Prudential to spin off US pensions outfit in next stage of revamp

Insurer Prudential unveiled plans to spin off US pensions business Jackson National Life on Wednesday just weeks after activist investor Dan Loeb’s Third Point urged a split-up of the firm.

Pru will sell a stake in Michigan-based Jackson in a stock market float in New York. No timetable has been given. The business, which sells annuities to American retirees, makes profits of $3 billion and was acquired by Pru in 1986.

The sale would be the second large reshaping of Prudential after it hived off its UK-focused M&G Investments and Pru UK division in a stock market float last year.

Chief executive Mike Wells, who used to run Jackson, denied the move was due to pressure from Third Point, which disclosed a 5% stake in late February and argued the FTSE 100 giant would be worth more as a standalone Asian business.

“We started this process way back at the half year. We have reviewed the Jackson strategy annually ever since I got here,” Wells said, adding that the company wanted first to work through the M&G split before pursuing the Jackson plan.

Plans to split Jackson and Pru Asia will prompt more speculation about the company’s long-term commitment to the UK, its home for the last 332 years.

Some say it would make more sense as a separate Asian business to base Pru’s headquarters in Hong Kong or Singapore, but Wells said Pru was committed to the UK.

“We have a primary listing in London and a primary listing in Hong Kong. We are building out our tech hub in Shanghai but the depth and breadth of financial talent in London is unique; regulatory, risk modelling, it’s the best in the industry. This is a very logical base,” he said.

Full year operating profits for the business rose 20% to $5.3 billion (£4.1 billion), above analyst estimates of $5 billion.