Rothesay Life to take over £12bn of Prudential annuity assets

Anne Richards CEO of M&G

Anne Richards CEO of M&G

Prudential, which said in August that it was embarking on a restructuring that would see it combine its M&G asset management and United Kingdom and European insurance businesses, said the timing of the spin-off has not yet been set and would depend on a range of factors, including completion of the Rothesay Life deal.

IFRS operating profit from the Asia business grew 15 per cent to £2 billion, "reflecting continued business momentum", the company said.

"There will also have been other insurers in the market with an eye on this".

John Foley, Chief Executive of M&G Prudential, also said, "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". This news also follows the decision to sell off £12 billion of its United Kingdom annuities book to Rothesay Life. We have also achieved all of our 2017 objectives, which we set in December 2013.

In the United Kingdom, M&G Prudential's total IFRS operating profit was 10 per cent higher than the prior year. Earnings per share were 93 pence, higher than 75 pence previous year.

Total revenue, net of reinsurance, was 86.56 billion pounds, up from 71.84 billion pounds a year ago.

"Captive asset managers embedded within life offices are rarely fully-reflected in the parent's valuation and the move should give M&G increased strategic flexibility in charting its own destiny over the long run", said Hollands.

The two businesses will have their own distinct investment prospects, the firm said today, with M&G Prudential lined up to be "an independent, capital-efficient UK & Europe savings and investment provider" and Prudential aiming to be a "a leading worldwide insurance group focused on high-growth opportunities in Asia, the United States and Africa".

In preparation for the United Kingdom demerger process, and to align the ownership of the company's businesses with their operating structures, Prudential plc intends to transfer the legal ownership of its Hong Kong insurance subsidiaries from The Prudential Assurance Company Limited to Prudential Corporation Asia Limited, which is expected to complete by the end of 2019.

"The sale of United Kingdom annuity assets suggests M&G Prudential is ultimately eyeing up something closer to the Standard Life Aberdeen model than Legal & General".

Morrisons (MRW) was meanwhile the biggest faller, down 5% at 215p despite unveiling a 4p special dividend and 11% rise in full-year profits, as free cash flow fell from £670 million to £350 million.

It certainly was for Prudential shareholders today, with the stock up 6.5% to 1,943.5p in late afternoon trading, topping the FTSE 100 leader board.

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