Pru to float minority stake in US business

BriTish insurance giant Prudential has unveiled plans to float a minority stake in its Us business following pressure from an activist investor.

The FTsE 100 firm said it would sell new shares in Michigan-based Jackson in a socalled initial public offering.

The proposal was in effect a compromise with activist Dan Loeb, who has a 5pc stake in Prudential through his fund Third Point and has called for a more radical shake-up.

Jackson, which analysts at Citi value at about £6.5bn, has been owned by Prudential since 1986.

The plan to sell new shares in Jackson was announced alongside results that showed operating profit at the Pru rose 20pc last year to £4.1bn.

Prudential chief executive Mike Wells said yesterday: ‘We have delivered another positive performance during 2019, despite significant macroeconomic and geopolitical volatility.’

The Pru added that the coronavirus had slowed business growth in China and hong Kong.

The company’s shares fell 3.2pc, or 35.5p, to 1062p.

The Pru spun off its UK and European arm as M&G last year and is increasingly an Asiafocused business.

Activist shareholder Loeb has called for a clean break between the Us and Asian operations. There have been calls also for the Pru to close its London hQ as a cost-saving measure.

Wells would not put a date on the Jackson share sale, which is ‘subject to market conditions’, but said the company needed more capital in order to ‘diversify at pace’, and that such funding was best provided externally.

however, he remained upbeat as to the prospects for the American market, given expected demand for products as more and more future retirees would have to ‘ self- fund what they live on’.

These will be new Jackson shares, he said, rather than a sale of any of the Pru’s holding.

he added: ‘ in Asia, we are focused on growth opportunities. We are building the long-term value of our fast-growing franchise by deepening our strong relationships with existing customers and by acquiring new customer relationships.’

regarding the coronavirus, Wells said the Pru had adjusted some of its products for consumers ‘to address their concerns and issues’ with the epidemic. he added of the virus’s impact: ‘We have been very fortunate to date that our claims have been relatively few.’

overall, he said of the restructured group: ‘ new Prudential is focused exclusively on markets with strong growth opportunities,’ adding that it would use a ‘long-term economic value lens’ to guide its commercial decision making.

Asked about the possibility that the Pru could ends its 172-year link with London, the city in which it was founded, Wells said: ‘We have discussed it at various times,’ and suggested that, were the company being founded now, it would be based elsewhere.

But he went on: ‘ London has some of the best people in financial services. in any scenario you’d want to tap into the talent in this market’.

on the approach and conduct of activist investors, as opposed to the more conventional variety, Wells said: ‘i don’t have a view one way or another how people engage with us. i have no preference or concern as to how someone comes at us.’