Pru dives £455m into the red

WEAK equity markets have left Prudential with a £455m pre-tax loss for 2001 compared with the £728m profit the previous year. The result was hit by a £1.4bn 'adjustment' for poor returns achieved in capital markets, much of which was due to an investment return in the UK of minus 3.5% for the year.

Prudential also took an £85m charge relating to investment bonds held by US arm Jackson National Life.

However, the insurer also booked a £338m profit from the termination fee it was paid following its aborted £16bn merger with American General.

Operating profit on an achieved basis, which smooths out the short-term impact of investment markets, climbed 15% to £1.2bn, helped by a 10% rise in new sales to £673m.

'We have made real progress in restructuring and refocusing our UK insurance operations and its strong performance in 2001 shows we can build the business in competitive markets,' said chief executive Jonathan Bloomer.

Insurance sales on an annual premium equivalent basis were 16% higher at £1.8bn and sales of investment products rose from £376m to £1bn. The year's dividend is up 3.7% to 25.4p.

Egg, Prudential's 79%-owned online bank, said on Monday that it made a maiden profit in November and December.