KEY POINTS

  • In June of this year, Prudential plc already sold an 11.1% minority equity stake in Jackson to reinsurer Athene Holding
  • In the first half of 2020, Jackson’s profit fell by 19%.
  • Last October, Prudential plc spun off its European investment management unit M&G

British insurance giant Prudential plc (PUK) said on Tuesday that it will spin off its U.S. businesses – Jackson National Life Insurance Co. and asset management firm PPM America Inc . – in order to focus on its operations Asia and Africa.

The announcment came after the company’s adjusted operating profit dropped by 3% in the first half of the year.

In June of this year, Prudential plc already sold an 11.1% minority equity stake in Jackson to reinsurer Athene Holding (ATH) for $500 million.

Prudential plc now said it plans to conduct a minority initial public offering of Jackson in the first half of 2021, followed by a “full divestment over time.”

Proceeds from the separation will be used by Prudential plc to “increase financial flexibility for further investment in our Asia and Africa business.”

However, Prudential plc noted that if market conditions are not supportive of an IPO, the company will engineer the separation “through a demerger of the group’s stake in Jackson to our existing shareholders,” subject to shareholder approval.

In the first half of 2020, Jackson’s profit fell by 19%.

Last October, Prudential plc spun off its European investment management unit M&G plc.

Reuters reported that Prudential plc had been under pressure to split off its U.S. business – particularly after U.S.-based hedge fund Third Point invested more than $2 billion in the company earlier this year and asked management to divest the U.S. units.

“The separation and divestment of Jackson would transform Prudential plc into a group purely targeting the structural opportunities of Asia and Africa,” said Prudential plc CEO Mike Wells, himself a former chief of Jackson.

Wells added that the separation will result in “two separately listed companies with distinct investment propositions, which we believe would lead to improved strategic outcomes for both businesses.”

Jackson is expected to be solely listed in the U.S., he added.

Prudential plc is not affiliated in any way with U.S.-based insurer Prudential Financial (PRU).

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