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March 14, 2018 at 04:35 PM
Prudential PLC, the London-based parent of Jackson National Life Insurance Company, plans to keep its life and annuity operations in the United States and Asia but separate from its life and asset management operations in the United Kingdom and Europe.
Executives from the U.K. Prudential — which has no connection with the Newark, New Jersey-based Prudential Financial Inc. — talked about the proposed spin-off of its U.K. and European life business today, when they released the company’s earnings for 2017.
(Related: AXA Talks More About US Life Spinoff)
The U.K. Prudential, which uses the International Financial Reporting Standards (IFRS) and trades in Europe under the stock symbol PRU, reported 2.4 billion British pounds in profits for 2017 after taxes, up from 1.9 billion pounds in profits for 2016. The company’s underlying free surplus generated increased 2%, to 3.6 billion pounds.
Operating profits increased 10%, to 4.7 billion pounds.
Prudential has been in business since 1848, and it has been selling life insurance in London since 1854. Managers created the current life business, M&G Prudential, by merging a number of homegrown and acquired businesses with M&G, an asset manager that Prudential acquired in 1999.
Reasons
European Solvency II financial standards apply to life insurers in the United Kingdom and Europe.
Mike Wells, the chief executive officer of the U.K. Prudential, said separating M&G Prudential from the other Prudential operations, by distributing shares of M&G Prudential stock to Prudential PLC shareholders, should make both companies stronger.
“Following separation, M&G Prudential will have more control over its business strategy and capital allocation,” Wells said. “This will enable it to play a greater role in developing the savings and retirement markets in the U.K. 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.”
The Process
M&G Prudential, the business involved in the proposed spin-off accounted, for 1.4 billion pounds of Prudential’s 4.7 billion pounds in 2017 operating profits.
Prudential is calling the separation process a “demerger.”
