Portfolio and Investment Strategy: Targeting the Opportunities a

Tough Market Presents

Leandra KnesPresident and Chief Executive Officer

Chief Investment OfficerPPM America

The North American Investment Arm of Prudential Plc

▲ Founded in 1990, headquartered in Chicago▲ Manages approximately $62.3 billion in assets

– Jackson National– Prudential UK and Prudential Asia– Institutional Collateralized Bond Obligation clients– Other clients

▲ 175 total employees in Chicago and New York City

Functional Organization Structure

¹ As of June 30, 2002² As of September 30, 2002; includes assets managed through PPM America’s affiliate, PPM Finance, Inc.

We Manage a Broad Array of Fixed Income and Equity Assets

.

Prudential plc$242 Billion ¹

PPM America, Inc$62.3 Billion ²

Commercial Real Estate

Private FinanceSpecial

InvestmentsWorkouts Private Equity

Structured Financeand

CDO Management

Operations and

FinancePublic Equity

Portfolio Management/

Quantitative AnalyticsCredit Analysis

Overwhelming Majority of PPMA’s Clients are Internal

BillionsJackson National Life $ 42.8Prudential 14.4Collateralized Bond Obligations 4.1Prudential Asia 0.7Other 0.3

$ 62.3

Assets Under Management as of September 30, 2002

Centralized Credit and Portfolio Management Functions

▲ Background– Historically organized in “self sufficient” asset class

silos, with little overlap ▲ Reorganized September 2001

– Leverage analytical competitive advantage– Centralize systems– Checks and balances– Expandable

Investment Portfolio Update

Defaults Projected to Decline From Highs but Still Well Above Long-term Average

Moody’s Forecast of Default Rates

Moody's Speculative Grade Trailing 12-Month Default Rates Actual Jan. 2000 to Aug. 2002 / Forecasted Sept. 2002 to Feb. 2003

6.2%6.7%

7.1%

7.7% 7.7% 7.9%

8.5%8.8% 9.0%

9.6% 9.8%

10.5%10.7%10.5%10.3%10.3% 10.5%10.3% 10.1%10.0%10.0%10.0%10.0%9.3%

8.8%

9.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

Jan-

01

Feb

-01

Mar

-01

Apr

-01

May

-01

Jun-

01

Jul-0

1

Aug

-01

Sep

-01

Oct

-01

Nov

-01

Dec

-01

Jan-

02

Feb

-02

Mar

-02

Apr

-02

May

-02

Jun-

02

Jul-0

2

Aug

-02

Sep

-02

Oct

-02

Nov

-02

Dec

-02

Jan-

03

Feb

-03

Months

%

3.77%*

Note: *Long run annual default rate is 3.77%

Return Calculation

Implied Total Return* 6.2%

2001 Interest Earned* $2,386.2m

*Time period is 2001, JNL portfolios only

Prudential Life Funds – U.S. Fixed Interest

* Benchmark is Merrill USD Corporates Index– 80% IG (split 45% A/ 55% BBB)– 20% BIG (split 70% BB/ 30% B)– Benchmark caps issuer exposure to control concentration risk

9-30-02Year-to-Date

October 2000Since Inception

62

300

Performance

*BasisPoints

OverIndex

0

300

150

75

225

Note: These numbers are not externally audited

Portfolio Management

Brion JohnsonExecutive Vice President

Head of Public Fixed IncomePPM America

Portfolio Management

▲ Manage multiple accounts using total return, “buy and manage” and other client specific strategies

▲ Client Portfolio Managers manage relationships, articulate client objectives and optimize portfolios

▲ Asset Portfolio Managers make sector and individual credit decisions for public fixed income securities

▲ Quantitative specialists support these functions

▲ Trading transmits market information and centralizes our interactions with Wall Street

QuantitativeResearch

ClientPortfolio Managers

AssetPortfolio Managers

Trading

Portfolio ManagementBrion Johnson

President, CEO & CIOLeandra Knes

Structured to Deliver Superior Investment Performance

Investment Strategy

▲ Increase the universe of investable asset categories– Greater diversification of risks– Higher option- and risk-adjusted spreads– Replacement of interest rate risk with diversifiable risks

▲ Continue to migrate away from residential MBS investments– Less attractive from a return on capital perspective

▲ Emphasis on “value-added” investments when relative values are attractive– Commercial mortgages– Investment grade private placements– ABS and CMBS

Seeking Diversified Portfolio That Funds Liabilities Without Mismatch Risk

Investment Strategy

▲ Maintain tight restrictions on duration, convexity and liquidity▲ Refinement of the investment policy implies

– A more precise articulation of risk and return– Quantification of out of index exposures– More active portfolio management– Better articulated sales criteria

▲ Migrate high yield investments to more private high yield investments– Better historical default/recovery experience– Better covenants/monitoring ability– Maintain 8% exposure for non-investment

grade investments

Seeking Value Added Investments Won’t Take “Bet the Company” Risks

Invested Assets Mix – JNL vs. IndustryFocus is on Diversifiable Credit Risk

JNL (6/30/02) Industry (12/31/01) $38.7 Billion

3%

1%

9%

1%

9%

3%

4%

32%

12%

26%

IG - Public (AAA-A) IG - Public (BBB) IG - Private/144A (AAA-A)

IG - Private/144A (BBB) NIG - Public NIG - Private/144A

Commercial Mortgages Common & Preferred Stock Sch. BA & real estate

Cash & other assets

2%

4%

15%

9%

9% 3%

13%

3%

37%

5%

21%Total

30%Total

$15.9

$14.8

$2.7

$33.4 Billion

47.7% Highest Quality AAA to A Aaa to A AAA to A 44.3% High Quality BBB Baa BBB

5.1% Medium Quality BB Ba BB 1.7% Low Quality B B B

1.0% Lower Quality CCC to C Caa to C CCC0.3% In or near Default

Rating Equivalents

JNL’s Corporate Portfolio is Largely Investment Grade Securities

Fixed Income Securities Portfolio - Quality Distribution June 30, 2002

As of June 30, 2002

Private ABS1.9%

CMBS5.0%

Public/144a ABS6.6%

Foreign government

0.1%

Public/144a Corp.53.1%

Private Corp.11.8%

MBS21.5%

$33.4 Billion

JNL’s Corporate Portfolio is Diversified by Sector

Fixed Income Securities Portfolio - Sector Distribution

Public Corporate Investment Grade Fixed Income Portfolio (market value) JNL’s Fixed Income Portfolio is Broadly Diversified

Industry Allocation vs. Index as of 6/30/02

Energy 7.0%

Electric 7.7%

Consumer non-cyclical 8.7%

Banking 13.5%

Consumer cyclical 14.0%

Utility other0.0%

Insurance 1.5%

Natural gas 1.3% Brokerage

4.5%

Reits 4.7%

Technology 2.3%

Communications 14.9%

Finance companies 3.4%

Transportation3.4% Basic industry

5.2%

Capital goods 6.4%

Financial other 0.5%

Industrial other 1.0%

Non-corporate 0.0%

Energy 4.8%

Electric 6.5%

Consumer non-cyclical 8.3%

Banking 13.7%

Consumer cyclical 7.3%

Utility other0.0%

Insurance 2.2%

Natural gas 2.1%

Brokerage 4.2%

Reits 1.5%

Technology 1.8%

Communications 10.3%

Finance companies 11.7%

Transportation3.0%

Basic industry 3.8%

Capital goods 3.2%

Financial other 0.0%

Industrial other 0.6%

Non-corporate 15.1%

Notes:Includes commercial paper. Data is consolidated to include Jackson National of New York.

$15.6 billion

JNL’s Telecom Exposure as of 6/30/02

DESCRIPTION

JNL Consolidated

BV as of 6/30/02

JNL Consolidated

MV as of 6/30/02Unrealized Gain/(Loss)

VERIZON GLOBAL FDG CORP 211 203 (8) QWEST COMMUNICATIONS 180 113 (67) AT&T CORP 144 125 (19) VODAFONE AIRTOUCH PLC 132 142 10 TELEFONICA EUROPE BV 110 113 3 CINGULAR WIRELESS LLC 105 98 (8) TELUS CORPORATION 103 88 (15) SPRINT CAPITAL CORP 112 96 (16) AT&T WIRELESS SVCS INC 98 80 (18) BRITISH TELECOM PLC 87 86 (1)

Top 10 Telecom Exposure 1,282 1,144 (139) Other Telecom Exposure 573 439 (134) Total Telecom Exposure 1,856 1,582 (273)

Credit Analysis

Jim YoungExecutive Vice President

Chief Credit OfficerPPM America

Credit Analysis

▲ Responsible for corporate credit analysis– Investment grade – High yield – Public and private credits

▲ Specialized industry analysts – Covering all industry classifications – Across credit spectrum

▲ Analysts, on average, follow 40 credits – Fewer if issuers in an industry are

primarily high yield – Greater if primarily investment grade

Ju n io r A n a lys ts(5 a n a lys ts su p po rt a ll

in d u s try a n a lys ts)

In d u stry A na lys ts(1 3 an a lys ts d e d ica ted to th e ir

o w n spe c if ic ind u s try)

C re d it A n a lys isJ im Yo u ng

P re s ide n t, C E O & C IOL e an d ra K n es

Credit Team Organized by Industry

Rigorous Approval Process Prior to Purchase

Approval Process for New Deals

▲ Full underwriting▲ Approval by Credit Committee

– Credit Opinion: Buy Above, Buy At, Buy Below, Sell

▲ Goal is to give Portfolio Managers information to guide purchase decision

Analysts Expected to Know Credits on “Real Time” Basis

Ongoing Portfolio Monitoring

▲ Expected to know credits “real time”

▲ Semi-annual portfolio reviews

▲ Constant communication with portfolio managers and traders

JNL has largely avoided many of the largest bankruptcies

Fifteen Largest Bankruptcies From 1/1/01 to 6/30/02

▲ Names held– Adelphia: sold out prior to bankruptcy at price well above prices today– Global Crossing– McLeod– Williams Communications

▲ Names avoided (less than $5MM exposure)– NTL Communications– Enron– Finova– Pacific Gas and Electric– XO Communications– Southern California Edison– PSINET– Comdisco– Exodus Communications– KMart– Metromedia Fiber

Notes:WorldCom filed in July, 2002

Competitor Information

▲ Schedule D

▲ Holdings in stressed names

▲ Underweight power generation, airlines

Evidence Would Suggest We are Doing as Well or Better Than Competition

Further Writedowns on High Yield Telecom $ 80MMABS Writedowns 30MMOther 40MM

Total $150MM

WorldCom (Fraud) $120MMAdelphia (Fraud) 11MM

Total Fraud-Related $131MM

Total $281MM

Writedowns and Losses Higher Than Expected Due to WorldCom Fraud

2002 First Half Writedowns and Realized Losses (Gross)

Credit Intensive Approach a Benefit in Today’s Market

Summary

▲ Weak U.S. economy and bond market in 2002▲ Many significant bankruptcies▲ JNL’s credit approach is paying dividends

– Avoided 11 of 15 bankruptcies– Severe underweight in power generation sector– 2002 performance as good, or better, than competition– Holdings in stressed names in line with competition– Solid total return performance

Commercial Mortgage Loans and Real Estate Securities

David ZacharExecutive Vice PresidentCommercial Real Estate

PPM America

Commercial Mortgage

Loans

CMBS and REIT

Securities

Real Estate Joint

Ventures

$3.3 billion $2.6 billion $60 million

PPM’s Commercial Real Estate Group

Commercial Mortgage Loans and Real Estate Securities

▲ Real estate securities ▲ Commercial mortgage

lending▲ Real estate joint

ventures

▲ Focus is on– High quality real estate – Well sponsored– Well located– Well diversified both in

terms of property types and geography

Real Estate Securities▲ CMBS: - $1.6 billion - 4.26% of JNL’s Invested Assets

– U.S. CMBS market is $500 billion in size– Value added to Corporate Bonds of similar ratings– Unlike MBS, excellent call protection via the individual

loans and the sequential structure of CMBS– JNL portfolio consists primarily BBB+ to A- securities

▲ REITs: - $732 million - 1.89% of JNL’s Invested Assets– Total public debt outstanding in REIT-debt market is $50

billion– Also value added to Corporate Bonds of similar ratings– All REIT-debt in JNL’s portfolio is public, investment

grade securities

A Description of the Attributes of a Commercial Mortgage Loan

Commercial Mortgage Loans

▲ Compelling Attributes of a Commercial Mortgage:

– Fixed Income Asset based on real estate assets

– Yield Maintenance – Favorable capital treatment by regulators

▲ JNL’s Commercial Mortgage Portfolio 9% of Invested Assets

– Totals $3.2 billion with an average loan size of $8.7 million

– Minimum loan size of $5 million, maximum loan size of $30 million

– Excellent experience– Well-diversified in property types

40 West Office BuildingSt. Louis, Missouri$22.5 million loan

PPM’s Origination Strategy and Preferred Property Types

Commercial Mortgage Lending Strategy

Strategy ▲ Value Added Lending

– Responsive– Creative– Mid Point documents– Process oriented– Borrower oriented

▲ Sourced and serviced by correspondents

– Local knowledge of borrowers and submarkets

▲ Loans underwritten by PPM– PPM orders the appraisal and

third party reviews

Monterrey, CA

San Francisco Columbus, OHIndianapolis

Chicago

Washington, D.C.

Des MoinesPhiladelphia

Rochester, NY

CharlotteNashville

Daytona Beach

Tampa

MiamiNaples, FL

BuffaloDetroit

Birmingham

Memphis

Milwaukee

Mcallen, TX

Kansas City

Austin

San Antonio

Los Angeles

San Diego

Houston

Dallas

Atlanta

St. Louis

Phoenix

Minneapolis

Portland, OR

Salt Lake City

Tuscon

Pittsburgh

Seattle

Cleveland

Boston

Denver

Las Vegas

Boise

Colorado Springs

Jacksonville

Columbia, SC

Louisville Norfolk

Omaha

Fresno

Fargo

Orlando

Charleston, SC

Wichita

TulsaSanta Fe

Spokane

Brownsville, TX

Reno

JNL’s Commercial Mortgage Loan Portfolio

PPM’s Origination Strategy and Preferred Property Types

Commercial Mortgage Lending Strategy

Targeted Property Types▲ Office Buildings

– Suburban, Class A– Loans at or below

replacement cost– Not CBD

▲ Retail Centers– Grocery or Discounter Anchored

▲ Apartments– Class A- or B+ – Newer or an effective age of 5 years

or less▲ Warehouse/Distribution

– High bay– Masonry construction Giant Eagle Center

Pittsburgh, PA

Wesley Park Apts.Atlanta,Georgia

Private Placement Investments

Private Placement Advantages

▲ Private placement investments have several advantages over public investments– Better and more consistent information– Better structure– Better documents– Better covenants and control– Better pricing

▲ JNL is willing to trade some liquidity for these advantages

Private Asset Class AUM ($ in Billions)Historical AverageSpread to Publics

Private Corporates $3.6 20-25 bps

High Yield Bank Loans $0.2 Up to 20 bps

Structured Finance $3.1 20-50 bps

Private Placement Pricing Advantage

Summary

Summary▲ Significant, multiple asset class investment

capabilities▲ Historically difficult investing environment▲ Value added research capabilities▲ Management response to current environment

– Monitor constantly– Reposition within constraints– Execute risk mitigation trades when practical– Transition with evolving investment policies

▲ PPM is well-positioned to be proactive on the opportunities that a tough market can present

Appendix

Appendix: A 2001 Return Calculations

Comments 12/31/00 12/31/01Total assets $36,067.9 $39,733.1

438.0 480.6$36,505.9 $40,213.7

Capital contribution-dividends (168.6)$40,045.1

Take out CMLs (4,660.2) (4,191.4)Take out Policy Lns (687.2) (700.4)PPM Assets ex CMLs $31,125.7 $35,153.3

Deposits $6,876.6W'drawals (4,858.7)Decr (incr) in CMLs 468.8Net transfer to sep accts (468.9)

Net $2,017.8

Assumptions/Methodology▲ Using the balance sheet we calculate the beginning

and ending market value of JNL’s portfolio, which reflects both realized and unrealized losses. We adjust for capital movement; for commercial mortgage loans, where the performance is clearly excellent; and for policy loans, which PPMA does not manage.

▲ We calculate net flows as sales minus surrenders and reflect the inflow from the reduction in the commercial mortgage loan portfolio. These numbers are from the GAAP statement of cash flows and from the balance sheet.

▲ Treating this as a mid-period flow, 6.2% is the real time weighted rated of return that these numbers suggest is the total return for the portfolio.

Accrued investment income

(32.8)$36,473.1