Prudential announced plans to split off its UK and Europe business as the life insurer posted a rise in annual profit driven by surging sales at its Asian business.
Prudential announced plans to split off its UK and Europe business as the insurer posted a rise in annual profit driven by surging sales at its Asian business.
The company said it would demerge M&G Prudential, resulting in two separately listed companies. M&G Prudential will be a savings and investment provider for customers in the UK and Europe while Prudential will be left as an international insurance group focused on Asia, the US and Africa.
The demerger will mark the final transformation of Prudential from its Victorian roots as a seller of life insurance to British workers into an Asia-focused insurance powerhouse. M&G Prudential will be led by its current chief executive, John Foley, while Prudential will remain under the leadership of Mike Wells. Both companies' headquarters will remain in London.
Paul Manduca, Prudential's 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, able to focus on their distinct strategic priorities in their chosen geographies. Both are expected to meet the criteria for inclusion in the FTSE 100 index.”
Prudential shares rose 5.5% to 101p at 08:07 GMT.
The company announced the demerger plan as it reported a 6% increase in 2017 profit, fuelled by its Asian operation.
Operating profit under international accounting standards for the year to the end of December increased to £4.7bn from £4.3bn a year earlier. Including currency movements, operating profit rose 10%.
At Prudential's Asian business, which is its biggest, operating profit jumped 15% to £1.98bn as sales rose by double digits in eight out of 12 life insurance markets.
Under its current strategy, Prudential sells savings and life insurance products to the growing middle-classes in Asia and aging populations in the US, the UK and Europe. M&G Prudential was formed from a combination of Prudential's asset management arm and its UK & Europe operations in 2017. The business had £17.3bn of net asset management inflows in 2017 and total assets under management of £351bn.
Prudential increased the annual dividend by 8% to 47p a share.