Prudential to split UK operation from US and Asian business

Life and insurance giant Prudential, which employs more than 2,000 workers at its site near Stirling, has announced that it is to demerge its UK and European business M&G Prudential in a move that will create two separately listed companies.

The division of the group will see the Prudential brand focus outside the UK on the US and Asian markets and will result in shareholders holding interests in both Prudential and M&G Prudential.

While Prudential Plc will be home to the Asian, African and US businesses, M&G Prudential, will deal with UK-based insurance and asset management operations.

Prudential also announced today the sale of £12 billion of its annuity portfolio to Rothesay Life, which specialises in buying up books of annuity business from insurance companies and pension schemes.

It says that the Prudential deal, which covers 400,000 policyholders, is the largest one of its type in the UK.

The transaction has been initially set up as a reinsurance contract and is expected to lead to a transfer of the portfolio by the end of 2019.

Prudential group chief executive Mike Wells said: “Following separation, M&G Prudential will have more control over its business strategy and capital allocation.”

Mr Wells added: “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.”

Paul Manduca, Prudential chairman, said: “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.”