Mark Tucker, chief executive of Prudential, this morning hit out at the government's controversial changes to Capital Gains Tax (CGT) as the insurer reported a 25 per cent increase in full-year operating profit driven by its expansion in Asia, which now accounts for more than half of the UK insurer's new business.

Shares in Prudential led the FTSE 100 risers this morning, increasing 2.45 per cent to 671p on operating profit up from £2.1 billion to £2.5 billion for the 12 months to December 31, 2007.

The Association of British Insurers had called on Chancellor Alistair Darling to change the taxation of investment bonds, which are taxed up to 40 per cent, as it said that the new CGT rate of 18 per cent made them less attractive when compared with unit trusts. It wanted a lower rate of CGT for long-term bond holders investing in equities but the government did not make any concessions in the Budget.

Mr Tucker said he was disappointed about CGT and that there wasn't a level playing field across the financial services industry.

He said: "The change in CGT disadvantaged life bonds and we were looking for greater equality with the mutual fund and unit trust industry. But the important point about CGT is that out of all of the UK life insurers we have less exposure than anyone. It’s very small, a few per cent.”

Total new business at Prudential rose 22 per cent to £1.2 billion, with over half the growth coming from Asia, making up for slowing growth in the UK where new business profit rose just 4 per cent to £277 million.

New business profit in Asia rose 34 per cent to £653 million with total European Embedded Value (EVV) operating profit in the region exceeding £1 billion for the first time.

In January, Mark Tucker, chief executive at Prudential, predicted the insurer would account for more than half of group sales within the next 12 months and this morning referred to growth in the region as “spectacular.”

He added that the opportunity to sell its products to people of retirement age in the region was “emerging rapidly,” and it was focusing on the retirement market to take advantage of the world’s aging population.

Mr Tucker said the group’s overall prospects for 2008 remained positive despite recent wider market pressures.

Although he admitted that volatility and nervousness in global markets had made it “clear there will be a period of less attractive economic growth trends in the US and in the UK than we have seen in recent years."

In the US, the world’s largest retirement market, new business profit rose 19 per cent to £285 million.

In the UK the group said the retirement and near-retirement population will represent the fastest growing segment of the insurance market over the next 10 years, as responsibility for income during retirement shifts from the government and employers to individuals.

The company added that it was the market leader in corporate pensions, providing over 20 per cent of FTSE 350 companies, and is also the biggest provider of pension schemes to the public sector.

During the year, the company sold Egg, its loss making UK internet banking division, to Citigroup for £575 million.

Prudential said that by the end of 2007 it had cut £115 million of costs of its £195 million target and that plans were in place to make up the difference.

During the year the company outsourced a large proportion of its back book and new business policy administration to Capita, which is expected to save £60 million by 2011.

M&G, the company's asset management division, increased operating profit by 28 per cent to £334 million.

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