determining results of  operations or re-estimations of reserves  for 
future policy  benefits.  Further  discussion of  these  and  other  important 
factors that could  cause Prudential's  actual future  financial condition  or 
performance or other  indicated results to  differ, possibly materially,  from 
those anticipated  in Prudential's  forward-looking  statements can  be  found 
under the 'Risk factors'  heading in this document  and the Annual Report  and 
the 'Risk Factors' heading of Prudential's  most recent annual report on  Form 
20-F filed with the U.S. Securities and Exchange Commission, as well as  under 
the 'Risk Factors' heading  of any subsequent  Prudential Half Year  Financial 
Report. Prudential's most recent Annual  Report, Form 20-F and any  subsequent 
Half  Year  Financial  Report  are/will   be  available  on  its  website   at 
www.prudential.co.uk.

Any forward-looking statements contained in this document speak only as of the
date on which they are made. Prudential expressly disclaims any obligation  to 
update the forward-looking statements contained in this document or any  other 
forward-looking statements it may make, whether as a result of future  events, 
new information or otherwise except as required pursuant to the UK  Prospectus 
Rules, the UK  Listing Rules, the  UK Disclosure and  Transparency Rules,  the 
Hong Kong Listing Rules, the SGX-ST listing rules or other applicable laws and
regulations.

10The  financial  information  presented  in  this  Interim   Management 
Statement and accompanying schedules is unaudited.



Supplementary schedules



Contents                                                                  Page

                                                                         
Schedule 1A New Business Insurance Operations (Reported Exchange Rates)   19

                                                                        
Schedule 1B New Business Insurance Operations (Constant Exchange Rates)   20

                                                                        
            Total Insurance New Business APE - By Quarter (Reported
Schedule 2A Exchange Rates)                                               21

                                                                        
            Total Insurance New Business APE - By Quarter (Constant
Schedule 2B Exchange Rates)                                               22

                                                                        
Schedule 3  Investment Operations - By Quarter (Reported Exchange Rates)  23

                                                                        
            New Business Profit and Margin ( % APE and % PVNBP) (Reported
Schedule 4  Exchange Rates)                                               24

                                                                        
Schedule 5  EEV New Business Methodology and Assumptions                  25

                                                                        
Schedule 6  Group Debt Securities at 30 September 2012                    28

                                                                        
Schedule 7  Basis of preparation                                          33

                                                                        





Schedule 1A - Reported Exchange Rates

PRUDENTIAL PLC - NEW BUSINESS - Q3 2012

INSURANCE OPERATIONS



                                                                   Annual
^                     Single               Regular          Equivalents^(3)            PVNBP
                      Q3      Q3            Q3     Q3            Q3     Q3             Q3      Q3

^                2012   2011         2012  2011          2012  2011 ^      2012   2011
                                   +/-                  +/-                  +/-                    +/-
^                  YTD     YTD   (%)     YTD    YTD   (%)     YTD    YTD   (%)      YTD     YTD   (%)
^                   £m      £m            £m     £m            £m     £m   ^       £m      £m
Group Insurance
Operations                                                                   ^
Asia ^(1a) (7)   1,071  1,096  (2%) 1,221 1,037   18% 1,328 1,147   16%  7,074  6,221   14%
US^(1a) (7)     11,221  9,735   15%    11    15 (27%) 1,133   988   15% 11,308  9,858   15%
UK               4,514  3,615   25%   166   207 (20%)   617   569    8%  5,264  4,603   14%
Group Total ^  16,806 14,446   16% 1,398 1,259   11% 3,078 2,704   14% 23,646 20,682   14%
^                                                                          ^
Asia Insurance
Operations^(1a)
(7)                                                                          ^
Hong Kong          101    121 (17%)   263   217   21%   273   229   19%  1,574  1,421   11%
Indonesia          247    177   40%   279   221   26%   303   239   27%  1,242    921   35%
Malaysia            69     60   15%   138   144  (4%)   145   150  (3%)    892    864    3%
Philippines        131     76   72%    20    14   43%    33    22   50%    188    115   63%
Singapore          277    246   13%   189   138   37%   217   163   33%  1,564  1,264   24%
Thailand             9      8   13%    27    19   42%    28    20   40%    106     75   41%
Vietnam              1      1    0%    29    29    0%    29    29    0%    102    101    1%
SE Asia
Operations inc.
Hong Kong          835    689   21%   945   782   21% 1,028   852   21%  5,668  4,761   19%
China^(8)           27     41 (34%)    43    42    2%    46    46    0%    218    227  (4%)
Korea               26     62 (58%)    64    75 (15%)    67    81 (17%)    353    430 (18%)
Taiwan             131    180 (27%)    99    77   29%   112    95   18%    514    447   15%
India^(5)           52    124 (58%)    70    61   15%    75    73    3%    321    356 (10%)
Total Asia
Operations ^    1,071  1,096  (2%) 1,221 1,037   18% 1,328 1,147   16%  7,074  6,221   14%
^                                                                          ^
US Insurance
Operations^(1a)
(7)                                                                          ^
Fixed Annuities    452    329   37%     -    -   N/A    45    33   36%    452    329   37%
Fixed Index
Annuities          790    680   16%     -    -   N/A    79    68   16%    790    680   16%
Life                 5      8 (38%)    11    15 (27%)    11    16 (31%)     92    131 (30%)
Variable
Annuities        9,695  8,511   14%     -    -   N/A   970   851   14%  9,695  8,511   14%
Wholesale          279    207   35%     -    -   N/A    28    20   40%    279    207   35%
Total US
Insurance
Operations      11,221  9,735   15%    11    15 (27%) 1,133   988   15% 11,308  9,858   15%
^                                                                          ^
UK & Europe
Insurance
Operations                                                                   ^
Direct and
Partnership
Annuities          214   264 (19%)     -    -   N/A    21    26 (19%)    214    264 (19%)
Intermediated
Annuities          411   180  128%     -    -   N/A    41    18  128%    411    180  128%
Internal
Vesting
Annuities        1,036   883   17%     -    -   N/A   104    88   18%  1,036    883   17%
Total
Individual
Annuities        1,661 1,327   25%     -    -   N/A   166   133   25%  1,661  1,327   25%
Corporate
Pensions           179   161   11%   130   174 (25%)   148   190 (22%)    757    979 (23%)
On-shore Bonds   1,613 1,265   28%     -    -   N/A   161   127   27%  1,613  1,266   27%
Other Products     648   579   12%    36    33    9%   101    91   11%    820    748   10%
Wholesale          413   283   46%     -    -   N/A    41    28   46%    413    283   46%
Total UK &
Europe
Insurance Ops ^  4,514  3,615   25%   166   207 (20%)   617   569    8%  5,264  4,603   14%
Group Total ^  16,806 14,446   16% 1,398 1,259   11% 3,078 2,704   14% 23,646 20,682   14%





Schedule1B - Constant Exchange Rates

PRUDENTIAL PLC - NEW BUSINESS - Q3 2012

INSURANCE OPERATIONS



                                                                     Annual
^                     Single                 Regular           Equivalents^(3)             PVNBP
                      Q3       Q3            Q3      Q3            Q3      Q3             Q3       Q3

^                2012    2011         2012   2011         2012   2011 ^      2012    2011
                                    +/-                   +/-                   +/-                     +/-
^                  YTD      YTD   (%)     YTD     YTD   (%)     YTD     YTD   (%)      YTD      YTD   (%)
^                   £m       £m            £m      £m            £m      £m   ^       £m       £m
Group Insurance
Operations                                                                      ^
Asia ^(1b) (7)  1,071  1,084  (1%) 1,221 1,030   19% 1,328 1,139   17%  7,074  6,202   14%
US^(1b) (7)     11,221  9,959   13%    11    15 (27%) 1,133 1,011   12% 11,308 10,086   12%
UK               4,514  3,615   25%   166   207 (20%)   617   569    8%  5,264  4,603   14%
Group Total ^  16,806 14,658   15% 1,398 1,252   12% 3,078 2,719   13% 23,646 20,891   13%
^                                                                             ^
Asia Insurance
Operations^(1b)
(7)                                                                             ^
Hong Kong          101    124 (19%)   263   223   18%   273   235   16%  1,574  1,458    8%
Indonesia          247    169   46%   279   212   32%   303   229   32%  1,242    883   41%
Malaysia            69     60   15%   138   144  (4%)   145   150  (3%)    892    864    3%
Philippines        131     79   66%    20    15   33%    33    23   43%    188    120   57%
Singapore          277    250   11%   189   140   35%   217   165   32%  1,564  1,281   22%
Thailand             9      8   13%    27    19   42%    28    20   40%    106     74   43%
Vietnam              1      1    0%    29    29    0%    29    29    0%    102    102    0%
SE Asia
Operations inc.
Hong Kong          835    691   21%   945   782   21% 1,028   851   21%  5,668  4,782   19%
China^(8)           27     43 (37%)    43    44  (2%)    46    49  (6%)    218    239  (9%)
Korea               26     61 (57%)    64    74 (14%)    67    80 (16%)    353    423 (17%)
Taiwan             131    181 (28%)    99    77   29%   112    95   18%    514    448   15%
India^(5)           52    108 (52%)    70    53   32%    75    64   17%    321    310    4%
Total Asia
operations       1,071  1,084  (1%) 1,221 1,030   19% 1,328 1,139   17%  7,074  6,202   14%
^                                                                             ^
US Insurance
Operations^(1b)
(7)                                                                             ^
Fixed Annuities    452    336   35%     -     -   N/A    45    34   32%    452    336   35%
Fixed Index
Annuities          790    696   14%     -     -   N/A    79    69   14%    790    696   14%
Life                 5      8 (38%)    11    15 (27%)    11    16 (31%)     92    135 (32%)
Variable
Annuities        9,695  8,707   11%     -     -   N/A   970   871   11%  9,695  8,707   11%
Wholesale          279    212   32%     -     -   N/A    28    21   33%    279    212   32%
Total US
Insurance
Operations      11,221  9,959   13%    11    15 (27%) 1,133 1,011   12% 11,308 10,086   12%
^                                                                             ^
UK & Europe
Insurance
Operations                                                                      ^
Direct and
Partnership
Annuities          214    264 (19%)     -     -   N/A    21    26 (19%)    214    264 (19%)
Intermediated
Annuities          411    180  128%     -     -   N/A    41    18  128%    411    180  128%
Internal
Vesting
Annuities        1,036    883   17%     -     -   N/A   104    88   18%  1,036    883   17%
Total
Individual
Annuities        1,661  1,327   25%     -     -   N/A   166   133   25%  1,661  1,327   25%
Corporate
Pensions

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