British insurer Prudential has decided to split M&G Prudential, its UK & Europe business from the US, Asia and Africa business.
The move will result in creation of two separately-listed companies, each with its own distinct investment prospects.
M&G Prudential will focus on the UK and Europe, while Prudential plc will focus on Asia, the US and Africa.
Following the completion of the demerger process, the shareholders will hold interests in both the companies.
Both the companies will maintain their headquarters in London and will be listed on London Stock Exchange.
M&G Prudential will be headed by its current CEO, John Foley, while Prudential plc will be spearheaded by its current group CEO Mike Wells.
John Foley said: “The demerger will allow M&G Prudential to play a broader leadership role in the fast-changing savings and investments market within the UK and Europe. 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.”
Wells said: “Our businesses share common heritage, values and purpose. 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.
“Following separation, M&G Prudential will have more control over its business strategy and capital allocation. This will enable it to play a greater role in developing the savings and retirement markets in the UK 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 US.”
Furthermore, M&G Prudential has agreed to divest £12bn of its shareholder annuity portfolio to Rothesay Life to achieve a more capital efficient and de-risked business model.
The proceeds from the sale will be used to support the demerger process, the insurer said.
The insurer also revealed that it plans to transfer the legal ownership of its Hong Kong insurance subsidiaries from The Prudential Assurance Company Limited (M&G Prudential’s UK regulated insurance entity) to Prudential Corporation Asia Limited, which is scheduled to complete by the end of 2019.