14th Mar 2018 07:47
LONDON (Alliance News) - Prudential PLC on Wednesday announced its intention to demerge M&G Prudential to create two-separately listed companies, while also reporting a rise in profit for 2017.
IFRS pretax profit in 2017 rose to GBP3.30 billion from GBP2.28 billion the year before, as total revenue net of reinsurance rose to GBP86.56 billion from GBPP71.84 billion.
The company raised its full-year dividend by 8% to 47.00 pence, from 43.50p the year before.
Prudential on Wednesday also said it intends to demerge its UK & Europe business, M&G Prudential, from Prudential PLC, which will cover Asia, Africa and the US, "resulting in two separately-listed companies with different investment characteristics and opportunities".
On completion of the demerger, shareholders will hold interests in both Prudential PLC and M&G Prudential.
In line with this strategy, Prudential said, M&G Prudential has agreed the sale of GBP12.0 billion of its shareholder annuity portfolio to Rothesay Life.
Under the terms of the agreement, M&G Prudential has reinsured GBP12.0 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.
The capital benefit of this transaction will be retained within the group to support the demerger process, Prudential said.
Prudential PLC's dividend policy will remain unchanged through the separation period, the company said.
Following the demerger, Prudential PLC will remain headquartered in the UK and retain its premium listing on the London Stock Exchange, its primary listing in Hong Kong, and other listings in Singapore and New York.
M&G Prudential also will be headquartered in the UK and also will take a premium listing on the London Stock Exchange.
The timing of the demerger will be subject to a number of factors, including the completion of the UK annuity sale, prevailing market conditions, the transfer of the Hong Kong business to Prudential Corporation Asia Ltd and seeking to minimise costs associated with the demerger.
Prudential said an update on the demerger, related steps and timing will be provided in due course.
"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," said Prudential Chief Executive Mike Wells.
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