Prudential to spin off M&G

The firm announced the news with its full-year results

The firm announced the news with its full-year results

M&G Prudential will become an independent UK & Europe savings and investment provider, headquartered in London.

On March 14, London-based business Prudential, one of the biggest insurance and financial services companies in the world, announced it will split into two separately listed companies, demerging its United Kingdom and Europe division from its global operations.

M&G Prudential will continue to be led by its current chief executive, John Foley, with a focus on running a more capital efficient and reduced risk businesses.

Mike Wells, group chief executive of Prudential, says following separation, M&G Prudential will have more control over its business strategy and capital allocation.

But, he concluded: "Nonetheless, the potential benefits arising from the demerger are intriguing and, should Prudential capitalise on the opportunities, the move could be extremely rewarding". This news also follows the decision to sell off £12 billion of its United Kingdom annuities book to Rothesay Life.

The transaction which was announced this morning saw life, pensions and longevity re/insurer Rothesay Life providing the reinsurance capacity to back a £12 billion chunk of Prudential plc's annuity book, which was managed under the M&G Prudential brand, as part of a demerger process.

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According to the company's statement, its United Kingdom and Europe savings and investment business, M&G Prudential, led by its current division chief, John Foley, will be a standalone entity focusing on more "capital-efficient and customer-focused" financial services.

Following completion, Rothesay Life will be the largest specialist annuity insurer in the United Kingdom, covering 400,000 policyholders.

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 United Kingdom and Europe".

"Under the terms of the agreement, M&G Prudential has reinsured £12.0 billion of liabilities to Rothesay Life, which is expected to be followed by a Part VII transfer of the portfolio by the end of 2019", a statement read. It is also subject to regulatory and shareholder approval.

"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", said Wells.

Worldwide insurer Prudential has announced that its United Kingdom and European units will be split from the rest of its global insurance business. Prudential's shares are changing hands 5.97 percent higher at 1,934.55p.

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