Prudential Plc soared on plans to split the firm by spinning off its U. K. operations, a move that will create an insurance business focused on faster-growth markets in Asia, Africa and the US. Investors will receive shares in M&G Prudential, formed last year through the combination of its UK asset-management business with European insurance assets. Both firms are likely to be included in the benchmark FTSE 100 Index of the UK’s biggest companies. Ahead of the demerger, Britain’s largest insurer will also sell 12 billion pounds ($16.7 billion) of annuities to Rothesay Life. Prudential, which derives about a third of its earnings from Asia, is benefiting from an expanding middle class and growing insurance coverage in the region. The UK business, led by John Foley, will have more control over its strategy and capital as a standalone company. It will also be able to play a greater role in developing long-term savings products, Chief Executive Officer Mike Wells said. “The new M&G Prudential has much stronger prospects and the separation has the capability to unlock quite a large amount of value for shareholders,” said Berenberg analyst Trevor Moss, who estimates the company could be worth as much as 15 billion pounds. “The UK business valuation has suffered as a consequence of being a small part of the sum of the parts and being a low-growth business in recent years.” Prudential climbed as much as 6.7 percent in London trading, the biggest gain since November 2016, and was up 6.2 percent at 1,938.5 pence as of 12:40 pm. That gave the firm a market value of more than 50 billion pounds. Looking East The spin off of the European operations has been an option considered by Prudential management for several years.
Source: Business Standard