Prudential to demerge UK & Europe arm and sell £12bn UK annuity portfolio


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.

M&G Prudential also will be headquartered in the United Kingdom and take a "premium" listing on the London Stock Exchange.

The business will be led by its current chief executive John Foley, who will continue to carry out his transformation plan to make it more "capital-efficient and customer-focused".

Back in August, the life insurer merged its asset management arm with its United Kingdom savings business, forming M&G Prudential with some £332bn in assets under management.

UK-based Rothesay Life announced today that it has entered into an agreement to purchase £12bn of annuities from Prudential plc. It said the transfer of the portfolio should be complete by the end of 2019.

"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", said Wells.

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'One may assume the United Kingdom interests (M&G Prudential) will be less appealing to investors as the non-UK interests have experienced faster growth, ' says Russ Mould, investment director at AJ Bell.

Regarding its demerger plans, the company said that M&G Prudential will become a capital-efficient UK & Europe savings and investment provider, while Prudential plc will be an insurance group focused on high-growth opportunities in Asia, the United States and Africa.

Prudential says the demerger will result in two separately-listed companies, "each with its own distinct investment prospects". "This will enable it to play a greater role in developing the savings and retirement markets in the United Kingdom and Europe through two of the financial sector's most trusted brands, while Prudential will be able to focus on the attractive returns and growth potential of its market-leading businesses in Asia and the U.S.". Proceeds will be used to support the group's demerger. Asia life businesses' operating profit was up 15 percent. New business profit increased by 12% to £3.6bn. Despite an early rise, shares in Morrison's gave up gains and posted the worst performance of the index, down 4.8 percent after the supermarket gave a full-year update amid a tough environment for food retailers due to competition in pricing and online.

Total revenue, net of reinsurance, was 86.56 billion pounds, up from 71.84 billion pounds a year ago.

For fiscal 2017, Prudential's profit before tax grew to 3.97 billion pounds from last year's 3.21 billion pounds.

Prudential raised its full year dividend by 8% to 47p per share even as underlying free surplus capital generation fell by 1% to £3.6bn due to an increase in restructuring costs and a lower contribution from our United States business.