Mark Tucker, the chief executive of Prudential, described Britain as a “challenging environment” yesterday after sales in the insurer’s home market fell by 20 per cent in the first nine months of the year.

However, 48 per cent growth in Asia buoyed the UK’s second-biggest insurance company and Prudential shares closed up 1.85 per cent at 743½p.

Mr Tucker reiterated his promise to update the market on Prudential’s efforts to overhaul the British business this year. In March, the company announced a number of initiatives, including the possibility of handing back some of its estimated £9 billion inherited estate to policyholders.

Yesterday, analysts were split on whether the reforms were working. Tim Young, of Collins Stewart, described the insurer’s UK business as “quite a mess” and Kevin Ryan, of ING, said that the British results were “disappointing”.

Mr Ryan said: “They have a problem with that business and it looks like they are nowhere near solving it”.

Yet Bruno Paulson, of Sanford Bernstein, said that although British sales had fallen, “key individual annuity sales did well”.

In the UK, retail sales were up 8 per cent to £523 million in the nine months to September 30, compared with the same period last year, on an annual premium equivalent (APE) basis. APE is a measure used by insurers to show the total amount of regular premiums from new business, plus 10 per cent of single premiums from business written during the year.

Total UK sales fell by 20 per cent to £529 million on an APE basis. The fall was attributed in part to Prudential’s loss of a lucrative contract to sell protection insurance products via Lloyds TSB, the high street bank. This contract had contributed £45 million to the 2006 UK sales figures.

Last year’s figures were also flattered by two large back-book sales, in which the insurer bought packages of annuities from Royal London and Scottish Amicable. Prudential is ironing out the final details for the transfer of a £1.7 billion book of annuities from Equitable Life, which is due in November and will be seen in the full-year bulk annuity sales figures.

Individual annuity sales were up 14 per cent to £214 million – boosted by Prudential’s long pipeline of maturing pensions savings products. As part of its UK restructuring, the insurer has moved away from some products, such as unit-linked bonds, which were down 32 per cent at £23 million on the previous year.

On the UK market as a whole, Mr Tucker said: “We still believe there will be net growth next year, probably at not dissimilar levels [to this year], at 5 to 10 per cent. We think our performance will be in line with that.”

Asia powered the company’s growth in the first nine months, up nearly 50 per cent to £939 million on an APE basis. Prudential prefers to set up grass-roots operations in developing countries, such as India and China, where sales rose 93 per cent and 100 per cent respectively, instead of taking part in joint ventures with local businesses. Most notably, the company’s Vietnamese operations returned to growth.

In America, sales rose 20 per cent to £511 million.

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