Prudential has announced bonuses on its traditional and accumulating with-profits business, expected to be worth £2.2bn.
Investment returns for the £109bn Prudential With-Profits fund, which has global holdings in shares, bonds, property and private assets, were minus 2.8 per cent in 2018.
In contrast, the FTSE All-Share and FTSE 100 indices fell 9.5 per cent and 8.7 per cent respectively, including the reinvestment of dividend income.
When setting bonuses, Prudential aims to smooth some of the extreme highs and lows of investment performance by holding back some returns in good years to support bonus rates in years where returns are lower.
As a result, the bonuses announced for 2018 mean that policyholders of accumulating with-profits policies will typically see year-on-year returns ranging from a small loss of 0.5 per cent to a gain of up to 2 per cent.
These returns are net of all management fees.
Over the longer term, the fund has generated returns which are greater than those from many investment markets.
In the 10 years to the end of 2018, the fund produced a cumulative gross return of 129.5 per cent before tax and charges.
This compares with a 121.4 per cent return from the FTSE 100 index over the same period, not allowing for any management fees.
Jack Daniels, chief investment officer of Prudential UK, said: "Last year will be remembered as a year of turmoil in investment markets but it is also a year when our With-Profits fund continued to deliver competitive returns.
"Although there were many ups and downs in investments markets last year and many ended the year at a lower level, our diversified approach, strong and prudent financial management and smoothing policy have shielded policyholders from the worst of the falls.
"Policyholders have avoided much of the falls experienced by investors in many other investments and we'll continue to manage the fund to secure the highest total return while maintaining an acceptable level of risk."
Ned Cazalet, founder of Cazalet Consulting and a former adviser to HM Treasury, said for many years, on a forward-looking basis, he has rated Prudential as a top with-profits provider.
Mr Cazalet said: "The Pru's depth of resources devoted to asset allocation and risk management combined with excellent financial strength and resilience have enabled it to provide worthwhile guarantees and consistently generate above-
average investment returns for policyholders at the same time as giving customers the benefit of valuable smoothing to help protect them against market uncertainty."