12 Mar 2001

Merger of Prudential and American General to create international insurance powerhouse

Not for release, publication or distribution in whole or in part in or into Australia, Canada or Japan

SUMMARY

LONDON, UK/HOUSTON, TEXAS, USA - Prudential plc ("Prudential") and American General Corporation ("American General") announce that they have agreed the terms of a merger (the "Merger") to create a top-tier international financial services business with leading market positions in the US, the UK and Asia.

Rationale for the Merger

• Creates a major international force in retail financial services with leading positions in the US, the UK and Asia
• Significantly enhanced combined US presence
• Provides scale and financial resources to accelerate growth and maximise value creation in our chosen markets
• Highly complementary multi-product, multi-distribution channel business models
• Diversification of business enhances quality of earnings

Other key highlights

• Pro forma combined market capitalisation of £30.8 billion (US$45.3 billion) based on closing prices and exchange rates on 9 March 2001
• Pro forma investment funds under management of £229 billion (US$336 billion)
• Merger ratio of 3.6622 Prudential shares for each American General share, implying a value of US$49.52 per American General share and a total fully diluted equity value of £18.1 billion (US$26.5 billion) based on the ten day trailing average closing prices on 9 March 2001
• Prudential shareholders to own approximately 50.5% and American General shareholders to own approximately 49.5% of the enlarged group on a fully diluted basis
• Prudential plc will be the holding company for the combined group
• Prudential's US operations, Jackson National Life ("JNL") and PPM America to be integrated with American General's operations
• Integrated board and management team: six representatives of American General to join the enlarged Prudential board of 18 directors
• Sir Roger Hurn to continue to be Chairman of Prudential and Jonathan Bloomer to continue as the Group Chief Executive. As a result of the Merger, Robert M. Devlin, Chairman and Chief Executive Officer of American General, will be invited to join the Prudential board as Deputy Chairman, and Chairman and Chief Executive Officer of North American Operations, reporting to Jonathan Bloomer
• Transaction to be effected by a US statutory merger which is expected to be tax free for American General shareholders
• Pre-tax cost synergies at a rate of over £85 million (US$130 million) per annum by the end of 2002 at an estimated one-time cost of less than one full year's worth of savings
• Merger is subject to shareholder approvals and regulatory consents and is targeted for completion in the third quarter of 2001

Commenting on the Merger, Jonathan Bloomer, Group Chief Executive of Prudential, said:

"Our two companies are a great fit. We have highly complementary business operations and we have pursued very similar strategies by broadening out our product ranges and distribution channels. Not only will this give us a leading position in the US, it also gives us the scale and financial strength to allow for continued expansion and faster growth in the other regions of the world in which we operate. We look forward to working with Bob Devlin and his team to implement our shared vision, capture new commercial opportunities and deliver long term value to our shareholders."

Robert M. Devlin, Chairman and Chief Executive Officer of American General, said:

"Today, American General has taken a bold step toward realising our strategic vision: to become a world leader in financial services through our merger with Prudential. I look forward to working with Jonathan Bloomer and the Prudential team to make this vision a reality. As part of an international financial services powerhouse, we will benefit from increased scale and financial resources that will provide a solid foundation for accelerated growth and profitability. It is also important to recognise that this merger is greater than just the size and scale it creates. It also represents an outstanding strategic fit for two organisations that share a common purpose for the future - to create superior returns for our shareholders, financial solutions for our customers around the world, and outstanding opportunities for our employees."

Details of the Merger are set out in Part I of this announcement. Information on Prudential is contained in Part II and information on American General is contained in Part III. Summary pro forma combined financial information is set out in Appendix 1.

Prudential is being advised by UBS Warburg. American General is being advised by Morgan Stanley Dean Witter.

UBS Warburg and Cazenove & Co. are acting as joint brokers to Prudential.

All Prudential corporate news releases can be accessed at Prudential's web site: www.prudential.co.uk. All American General corporate news releases can be accessed at American General's web site: www.americangeneral.com.

There will be a conference call today for wire services at 7.45am (London time) on +44 20 8781 0598. This conference call will be hosted by Jonathan Bloomer, Group Chief Executive of Prudential and Robert M. Devlin, Chairman and Chief Executive Officer of American General.

A UK analysts' conference will be held at 9.30am (London time) and a press conference will be held at 11.15am (London time) today at the offices of Prudential plc, Laurence Pountney Hill, EC4R 0EU. A webcast of the presentation and the presentation slides will be available on the group's website, www.prudential.co.uk. A US analysts' conference will be held at 9.00am (EST) today at The St Regis, Two East 55th Street at Fifth Avenue, New York City which will be broadcast live on American General's website at www.americangeneral.com.

This summary should be read in conjunction with the full text of this announcement.

Enquiries:

Prudential plc
Rebecca Burrows (Investors)
+44 20 7548 3537

Andrew Crossley (Investors)
+44 20 7548 3166

Geraldine Davies (Media)
+44 20 7548 3911

American General Corporation
Kenneth A. Brause (Investors)
+1 212 446 3107

John E. Pluhowski (Media)
+1 713 831 1149

UBS Warburg Ltd., which is regulated in the United Kingdom by The Securities and Futures Authority Limited, is acting for Prudential plc in connection with the Merger and for no one else and will not be responsible to anyone other than Prudential plc for providing the protections afforded to customers of UBS Warburg Ltd., or for providing advice in relation to the Merger.

This announcement has been approved by UBS Warburg Ltd., for the purposes of Section 57 of the Financial Services Act 1986. This does not constitute a recommendation regarding the Prudential ordinary shares. The value of an investment may go down as well as up. Investors or potential investors should seek advice from an independent financial adviser as to the suitability for the individual concerned.

This announcement does not constitute an offer or invitation to purchase any securities. Any such offer will only be made in documents to be published in due course and any such acquisition should be made solely on the basis of information contained in those documents.

Prudential plc and American General Corporation will be filing a proxy statement/prospectus and other relevant documents concerning the proposed transaction with the SEC. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ON THE PROPOSED TRANSACTION. Investors will be able to obtain the document free of charge at the SEC's website (www.sec.gov). In addition, the proxy statement/prospectus and other relevant documents concerning the proposed transaction and filed with the SEC may be obtained free of charge by contacting Prudential plc, Laurence Pountney Hill, London EC4R 0HH, England, Attention: Investor Relations (tel. (44 20) 7548 3537), and American General Corporation, 2929 Allen Parkway, Houston, Texas, 77019, Attention: Investor Relations (tel. (+1 713) 522-1111).

American General Corporation and its directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders of American General Corporation. The directors and executive officers of American General Corporation include: J. Evans Attwell, Brady F. Carruth, W. Lipscomb Davis Jr., J. Edward Easler II, Larry D. Horner, Richard J.V. Johnson, Morris J. Kramer, Michael E. Murphy, Michael J. Poulos, Robert E. Smittcamp, Anne M. Tatlock, Robert M. Devlin, Mark S. Berg, James P. Corcoran, David W. Entrekin, Frederick W. Geissinger, John A. Graf, John V. LaGrasse, Rodney O. Martin Jr., Nicholas R. Rasmussen, Gary D. Reddick and Richard W. Scott. Collectively, as of 28 February 2001, the directors and executive officers of American General Corporation beneficially owned approximately 2% of the outstanding shares of the common stock of American General Corporation. Stockholders may obtain additional information regarding the interests of such participants by reading the proxy statement/prospectus when it becomes available.

PART I - DETAILS OF THE MERGER

1. Principal Terms
   The Merger will be effected in accordance with the terms of an Agreement and Plan of Merger dated as of 11 March 2001 (the "Merger Agreement") which has been unanimously approved by the boards of both companies. Under the terms of the Merger, pursuant to which American General will merge with a subsidiary of Prudential through a US statutory merger, each share of common stock of American General will be exchanged for 3.6622 new Prudential ordinary shares or, at the election of the American General shareholder, 1.8311 American Depositary Shares ("ADSs"). This merger ratio implies a value of US$49.52 for each American General share and a total fully diluted equity value of £18.1 billion (US$26.5 billion) based on the ten day trailing average closing prices on 9 March 2001. Prudential shareholders will own approximately 50.5% and American General shareholders will own approximately 49.5% of the combined company on a fully diluted basis.
   
   Prudential will retain its primary listing on the London Stock Exchange with ADSs listed on the New York Stock Exchange. Prudential will apply for the new Prudential ordinary shares to be issued to American General shareholders in connection with the Merger to be listed on the London Stock Exchange and for the ADSs to be listed on the New York Stock Exchange.
   
   The combined group will be headquartered in London, UK with the United States headquarters being in New York. The combined US business will continue to have substantial operations in Houston, Texas and Lansing, Michigan and other key locations throughout the United States.
   
   Prudential and American General intend to publish detailed information on the Merger for their respective shareholders by late second quarter of 2001. Subject to shareholder approvals, regulatory consents, and a tax ruling and opinions, closing of the Merger is targeted for late third quarter of 2001.
   
   The transaction is expected to be tax free for American General shareholders.
2. Financial Overview
   The combined group will be a leader in the international financial services marketplace. The pro forma combined market capitalisation of £30.8 billion ($45.3 billion), based on closing share prices and exchange rates on 9 March 2001, would make the group the sixth largest international insurance business and the 11th largest company in the FTSE 100 index.
   
   On a pro forma basis for the year ended 31 December 2000, the combined group would have written new business annual premium equivalent of £3.2 billion ($4.8 billion). Pro forma Prudential and American General combined operating profit based on a longer term rate of return and before amortisation of goodwill for the year ended 31 December 2000 were £1.9 billion ($2.8 billion) on a UK GAAP, modified statutory basis.
   
   Set out in Appendix 1 are provisional unaudited calculations of limited financial information on American General's operations using the achieved profits basis of accounting. The actuarial methods and assumptions used as a basis for the provisional achieved profits financial information have been reviewed by Milliman & Robertson, consulting actuaries. This information has not been subject to audit review and is subject to further adjustment.
   
   The provisional achieved profits shareholders' funds of American General as at 31 December 2000, calculated on the basis set out above, would have been £7.6 billion (US$11.4 billion). On a pro forma combined basis as at 31 December 2000, the combined group would have had shareholders' funds on an achieved profits basis of £16.4 billion (US$24.5 billion).
   
   On a pro forma combined basis for the year ended 31 December 2000, the Merger would have been earnings enhancing to Prudential's shareholders using operating earnings before exceptional items on a modified statutory basis, even before giving effect to anticipated synergies. The Merger is expected to generate pre-tax cost synergies at a rate of over £85 million (US$130 million) per annum by the end of 2002 at an estimated one-time cost of less than one full year's worth of savings.
3. Background to and reasons for the Merger
   Prudential is an international retail financial services business with a clear strategy to be a market leader in its chosen markets of the UK, the US, Asia and, more recently, Continental Europe. It has adopted a multi-channel, multi-brand approach to delivering a variety of products to meet the savings and financial security needs of an increasingly sophisticated customer base. Prudential has made a number of successful acquisitions to enhance its position. It has also demonstrated that it is capable of building new businesses such as egg, the UK's leading financial services e-commerce brand. Prudential has a strong commitment to maximising shareholder value through driving growth in existing and new markets.
   
   American General is an integrated financial services company focusing on asset accumulation, life insurance and consumer lending, primarily in the US. Like Prudential, American General has successfully delivered strong shareholder returns by adopting a multi-channel, multi-product approach focused on providing lifetime solutions to its customers and through a strong commitment to efficiency in operations and capital management.
   
   Both companies have targeted growth sectors where they believe they can earn attractive returns on capital and have made a number of acquisitions which they have successfully integrated to expand their businesses further.
   
   In recent years, the global insurance and asset accumulation industries have been going through significant consolidation. As a result, these industries are beginning to be led by companies which have sufficient scale and financial strength to command leading market positions. Against this background, Prudential and American General believe that, although they are both successful companies in their own right, they can deliver faster growth and greater value creation immediately and in the long term by combining their businesses.
   
   The combined group will be the sixth largest global insurance company in terms of market capitalisation with leadership positions in demographically attractive markets. Prudential and American General believe that the enhanced international scope, together with the resulting larger capital base, will ensure that the combined group is well positioned to capitalise on the outstanding growth opportunities that exist in the North American, Asian and European markets.
   
   The US is the world's largest life insurance and retirement services market. Nearly a quarter of the US population is aged between 45 and 65 years old. This so-called "baby boom" generation is entering the period of their highest net savings years. Prudential and American General strongly believe that the US market has highly attractive characteristics and an established investment culture which the combined group, as a leader in these key markets, will be well placed to capitalise on.
   
   The combined American General and JNL businesses will be the number one provider of annuities in the US with leading positions in variable, fixed and equity linked annuities. In addition, the complementary nature of their product offerings should improve the overall quality of earnings of the combined business (for example, offering both tax-qualified and non-tax qualified annuities). Similarly, there is very little overlap in the distribution platforms of American General and JNL, which will enhance the combined group's ability to access different customer segments.
   
   The combined group's management team has a proven track record in integrating acquisitions successfully and delivering value to shareholders.
4. Merged group board and headquarters
   The Prudential board will continue to be chaired by the current Prudential Chairman, Sir Roger Hurn. Jonathan Bloomer, the current Prudential Group Chief Executive, will be Group Chief Executive of the combined group.
   
   As a result of the Merger, Robert M. Devlin, Chairman and Chief Executive Officer of American General, will be invited to join the Prudential board as Deputy Chairman, and Chairman and Chief Executive Officer of North American Operations, reporting to Jonathan Bloomer. John A. Graf, Senior Vice Chairman - Asset Accumulation and Rodney O. Martin Jr., Senior Vice Chairman - Financial Services of American General will be invited to join as executive directors, and Michael J. Poulos, Anne M. Tatlock and Larry D. Horner will be invited to join as non-executive directors. At the same time as the Merger Agreement was entered into the three American General executive directors to be appointed to the Prudential board entered into amendment agreements in relation to their existing service contracts with American General. Further details of these service contracts and amendment agreements will be available in the public documentation to be distributed in due course.
   
   The enlarged Prudential board will comprise 8 executive directors and 10 non-executive directors.
   
   The combined group's headquarters will be in London, UK with the United States headquarters in New York. The US business will continue to have substantial operations in Houston, Texas; Lansing, Michigan; and other key locations throughout the United States.
5. Merger Agreement
   Under the terms of the Merger Agreement, pursuant to which American General will merge with a subsidiary of Prudential through a US statutory merger, each share of common stock of American General will be exchanged for 3.6622 new Prudential ordinary shares or, at the election of the shareholder, 1.8311 new Prudential ADSs.
   
   The Merger Agreement sets out the conditions to the closing of the Merger. It also contains certain termination rights, mutual representations and warranties and various covenants relating to the operation of the businesses of Prudential and American General in the period until closing.
   
   The Merger Agreement requires Prudential and American General to effect the Merger unless any one of the conditions to the implementation of the Merger is not satisfied or waived by 31 December 2001 subject to extension for a period of 30 days to obtain regulatory consents. The Merger Agreement also provides for termination rights and termination fees to be paid by one party to the other in certain circumstances.
   
   Principal conditions
   The conditions to the implementation of the Merger include necessary Prudential and American General shareholder approvals, receipt of certain regulatory approvals and appropriate tax opinions and rulings and the absence of any governmental order prohibiting the Merger.
   
   Termination rights
   The circumstances in which either party is able to terminate the Merger Agreement include:
   
   

   -	If either Prudential or American General shareholders do not approve the Merger;
   -	If the board of the other party withdraws or adversely modifies its approval or recommendation of the Merger;
   -	If there is a material breach of representation, warranty or covenant by the other party that is not cured or is incapable of being cured;
   -	If the other party's board recommends a superior acquisition offer for that party; or
   -	Closing not having occurred by 31 December 2001, subject to a 30 day extension for finalising regulatory approvals.

   
   
   Termination payments
   

   -	The parties have agreed that American General will make a payment to Prudential of up to US$600 million (£408 million) if the Merger Agreement is terminated in specified circumstances following the making by a third party of a bid for American General, including:
   	-	If American General's board withdraws its recommendation of the Merger or recommends the competing bid;
   	-	If American General's shareholders reject the Merger;
   -	The parties have agreed that Prudential will make a payment to American General of up to £236 million (US$347 million) if the Merger Agreement is terminated in the same circumstances relating to Prudential;
   -	A portion of any termination fee will be payable on the relevant termination, with the remainder payable on consummation of another transaction or the paying company agreeing to another transaction within 9 months.

6. Dividends
   Between signing and closing both companies will continue to pay dividends in line with their existing dividend policy. In addition, shortly prior to closing, American General will pay a special dividend to its shareholders intended to equalise dividends of the two companies between signing and closing and give American General shareholders the benefit of the Prudential dividend rate as if they had become Prudential shareholders on 12 March 2001.
   
   The combined group intends to maintain a progressive dividend policy. Prudential intends to continue paying two semi-annual dividends per year.
7. Accounting and Reporting Implications
   It is expected that the Merger will be accounted for using merger accounting under UK GAAP although this is not a condition of the Merger Agreement. Under US GAAP, the Merger will be treated as a purchase. Prudential will continue to have a December financial year end. The accounts of the group will be published in pounds sterling and will be prepared in accordance with UK GAAP. A reconciliation to US GAAP will be provided in the group's SEC filing. The combined group will continue to report on a semi-annual basis.
   
   The following pounds sterling and US dollars exchange rates have been used in this announcement:

PART II

INFORMATION ON PRUDENTIAL

Group Overview

• Established in London in 1848, Prudential is a leading international financial services group with funds under management of £165 billion at 31 December 2000, and around 22,000 employees worldwide.
• Total group-wide insurance and investment sales for the full-year ended 31 December 2000 were £13.9 billion, up 13 per cent on prior year. Statutory basis operating profit grew by 8 per cent in 2000 to £840 million. Over 50 per cent of the group’s new business revenue and over 60 per cent of its new business achieved profits in 2000 came from outside of the UK.
• Standard & Poor’s financial strength rating for Prudential is AAA.
• In June 2000, Prudential listed its ADRs on the New York Stock Exchange and floated a minority stake in egg, its internet financial services company, on the London Stock Exchange.

UK and Europe

• In the UK, Prudential is one of the largest life insurance companies and pension annuity providers. Prudential has built a powerful multi-brand business model through:
  • Acquisition of Scottish Amicable Life in September 1997, expanding Prudential's distribution through intermediaries;
  • Acquisition of M&G, one of the UK's largest retail fund managers, in April 1999; and
  • Launch of egg, the UK's leading internet financial services brand, in October 1998;
• Continued development of Prudential branded businesses and products such as stakeholder pensions.
• The financial strength of the group’s main UK long-term fund is rated AAA by Standard and Poor’s and Aaa by Moody’s.
• In Europe, Prudential has entered into strategic distribution arrangements with CNP Assurances in France and Signal Iduna in Germany. In January 2001, Prudential also announced the launch of a new product in France, Prudential Europe Vie, an additional distribution agreement in France with Centre Français du Patrimoine (the largest multi-product broking network in France), and the opening of a Paris-based branch.

United States

• Prudential owns Jackson National Life ("JNL"), the 20th largest life insurance company in the United States, based on total assets.
• Since it was acquired by Prudential in 1986, JNL has been transformed from a single product line provider into a multi-channel, multi-product provider. This has been achieved by pursuing a strategy of broadening its product range and distribution reach through both organic growth and strategic acquisitions. In 2000, JNL continued to drive forward its strategy with the self-financed acquisitions of Highland Bancorp and IFC Holdings.
• In 2000 Standard and Poor’s raised its insurer financial strength rating on JNL and Jackson National Life of New York to AAA. The rating from Moody’s is Aa3.

Asia

• Prudential first established its presence in Asia in 1923 and now has businesses in 11 countries across the region. It continues to pursue a strategy of broadening its customer base, distribution reach and product range, and is the leading private mutual fund provider in India. It also has top 5 positions in Hong Kong, Singapore, Malaysia, Vietnam and the Philippines.
• Building professional agency distribution remains one of Prudential's core strengths in the region, and it is widening its distribution channels with a growing number of bank distribution arrangements.
• In 2000, Prudential acquired an 89 per cent interest in Taiwanese mutual fund provider, Core Pacific Securities Enterprise Trust, and launched a joint venture with China International Trust & Investment Corporation (CITIC) in Guangzhou, China. It acquired Orico Life Insurance Co. Ltd in Japan in February 2001.

Financial Summary

PART III

INFORMATION ON AMERICAN GENERAL

Overview

• American General, founded in 1926, is a diversified financial services organisation headquartered in Houston, Texas. It has 16,000 dedicated employees and is a leading provider of retirement services, life insurance, consumer loans, and investments to over 12 million customers. With total assets in excess of US$120 billion, American General is the second largest publicly-traded life insurance company in the United States.
• American General has developed a powerful multi-brand, multi-channel business model and it has established leading positions in a number of its product areas in the United States:

-	The third largest writer of annuities;
-	The leading provider of fixed annuities;
-	The second largest issuer of life insurance policies;
-	The seventh largest life insurer by new life premium sales; and
-	A leading provider of real estate and consumer loans through the third largest consumer finance branch network in the United States.

Business Operations

• American General’s operations are organised into two strategic business groups - financial services and asset accumulation – through which the group’s operating divisions are managed:
  
  

  -	The Retirement Services Division is a leading provider of retirement products and services, and markets its products through two major distribution channels. This Division is managed through the asset accumulation business group. Tax-qualified annuities and mutual funds are sold by its 1,900 financial advisers to employees of educational, health care, government entities and other non-profit organisations. Non-qualified annuities are sold through 37,000 representatives of over 300 banks and other financial institutions, as well as through 22,000 life insurance agents. Pre-tax operating earnings from the division increased 17% from US$855 million in 1999 to US$1,002 million in 2000 representing 39% of the group total.
  -	Investment activities, also managed through the asset accumulation business group, are an integral part of American General’s operations. In addition to almost US$73 billion of investments supporting its general account insurance and annuity liabilities at the year-end 2000, American General provides investment management, advisory, and administration services for around US$23 billion of separate account assets. It has also built a significant fee-based asset management capability.
  -	The Life Insurance Division, which is managed through the financial services business group, is a leading provider of life insurance products used for protection, financial planning and wealth transfer. Products and services are distributed through independent agent distribution systems, which include 33,000 independent agents and strategic alliance partnerships with independent broker/dealers, banks, and financial planners, as well as around 4,500 career agents. The division reported pre-tax operating earnings of US$1,164 million in 2000, up 6% from US$1,103 million in 1999 representing 46% of the group total.
  -	The Consumer Lending Division, which is also managed through the financial services business group, provides a wide variety of consumer lending products, including mortgages, consumer loans, retail sales finance, and credit-related insurance, to over 2 million customers. These products are marketed through American General’s network of over 1,300 branches as well as through an internet-based lending system which was introduced in 2000. Pre-tax operating earnings increased by 10% from US$351 million in 1999 to US$385 million in 2000, representing 15% of the group total.

  Financial Summary (US GAAP basis)

  	2000	1999	% Change
  	(US$m)	(US$m)
  Revenue and Deposits	22,368	20,232	+11
  Operating Earnings	1,310	1,179	+11
  Net Income	1,003	1,131	-11
  Operating Return on Equity (%)	16.7	16.0	n/a
  Total Assets (excl. SFAS 115)	120,360	116,876	+3
  Adjusted Shareholders’ Equity	8,123	7,724	+5

  APPENDIX 1

  The information set out below has been prepared for illustrative purposes only

  Pro forma summarised financial information for Prudential and American General for the year ended 31 December 2000

  	Prudential (£m)	American General (£m)	Pro forma (£m)
  	(Note 1)	(Note 2)	(Note 3)
  New business – annual premiums	569	852	1,421
  New business – single premiums	13,354	4,558	17,912
  New business (APE) (Note 4)	1,904	1,308	3,212
  New insurance business (APE)	1,528	1,308	2,836
  Value added by new business before tax (Note 5)	613	500	1,113
  Achieved profits shareholders' funds (Note 5)	8,833	7,600	16,433
  Analysed as:
  - long term business	7,875	9,800	17,675
  - goodwill	1,611	500	2,111
  - other net assets	1,082	866	1,948
  - total net assets before borrowings	10,568	11,166	21,734
  - net core debt	(1,735)	(3,566)	(5,301)
  - achieved profit basis shareholders’ funds (Note 9)	8,833	7,600	16,433
  Modified statutory basis operating profit (Note 6)	840	1,070	1,910
  MSB operating profit eps (Note 6)	31.5p	n/a	35.3p
  Investment funds under management (£bn)	165	64	229

  Pro forma summarised financial information for Prudential’s US business and American General for the year ended 31 December 2000

  	Prudential’s US business (£m)	American General (£m)	Pro forma US business (£m)
  	(Note 1)	(Note 2)	(Note 3)
  New business – annual premiums	25	852	877
  New business – single premiums	4,830	4,558	9,388
  New business (APE) (Note 4)	508	1,308	1,816
  Value added by new business before tax (Note 5)	221	500	721
  Achieved profits shareholders' funds (Note 5)	2,756	7,600	10,356
  Modified statutory basis operating profit (Note 6)	466	1,070	1,536
  US GAAP pre-tax income (Note 7, 8)	406	1,104	1,510
  US GAAP shareholders’ equity (Note 7)	1,962	5,235	7,197
  US GAAP total assets (US$bn)	45	120	165
  Investment funds under management (US$bn)	30	64	94

  Note:

  1. Extracted from the Prudential preliminary results announcement on 22 February 2001.
  2. American General results above have been translated at an average exchange rate of £1:$1.5158 and a year end exchange rate of £:$1.4938.
  3. No adjustment has been made to include synergy benefits or the costs of the merger.
  4. Annual premium equivalent (APE) is a UK industry measure calculated as annual premiums plus 1/10th single premiums.
  5. American General's achieved profit information in respect of long term business represents provisional calculations using a methodology consistent with the draft guidance issued by the Association of British Insurers in 1995; and with economic assumptions consistent with Prudential's own US business, including a discount rate of 8.5% p.a. and an allowance for cost of capital. All amounts other than for long term business are based on American General's US GAAP results. American General's US GAAP information has been extracted from their audited 2000 results and estimated adjustments have been made to eliminate inconsistencies with UK GAAP using a methodology consistent with that used for Prudential's own US business.
  6. Based upon a longer term rate of investment return and before amortisation of goodwill. American General's US GAAP information has been extracted from their audited 2000 results and estimated adjustments have been made to eliminate inconsistencies with UK GAAP using a methodology consistent with that used for Prudential's own US business.
  7. Represents Jackson National Life, excluding US broker dealer and fund management operations.
  8. Income before charge for dividends on preferred securities.
  9. Shareholders' funds for American General exclude own shares of the American General parent company held by American General as treasury shares.

APPENDIX 2

This press release includes certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of the safe-harbor provisions of the US federal securities laws. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed or implied by the statements. These statements are generally identified by the words "expect", "intend", "believe" and other similar expressions. Many of these risks and uncertainties relate to factors that are beyond the companies' ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants and the action of governmental regulators. In particular, statements regarding the consummation of the transaction are subject to risks that the closing conditions to the transaction will not be satisfied, including the risk that regulatory approvals will not be obtained, that the stockholders of either company will not approve the merger, that a superior acquisition proposal will be made for either company, or that tax-free treatment for US purposes for the Prudential shares and ADSs to be received by the American General shareholders cannot be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. The companies do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.

In addition, statements regarding the expected benefits of the transaction are subject to the risk that expected synergies will not be achieved and to the general risks associated with the companies' businesses, as described in their filings with the US Securities and Exchange Commission, including American General's Form 10-K for the year ended 31 December 1999 and subsequent Forms 10-Q and Forms 8-K and Prudential's Forms 6-K.