M&G Prudential demerge: Insurance giant announces it will spin off UK and European business

Company will seek a separate listing on the London Stock Exchange for M&G Prudential

Prudential will remain headquartered in London, under current chief executive Mike Wells (Bloomberg)

Prudential has announced that it will spin off its UK and European unit from its international insurance business, marking a major shake-up for the global company.

Under the plans, the group will seek a separate listing on the London Stock Exchange for M&G Prudential. The move is designed to help Prudential focus on its lucrative Asian, US and African operations while giving M&G Prudential "more control" over its own business strategy and the way that it allocates capital.

Separately on Wednesday, Prudential also said that it plans to sell off a £12bn UK annuities book to Rothesay Life.

“The decision to demerge M&G Prudential follows a rigorous review by the board which considered all options, including the status quo, and concluded that it is in the best interest of the group to operate as two separately-listed companies, able to focus on their distinct strategic priorities in their chosen geographies,” Paul Manduca, Prudential’s chairman, said.

Prudential will remain headquartered in London, under current chief executive Mike Wells. John Foley, the current head of M&G Prudential, will remain in charge of that business.

The announcement comes as Prudential posted a 10 per cent rise in operating profits for 2017 to £4.7bn, up from £4.3bn a year earlier. The jump was particularly driven by a 20 per cent rise in operating profits at its Asian division, to just under £2bn. That was around double the growth rate of profits for its UK and European division. The US business saw profit grow by 9 per cent to £2.2bn.

"I am confident that, given the extent of our opportunities and our proven ability to execute and innovate, we are well positioned to continue to grow profitably," said Mr Wells.