Prudential to separate from US operation

Prudential has announced its intention to fully separate its $5bn (£3.8bn) US operation, Jackson Life, from the group.

The separation will commence with a minority IPO planned for the first half of 2021, moving into a full divestment over time.

According to the multinational life insurance group, the post-separation company will focus on high growth in its Asian and African markets, with a view to achieve sustained double-digit growth in embedded value per share.

It comes as the group said its Asia half-year adjusted operating profit was up 14%, with double-digit adjusted operating profit growth in nine Asia markets.

In its half-year results, group regulatory capital surplus remained strong at $12.4bn (£9.5bn), with an LCSM ratio of 334%, up from 309% the year before.

Adjusted operating profit fell by 2% to $2.5bn (£1.9bn) in the half-year period, however. 

CEO Mike Wells said: “We have delivered a resilient performance in the first half, despite a challenging new business sales environment, which is likely to persist for the rest of the year, and further falls in interest rates. 

“The board of Prudential has decided to pursue the full separation and divestment of Jackson to enable the group to focus exclusively on its high-growth Asia and Africa businesses. This would result in two separately listed companies with distinct investment propositions, which we believe would lead to improved strategic outcomes for both businesses.”

He added: “The separation and divestment of Jackson would transform Prudential into a group purely targeting the structural opportunities of Asia and Africa. 

“The post-separation group would focus on growth, with a view to achieving sustained double-digit growth in embedded value per share. This would be supported by growth rates of new business profit, which are expected to substantially exceed GDP growth in the markets in which the group operates.”

In addition, he noted that the group was well positioned “both to weather the disruption caused by the Covid-19 pandemic as we continue to support our customers and communities in the recovery to come, and emerge stronger and with a more focused strategy”.

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