18th Jun 2020 09:59
(Alliance News) - Prudential PLC on Thursday said its Jackson unit will receive a USD500 million investment and struck a reinsurance agreement as the US business prepares for its minority initial public offering.
Prudential shares shot up 8.2% to 1,275.00 pence on Thursday morning in London.
Retirement services firm Athene Holding Ltd will take an 11% economic interest in Jackson, in exchange for the investment.
Prudential explained the cash injection "will be deployed in Jackson, strengthening its capital base".
The FTSE 100 insurance company added that Athene also has fully reinsured a USD27.6 billion portfolio of Jackson's annuity liabilities in the US.
Prudential added: "Prudential continues to prepare for a minority IPO of Jackson alongside the active evaluation of other options to create an independent US business."
The company said it will issue a further update in its interim results in August.
"After the transaction, Prudential's US business will have an anchor investor of Athene's standing bringing a long-term commitment to Jackson and its development, while Prudential will retain full strategic flexibility in relation to the business," the insurer added.
It was back in March that Prudential said it would "pursue a path for an independent Jackson".
Prudential had been under pressure from activist fund Third Point LLC to demerge the unit.
Prudential Chief Executive Officer Mike Wells said on Thursday: "Today's transactions with Athene, a leading franchise in the retirement services market, further strengthen our capital position and enhance our ability to grow. We value Athene's investment in Jackson, which is aligned to our common goal of serving the growing population of American savers transitioning into and through retirement."
By Eric Cunha; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Prudential