Prudential, the second-largest insurer, signalled further expansion plans in the UK and Europe as it posted a 15 per cent increase in sales last year to £2.5 billion and a record performance by its fund manager, M&G.

But Mark Tucker, the Pru's chief executive since last year, declined to be drawn on speculation it may hook up with rival British insurer Aviva.

Mr Tucker would only say that: "We believe there is a tremendous upside in our business and that we have an independent future,"

However, the Pru will "continue to pursue profitable opportunities" in terms of expanding the business after buying a portfolio of pension annuities from Royal London earlier this month with assets worth about £650 million.

Mr Tucker has already said he is considering buying up struggling pension schemes in the UK.

The insurer also struck a reassurance deal with Scottish Life, a division of Royal London, late last year involving pension annuities arising out of maturing policies.

As the Pru noted that it had already made a "good start" to the current financial year, Mr Tucker boasted that all of his divisions - from the UK and Europe, to Asia and the United States - had posted double digit sales increases last year.

Like most insurers, the Pru reports its sales on an "annual premium equivalent" (APE) basis - a way of smoothing out potentially distorting large sales of single-premium policies such as annuities.

Mr Tucker said that, in the UK and Europe, APE sales were up 10 per cent on last year at £900 million, with £200 million of sales taking place in the fourth quarter. He said the last three months of the year had been "a strong quarter for corporate pensions in particular but also stronger bond and individual annuity sales".

Sales in the United States, where the Pru operates Jackson National Life, rose by 15 per cent to £515 million, while sales in Asia jumped by 23 per cent to £732 million.

M&G saw the "strongest retail sales in its history", attracting £3.9 billion of new assets to manage and £4.1 billion of institutional sales.

Since joining as chief executive from banking group HBoS - as the replacement for ousted former boss Jonathan Bloomer - Mr Tucker has been rebuilding the insurer's relationships with shareholders, gradually expanding further overseas and bringing in new senior executives, including former Lloyd's of London chief Nick Prettejohn.

Mr Tucker also sealed full control of Egg, the internet bank previously 79 per cent owned by the insurer, earlier this week.

Shares in the Pru, forecast to deliver profits of about £1.6 billion for 2005, closed last night at 550.5p, valuing the group at more than £13.2 billion.

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