Prudential to split by year-end

Friday, 16 August 2019 00:00 - - {{hitsCtrl.values.hits}}

LONDON (REUTERS): Britain’s biggest insurer Prudential will complete a planned break-up of the company by the end of the year, with its UK-focused fund and insurance business set to list as M&G Plc.

The logo of British life insurer Prudential is seen on their building in London, Britain - Reuters

The Asia and US-focused rump of the company will continue to trade as Prudential and be listed in the UK, but will be subject to the regulator in Hong Kong – where Prudential said it was “carefully monitoring” current violent protests in the city.

“We expect to complete the demerger of M&GPrudential in the fourth quarter of 2019, and preparations are complete for Prudential Plc’s move to group-wide supervision by the Hong Kong Insurance Authority,” Chief Executive Mike Wells said in a statement.

“We believe that the demerger will enable both businesses to maximise their potential performance.” Prudential said last year it planned to split into two companies, a route followed by insurance and asset management peers including Old Mutual and Standard Life Aberdeen.

The process has been slow, though, due to the need for a court process to complete a transfer of 12 billion pounds ($ 14.5 billion) in annuities to insurer Rothesay Life. Prudential agreed the sale of the book of closed policies to Rothesay last year. While it would keep the Prudential brand for savings and insurance customers in the UK and Europe, and for asset management in South Africa, M&G would be the asset management brand globally.

Total assets under management rose 6% in January-June from a year earlier to more than 341 billion pounds, Foley said, although like most of its major fund rivals, the bulk of that came from market moves more than offsetting net outflows of client cash.

The split will enable the part of the group focused on Asia and the United States to be regulated in Hong Kong, where capital rules are considered less onerous.

Stripping out the performance of its M&GPrudential unit over the period, Prudential saw a 14% rise in half-year operating profit to 2.02 billion pounds, driven by robust growth in its Asian business.

“The group’s performance has again been driven by our Asian business, where we have delivered double-digit growth across our key metrics of operating profit,” Wells said in a statement.

“We are benefiting from growing demand for health, protection and savings across the region.” New business profit in Asia rose 10% over the six months to the end of June, while assets under management at its Asia-focused fund unit Eastspring grew 12% to 169.5 billion pounds.