Prudential expects consolidation in the UK insurance industry

The group said sales grew 26% to �1.85bn in 2004, beating forecasts for a rise to �1.7bn.

Prudential said it expected growth to continue in 2005, adding it was well placed for expansion in the UK after its �1bn rights issue last year.

The figures show a significant recovery from 2003 when stock market volatility cut profits to �794m from �1.13bn.

"All our businesses are showing strong momentum, and we have delivered significant year-on-year sales growth in each of our markets," chief executive Jonathan Bloomer said.

Strategy shift

The figures were the first since the group's huge fundraising rights issue in October.

At the time the move was seen as a shift in strategy and led many investors to question Mr Bloomer's position.

However, sales in the UK and Europe for the year were up 40% on 2003 at �817m. But the figure does slip back to 21% when the effect of a �111m one-off transaction with Royal London is stripped out.

The group added that sales in the UK and Europe market actually surged 104% during the final three months of the year - without any change in rates driving the increase.

Instead it put the rise down to strong sales through partnerships, such as its credit life protection products sales through Lloyds TSB.

Meanwhile, in the US, Jackson National Life sales for the year rose 21% - on constant exchange rates - to �453m, while Asian operations benefited from a strong fourth quarter to rise 14% to �576m.

All figures are on an annual premium equivalent basis - the standard industry measure that strips out volatility.

Growth hopes

Mr Bloomer said the group would now be switching its focus to the UK after years of concentrating on high growth Asian markets.

Over the coming 12 months, Prudential said it expected growth in the UK to be "substantially over" the 5-7% growth it predicts for the market as a whole.

Prudential's results echoed those of UK insurance giant Aviva, which owns the Norwich Union brand.