M&G Prudential, the company’s UK and European savings and investments business, which includes all UK Pru customers, will float as an independent company on the London Stock Exchange. Prudential PLC will target high-growth opportunities in Asia, the US and Africa, but will be headquartered in
On completion of the demerger, shareholders will hold interests in both Prudential plc and M&G Prudential.
M&G Prudential will be led by its current chief executive John Foley and says it will continue its transformation into a more capital-efficient and customer-focused business, targeting growing demand for comprehensive financial solutions.
M&G Prudential has reinsured £12bn of liabilities to Rothesay Life, which is expected to be followed by a Part VII transfer of the portfolio by the end of 2019.
Prudential plc will be led by its current group chief executive Mike Wells. Pru says its Asia pan-regional life and asset management business is well-positioned to meet the savings and protection needs of a growing and increasingly wealthy population, through top three positions in nine out of twelve life markets, and through Eastspring’s established presence in ten Asian countries.
Jackson is one of the largest providers of retirement solutions in the US. In Africa, Prudential has established operations in five countries since 2014.
Prudential plc chairman Paul Manduca says: “The decision to demerge M&G Prudential follows a rigorous review by the Board which considered all options, including the status quo, and concluded that it is in the best interest of the Group to operate as two separately-listed companies, able to focus on their distinct strategic priorities in their chosen geographies. Both are expected to meet the criteria for inclusion in the FTSE 100 index”.
Wells says: “Our businesses share common heritage, values and purpose. 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.
“Following separation, M&G Prudential will have more control over its business strategy and capital allocation. This will enable it to play a greater role in developing the savings and retirement markets in the UK and Europe through two of the financial sector’s most trusted brands, while Prudential plc will be able to focus on the attractive returns and growth potential of its market-leading businesses in Asia and the US.”
Foley says: “The demerger will allow M&G Prudential to play a broader leadership role in the fast-changing savings and investments market within the UK and Europe. M&G Prudential’s proven investment capabilities and balance sheet management provide an excellent platform from which to serve the demand for comprehensive financial solutions.”
Aon partner John Baines says: “This market development is the culmination of a long process and during that period it’s pleasing that appetite for pension scheme transactions remained undiminished and pricing remained very attractive, even in the context of a mega deal in the market. We believe this shows the UK market has matured, remains very competitive and can cope with this kind of change.
“There will also have been other insurers in the market with an eye on this. In fact, we expect their appetite has only increased as a result of this deal. So while it is a clearly very significant deal we don’t believe there will be any fundamental change to the way the bulk annuity market acts during 2018 – we think it remains on target for at least £30bn, as we predicted in late 2017.”