Where the axe will fall

Reading: 1,200 jobs Craigforth: 430 jobs London: 230 jobs Ilford: 140

Earlier on Friday, the company also confirmed that it will pull out of general insurance, in a shake-up of the Pru's UK operations.

It plans to sell its general insurance arm for �353m in cash to the Swiss insurer Winterthur, the insurance arm of Credit Suisse.

The general insurance arm covers many household goods and motor insurance policies.

Major review

The changes come as the result of a major strategic review of the Pru's UK operations and plans to overhaul under-performing businesses.

I can assure you that we will resist any compulsory redundancies of MSF members

Roger Lyons MSF union

The job losses will see 25% of the workforce cut, according to Roger Lyons, general secretary of the Manufacturing, Science & Finance (MSF) union, which represents Pru workers.

Mr Lyons told BBC Breakfast News that he was "shocked" by the scale of the restructuring.

He added that the union would be in negotiations with the Prudential about the details and scale of the job losses.

"I can assure you that we will resist any compulsory redundancies of MSF members," he said.

He also confirmed that job losses would hit Pru operations in Reading, London and Craigforth near Stirling.

Winterthur deal

The general insurance arm will be folded into Churchill Group, the UK subsidiary of Winterthur, although policies will still be marketed under the Prudential brand.

About 1,200 jobs will transfer from the Pru to Churchill as a result of the deal, which the Pru values at �810m.

The Prudential has also stressed that there will be no redundancies as a direct result of the sale.

In addition to the sale price of �353m, the Pru says it will receive �236m through a profit sharing agreement.

Winterthur will also take on the responsibility for underwriting the risk on the Prudential's general insurance products.

Chief executive Mark Wood described the new deal as "good news for shareholders, customers and employees alike".

Savings

As a result of the changes, the Prudential expects to achieve annual cost savings from 2004 of around �175m.

However, the company expects to incur a restructuring charge of �170m by the end of 2003.

The Prudential also said it would create a single brand for life and pensions. This will see the integration of Scottish Amicable's operations under the Prudential brand.

In addition, the company will invest �50m over five years on PruLab, a new function to research and develop new life and savings products.

February cuts

In February, the Pru cut one-sixth of its workforce by scrapping door-to-door sales teams.

But last month it reported a 54% rise in sales and said its direct exposure to the insurance cost of the 11 September attacks was "extremely limited".

The company sold insurance and investment products worth �15.1bn during the first nine months of 2001.