Rothesay Life reinsures £12 billion annuity book for Prudential


Shareholders will retain stakes in both companies after the demerger, and both will have premium listings on the London Stock Exchange.

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.

M&G Prudential, the United Kingdom and European business, will be listed on the London Stock Exchange and headed by its current chief executive John Foley. Meanwhile, Prudential will be helmed by the group's current CEO, Mike Wells, and will operate in the growing Asia, Africa and USA markets, but remain headquartered in London. Prudential will remain headquartered in London under the current Chief Executive Mike Wells, whilst John Foley will continue heading up M&G Prudential.

The timing of the demerger will be subject to a number of factors, including the completion of the United Kingdom annuity sale, prevailing market conditions, the transfer of the legal ownership of the Hong Kong business and efforts to minimise costs associated with the demerger.

Jason Hollands of Tilney Investment said: "The news that Prudential is to split and spin-out its asset management dominated M&G Prudential business as a separately listed United Kingdom company is arguably a long overdue development".

It will also help the United Kingdom part of the business "continue its transformation into a more capital-efficient and customer-focused business, targeting growing demand for comprehensive financial solutions".

United Kingdom life insurer Prudential has sold a £12 billion United Kingdom annuity portfolio to Rothesay Life.

The transition to a Part VII transfer will see all of the underlying assets and policy liabilities transferred to Rothesay Life, subject to regulatory and court approval.

"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.

"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 plc will be able to focus on the attractive returns and growth potential of its market-leading businesses in Asia and the U.S.". "M&G Prudential's proven investment capabilities and balance sheet management provide an excellent platform from which to serve the demand for comprehensive financial solutions".

Jason Hollands said Pru's spin-out of M&G Prudential was "arguably a long overdue development" and follows the direction of travel in the sector, with players like Standard Life Aberdeen separating its insurance and asset management units. Prudential's shares are changing hands 5.97 percent higher at 1,934.55p.