Insurance giant Prudential showed how corporate collapses and falling stock markets had hit home after it unveiled a slide in half-year profits.

In the US, Prudential was hit by losses totalling about £148.4 million on its bond portfolio, a large proportion of which related to disgraced telecoms group WorldCom.

Prudential said the credit defaults and tough equity markets meant it had reviewed capital requirements for the US and was now expecting to inject about £300 million into the business.

The tough conditions in the US also contributed to a 15 per cent fall in group-achieved operating profits, excluding net asset value, to £543 million in the six months to June 30. The loss was widely expected by analysts.

Total new business-achieved profits for the half-year were up 16 per cent at £397 million, helped by strong performances in the US and Asia.

The group said Prudential Corporation Asia had seen impressive growth with new business achieved and profits up 27 per cent.

Prudential said the strong performance had come despite a slowdown in some of the Asian economies.

The US operation, Jackson National Life, reported a 26 per cent hike in new business-achieved profits to £117 million in the first half.

In the UK, total sales of insurance products rose 13 per cent to £3.1 billion while margins increased from 30 per cent to 36 per cent. The group said this demonstrated "the success of the business in focusing on products where we have market-leading presence, scale economies and higher return on capital".

Prudential also unveiled a strategy change for the Prudential-branded business in mainland Europe.

Chief executive Jonathan Bloomer said following a review, the group no longer planned to grow the operation either organically or via acquisitions.

He added: "It is clear the returns achievable would be too low to justify any significant investment of capital."