Prudential lifted annual operating profits by 33 per cent to £1.71 billion after benefiting from strong performances in the United States and Asia.

In the competitive UK market, the blue-chip company increased profits from new business by one per cent to £243 million, although the overall surplus for the Pru's home region showed a 12 per cent decline on 2004 to £426 million.

Retail banking arm Egg, which the Pru acquired in full earlier this year, posted underlying profits of £60 million, against £72 million last time.

In the wake of the deal for Egg - it has a call centre in Dudley - the company is looking for annual cost savings of £40 million across its UK operations by 2007.

The overall profits figure for the group was ahead of market expectations for a surplus of around £1.58 billion.

US-based Jackson National Life, which operates in the largest retirement savings market in the world, doubled earnings to £755 million.

The Pru said life insurance markets in Asia were also attractive with high growth rates leading to a 25 per cent improvement in profits to £576 million.

Chief executive Mark Tucker, who took the helm last year, said: "These results demonstrate the progress we are making in developing compelling positions in the world's leading retail financial services markets."

In the UK, Mr Tucker said the company had three strong retail franchises in the Prudential, Egg and the fund management arm M&G.

The Pru's core operation employs about 6,800 people in the UK, while M&G has 1,400 staff in London and Chelms-ford, Essex, with around 2,500 people working for Egg, including at Derby.

Mr Tucker said a review of the UK cost base, in order to achieve the £40 million of savings, would take place during 2006.

Sales growth in the UK was ten per cent at £900 million but this improvement for new insurance products lagged elsewhere in the world, with the figure up 14 per cent in the United States and 27 per cent higher in Asia.

Mr Tucker said: "Prudential has had a successful year across all its businesses. We have ambitious growth plans in place and I am confident in the outlook for the group's future prospects."

Analysts were particularly impressed by the strong profit performance from Jackson National, which had record sales, along with a jump in new business profits to £211 million, due to improved profitability for its main annuity product range.

Lehman Brothers analyst Matt Lilley said the good results could draw a line under the company's recent woes.