Prudential's with-profits fund made pre-tax returns of 18.7% in 2009 and the insurer confirmed bonuses would be maintained.
This compared to returns of 30.1% for the FTSE All Share over the period.
Meanwhile, the fund has delivered a 66.3% return over 10 years compared with the FTSE All-Share index cumulative total return of 17.7% over the same period.
Careful management of the fund, coupled with the effect of smoothing, protected policy values from the extreme market conditions seen in H2 2008 and the first half of 2009, the company says.
An estimated £2bn added to Prudential with-profits policy values, split between £1.1bn in annual bonus and £0.9bn in final bonus.
Prudential says it is maintaining its annual bonus rates for personal pension policies, as well as for its with-profit bonds.
Pension policyholders are receiving year-on-year increases in their policy values of between 4% and 9%, while with-profits bond holders will also see year-on-year increases in policy values of between 3.5% and 7%.
Sales of with-profits bonds were £101m at 30 September 2009, on an APE basis, up 36% on the same period in 2008.
Prudential's approach to Market Value Adjustments (MVA) remains unchanged, with those policies which have been held for more than five years and have an MVA-free withdrawal limit, the limit of £25,000 in any 12 month period.
However, the company says where applicable, MVA is calculated on a case-by-case basis.
David Belsham, chief actuary at Prudential, says: "The bonuses we're announcing today are prudent and will protect the ongoing interests of our current and future policyholders.
"Our overriding priority has always been to maintain the long-term financial security of the fund and to continue to deliver strong performance for the benefit of our customers."
Prudential says in 2010, policyholders will typically see year-on-year increases of between 3.5% and 9% in their accumulating with-profits policy values.
Legal & General issued its with-profits fund results last week, reporting double digit returns during 2009 averaging 14% before taxes and charges to beat inflation over a 10-year period.
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