Prudential announces plan to split

Anne Richards CEO of M&G

Anne Richards CEO of M&G

"Prudential plc today announces its intention to demerge its UK & Europe business M&G Prudential from Prudential plc, resulting in two separately-listed companies with different investment characteristics and opportunities", it said in a statement.

Prudential plc will combine the exciting growth potential of its Asia, US and Africa businesses and will be led by its current Group Chief Executive Mike Wells. Both will remain listed and headquartered in London. On completion of the demerger, shareholders will hold interests in both Prudential plc (Asia and United States business) and M&G Prudential. The Prudential dividend policy will remain unchanged through the separation period.

Prior to the demerger, the group's debt capital position will be re-balanced across Prudential and M&G Prudential, which may include the redemption or debt liability management of issued debt, and new debt issuance. As part of the restructure, Prudential will sell its £12 billion book of United Kingdom annuities to Rothesay Life.

M&G Prudential will continue to be led by its current chief executive, John Foley, with a focus on running a more capital efficient and reduced risk businesses.

Group boss Mike Wells said Prudential had achieved its objectives for 2017, which included seeing its Asian business deliver a compound annual growth rate in operating profit of at least 15% between 2013 and 2017.

The demerger will create M&G Prudential, a savings and investment provider for Britain and Europe, and Prudential plc, which will mostly focus on insurance in Asia, the United States and Africa, the company said in a statement. "Both are expected to meet the criteria for inclusion in the FTSE 100 index". Looking forward, we believe we will be better able to focus on meeting our customers' rapidly evolving needs and to deliver long-term value to investors as two separate businesses.

Prudential said it would give the division "more control" over its business strategy and capital allocation and allow it to focus more closely on its respective geography.

The division of the group will see Prudential focus outside the United Kingdom on the USA and Asian markets. Discussions have also commenced with our other key stakeholders, including rating agencies. It will be subject to the usual shareholder and regulatory approval.

The annuity sale is the largest of its kind in the United Kingdom and covers 400,000 policyholders.

All of those steps would be taken in an effort to "minimise costs" linked to the demerger, though Prudential said it would provide an update in due course.