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Prudential to split in new world order for British insurers

Reuters  |  LONDON 

By Ben Martin, Carolyn Cohn and Simon Jessop

(Reuters) - Prudential is to spin off its British and European from its international operations, breaking up the 170-year-old insurer to refocus on faster-growing markets in the sector's latest major shake-up.

British insurers have been changing tack to cut their exposure to capital-intensive products following the introduction of rigorous European solvency rules, while also seeking ways to deal with growing fee pressure.

Prudential said it is splitting off savings and investment-focused M&G Prudential, which will be based in London, leaving focused on and in the rapidly expanding markets of and as well as the United States, which is less tightly regulated than

The demerger could herald further changes for the group, analysts said. analysts pointed to the example of plans for an IPO in the United States, while RBC said the Asian and U.S. businesses could eventually be split, and that M&G could separate from UK

Prudential shares were up 6 percent to 19.37 pounds at 1244 GMT on Wednesday, taking it to the top of the index.

The international will also remain headquartered and listed in London, led by

"We're looking to grow the piece that's capital-light," Wells said of M&G Prudential, adding that it would be "competing domestically" for people and capital.

Prudential will also move the legal entity for its Hong Kong subsidiaries to from Britain, further reducing exposure to European capital rules.

Prudential's move follows Standard Life's merger with in 2017 which led to the sale of the bulk of its to

And Anglo-South African group is in the midst of a four-way split.

"Imitation is the greatest form of flattery," said of the Prudential move.


RBC analysts value the new M&G Prudential at 9.8 billion pounds ($13.7 billion) and Prudential said it expects both companies to feature on Britain's index.

Wells told a media call that the was not connected with Brexit and Prudential is not planning to sell any of the British One told a bid for M&G Prudential was unlikely before the deal completes.

Ben Ritchie, at top-15 shareholder Aberdeen Standard Investments, told that M&G Prudential was likely to have good cashflow and would be capable of paying a reasonably high and recurring dividend.

M&G Prudential's will steer it through the demerger and investors will hold shares in both, although the timing of the has not yet been set.

Prudential, which also disclosed the sale of a 12 billion-pound UK annuities book to Rothesay Life, is not planning to sell more of the around 20 billion pounds in annuities it still has, Foley said.

The insurer posted a 6 percent rise in 2017 operating profit to 4.7 billion pounds, beating market expectations of 4.6 billion pounds.

($1 = 0.7163 pounds)

(Reporting by Ben Martin, additional reporting by Noor Zainab Hussain, editing by and Alexander Smith)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, March 14 2018. 19:26 IST