" 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. "
Prudential has announced plans to demerge its UK & Europe business, M&G Prudential, as well as the sale of a £12.0 billion UK annuity portfolio to Rothesay Life.
Prudential says the demerger will result in two separately-listed companies, "each with its own distinct investment prospects".
M&G Prudential will become an independent UK & Europe savings and investment provider, headquartered in London.
Alongside the demerger, M&G will sell £12.0 billion of its shareholder annuity portfolio to Rothesay Life. The capital benefit of this transaction will be retained within the Group to support the demerger process.
The transaction will result in a significant increase to Rothesay Life’s asset base to over £37bn..
Following completion, Rothesay Life will be the largest specialist annuity insurer in the UK.
Paul Manduca, chairman of Prudential, 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”.
Mike Wells, group chief executive, commented: “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.”
John Foley, chief executive of M&G Prudential, added: “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.”
Addy Loudiadis, chief executive of Rothesay Life, said: "I am delighted that Prudential, one of the UK’s most respected insurance companies, has chosen Rothesay Life to secure its policyholders’ pensions over the long term in a landmark transaction for us and for the industry. This is a testament to the quality and strength of our business, our focus on customer service, our execution proficiency and the support we receive from our shareholders. We look forward to building on this success as we predict a very active pension buy-out pipeline ahead."