Investment - Articles - Rothesay Life purchase annuity portfolio from Prudential

Investment - Articles - Rothesay Life purchase annuity portfolio from Prudential

M&G Prudential will be a savings and investment provider in the United Kingdom and Europe, while Prudential plc will be an global insurance group targeting growth opportunities in Asia, the U.S. and Africa.

In the U.S., life business Jackson delivered positive separate account net inflows of 3.5 billion pounds, with separate account assets increasing by 19 percent.

Prudential also announced the sale of £12bn ($16.7bn) of its United Kingdom shareholder annuity portfolio to life insurer Rothesay Life.

M&G Prudential will continue to be led by its current chief executive, John Foley, with a focus on running a more capital efficient and reduced risk businesses.

John Foley, chief executive of M&G Prudential, added: "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".

The idea of the demerger is to give M&G Prudential more control over its capital allocation and strategy, while Prudential can focus also on the growth opportunities within the U.S., Asia and Africa.

The move will result in two separately listed companies that will each offer their own distinct investment products - according to a release, M&G Prudential will be an independent savings and investment provider based in London and led by chief executive John Foley, while Prudential Plc will continue as an worldwide insurance group headquartered in London but focusing on growth opportunities across the US, Asia and Africa, under group chief executive Mike Wells.

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"We're not looking to get rid of all of our capital-intensive products, we're looking to grow the piece that's capital-light", Wells told Reuters, adding that the M&G Prudential business "is better off standalone, competing domestically for people, for capital".

Following completion, Rothesay Life will be the largest specialist annuity insurer in the United Kingdom, covering 400,000 policyholders.

As part of the split, ownership of the group's Hong Kong insurance subsidiaries will be transferred from M&G Prudential to its Asia division by 2019. "Both are expected to meet the criteria for inclusion in the FTSE 100 index".

Under the plans, the group will seek a separate listing on the London Stock Exchange for M&G Prudential.

As part of the deal, the life insurer giant will also be offloading its United Kingdom annuity business to Rothesay Life for £12bn, using the proceeds to help fund the demerger.

He added: "The separation of the United Kingdom and European unit will enable each business to hone in on specific strategic objectives". This is a testament to the quality and strength of our business, our focus on customer service, our execution proficiency and the support we receive from our shareholders. We believe this shows the United Kingdom market has matured, remains very competitive and can cope with this kind of change.