Insurer Prudential is splitting in two – with the fast-growing Asian and US business hived off from its slow and steady UK division.
The separation is expected to happen late next year after court approval, with investors getting shares in both companies.
Current chief executive Mike Wells will run the US and Asian operation, which had assets of £318billion, made profits of £4.2billion last year and will be known as Prudential Plc.
Prudential has announced its UK unit M&G Prudential is being spun–off with the creation of a new US brand
Its US brand Jackson Life hopes to tap into the 3.5m Americans who are now over 65, and its businesses across the Pacific region see opportunities in the surging middle class market, with Asia’s working-age population due to surge by 200m in the next 12 years.
The company also has a presence in five African countries and, overall, looks after nearly 19m customers.
The British and European segment includes life insurance brands and fund manager M&G and will be run by John Foley, who already oversees it.
M&G Prudential, as it will be known, looks after £351billion of savers’ cash and had a 2017 profit of £1.4billion, with 7.2m customers.
END OF AN ERA: PRUDENTIAL
- Prudential was founded in London in 1848 to provide loans to working people
- It sold insurance polices for as little as one penny through a team of door-to-door salesmen
- Its traditional red terracotta headquarters in Holborn Bars is considered one of the City’s finest buildings
- The firm became famous for its army of insurance salesmen − who became nicknamed the ‘man from the Pru’
- It grew into an international giant with businesses in the US and Asia, and has 26million customers
- But the business has been dogged by mis-selling scandals, last year admitting it had wrongly sold thousands of overpriced annuities
- It bought fund manager M&G in 1999, now run by Anne Richards, one of the most influential women in UK finance
Hargreaves Lansdown analyst Nicholas Hyett said: ‘The two businesses that emerge will be distinctive, a high-growth emerging market play and a capital light dividend machine (eventually).’
Wells said it was not possible to say what the relative sizes of the two parts of the company will be.
Both will continue to be listed on the London Stock Exchange and have their headquarters in the City.
The chief executive added that the board will not get any special bonuses if the demerger succeeds and there are no plans to cut staff or slash costs as part of the deal.
But he added: ‘One of the things that’s important about this business is that we do evolve our staffing levels every year.’
The split is likely to fuel speculation that a large competitor may swoop on the British side of the business.
The Pru revealed overall profits of £3.3billion for 2017, up 45 per cent on a year earlier, and hiked its dividend by 8 per cent to 47p per share.
Shares were up 5.1 per cent, or 92.5p, to 1918p.