By Ben Martin and Carolyn Cohn
LONDON (Reuters) - Prudential is to spin its British and European business off from its international operations, breaking up the 170-year-old insurer in the latest shake-up in a fast-changing industry.
Insurers in Britain have been changing strategy to reduce exposure to capital-heavy products following the introduction of rigorous European solvency rules two years ago, while also seeking ways to deal with growing pressure on fees.
"We're not looking to get rid of all of our capital-intensive products, we're looking to grow the piece that's capital-light," Wells told Reuters, adding that the M&G Prudential business "is better off standalone, competing domestically for people, for capital".
Once the proposed split is complete, Prudential said it expects both companies to be big enough to feature on Britain's benchmark FTSE 100 stock index.
The industry is wrestling with the rising cost of regulation and pressure on fund management fees and Prudential's move follows Standard Life's merger with Aberdeen Asset Management in 2017 which led to the sale of the bulk of its insurance business to Phoenix Group last month.
As well as the demerger, Prudential disclosed the sale of a 12 billion-pound UK annuities book to Rothesay Life and posted results for 2017, which showed a 6 percent rise in operating profit to 4.7 billion pounds, beating market expectations of 4.6 billion pounds.
Prudential, which said in August that it was embarking on a restructuring that would see it combine its M&G asset management and UK and European insurance businesses, said the timing of the spin-off has not yet been set and would depend on a range of factors, including completion of the Rothesay Life deal.
Prudential's shares were up 5.4 percent to 19.25 pounds at 0841 GMT, taking it to the top of the FTSE 100 index.
(Reporting by Ben Martin, additional reporting by Noor Zainab Hussain, editing by Sinead Cruise and Alexander Smith)