Prudential breaks up 200-year old empire to unleash Asia growth

Insurer Prudential unveiled a dramatic break-up of its global empire on Wednesday by announcing that it would demerge its UK unit, M&G Prudential, and then turn itself into a standalone Asian-focused giant.

Britain’s biggest insurer — founded 170 years ago in Holborn — will carve out M&G Prudential by listing separate shares in the company on the FTSE 100, ending years of speculation that the UK and international arms would go their separate ways.

To fuel M&G Prudential’s standalone prospects, a £12 billion annuity book has also been sold to Rothesay Life, freeing up around £1 billion of capital.

Both businesses will remain headquartered in London.

Prudential’s Mike Wells will stay head of the international company and Pru veteran John Foley will lead M&G Prudential. A new board will be created to oversee the UK firm.

“London is one of the deepest and best markets in the world and the talent base is unparalleled. British rule of law exports well to various markets where we do business and the governance standards help us in foreign markets,” Wells said.

He added that the move was not about saving money but instead a response to the rapid growth and success of M&G Prudential, which were merged together last August. Shares in the firm rose 90.5p, or 5% to 1916p.

The mixture of the two sides of the company has long puzzled analysts and investors, given the different customers and markets each division served.

Prudential Plc, worth £40 billion, mainly sells products to the booming middle-class in Asia and retirees across America whereas M&G Prudential, worth £10 billion, sells policies and investments to pensioners in the UK and Europe.

Splitting the shares in two will also give investors more choice which part of the Pru they like best, Wells said.

M&G Prudential has more than seven million customers and a £350 billion fund management arm led by top fund manager Anne Richards.

Prudential Plc has four million policyholders in the US and 15 million life insurance customers across Asia.