Prudential Says U.S. Unit Will Be Spun Off in Second Quarter

(Bloomberg) -- Prudential Plc laid out a time frame for splitting off its U.S. arm as the insurance giant prepares to ramp up its focus on Asia.

The demerger of its Jackson unit is expected to complete in the second quarter of this year, the company said in an earnings statement Wednesday. Prudential also said it was still considering raising up to $3 billion of new equity, which could occur via a share sale in Hong Kong as part of its refocus on Asia.

Prudential's shares were up 1.1% at 9.50 a.m. in London.

”The proposed demerger will complete Prudential's structural shift from a diversified global group to a growth business focusing exclusively on the unmet health, financial protection and savings needs of people in Asia and Africa,” Chief Executive Officer Mike Wells said in the statement.

Prudential, which focuses mainly on life and health insurance, is looking to high growth markets in Asia and Africa for its future. After spinning off its U.K. business in 2019, the firm last year said it planned to separate Jackson via an initial public offering in 2021. The insurer abandoned that idea in January, announcing a demerger of the U.S. unit instead.

The insurer will retain a near 20% non-controlling interest in Jackson following the spinoff. It then intends to monetize part of the stake to support investment in Asia, and to eventually own less than 10% of the unit.

One reason for raising capital in Hong Kong is to build liquidity, so the firm can eventually get added to local indexes and the Stock Connect trading link with China, Wells said on a call with reporters on Wednesday.

Prudential reported an adjusted operating profit of $5.51 billion for 2020, an increase of 3.7% from the previous year and beating the average analyst estimate.

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