The Pru wants to grab extra business in the UK

Under the offer, shareholders are being invited to buy one new share at 308p for every six they already own.

The price is a 33% discount to Monday's close but investors took a dim view of the offer - Prudential shares fell 7.9%.

Prudential also said that its sales during the first nine months of the year grew 16% to �1.3bn.

'Growth opportunities'

Prudential said the majority of the proceeds from the rights issue would be used to support its growth plans for the UK.

"In recent years we have transformed our business in the UK and we are now well positioned to take advantage of the growth opportunities in the market," said chief executive Jonathan Bloomer.

In the auction process that Pru were running, no one (at Egg) knew who they might be working for or whether they would be working Paul Gratton, Egg chief executive See Prudential's share price See Egg's share price

The rest of the money will be used to meet new EU solvency rules which come into force on 1 January 2005.

Prudential's rights issue follows previous cash calls from rivals Aviva and Legal & General.

UK life insurers have suffered in recent years as demand for products has dipped following falling share prices, while the sector has also been forced to meet tougher funding requirements.

Abandoned sale hits Egg

While Prudential was detailing its proposed rights issue, Prudential-owned internet bank Egg unveiled a drop in operating profits for the July to September quarter.

UK operating profits for the three months to 30 September fell to �18.6m from �20m a year ago.

The bank said rising interest rates and tough competition had hit business, while Prudential's failed attempt to sell its 79% stake in Egg had also proved a major distraction.

"In the auction process that Pru were running, no one knew who they might be working for or whether they would be working," said Egg chief executive Paul Gratton.

Egg's operating profit for the nine months to 30 September was �10m, against a loss of �23.4m at the same point last year.

However, after taking into account a charge for the closure of its loss-making French business, pre-tax losses for the nine months were �103.3m, against a �24.9m loss last year.

Egg announced in July that it was to close down its French business. Earlier this month it said it was in talks to sell the French credit card business to the financial services arm of French retailer Auchan.