Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

The logo of British life insurer Prudential is seen on the company's office building in London on March 17, 2019.

Simon Dawson/Reuters

Prudential plans to float a minority stake in its U.S. business, Britain’s largest insurer said on Wednesday, as it faces demands from rebel investor Third Point for a full breakup.

The U.S. hedge fund last month said it had bought around 5 per cent of the company and called on Prudential to hive off its U.S. business Jackson and cut its London head office, proposals with which investors have sympathy.

Prudential’s main businesses are in Asia and the United States after it spun off its British unit last year.

Story continues below advertisement

Prudential was planning a minority initial public offering (IPO) of Jackson, CEO Mike Wells – who formerly served as the boss of Jackson – said as the company reported a 20 per cent rise in 2019 operating profit.

“In order to diversify at pace, Jackson will need access to additional investment,” he said on a media call, adding that he had first signalled the need for outside capital for Jackson in August and that the company had “undertaken significant work with our advisers to prep the U.S. business.”

Goldman Sachs and Citi are advisers to Prudential, according to its website, while Rothschild is also advising the firm, a source familiar with the matter told Reuters.

A Third Point spokesman declined to comment on the IPO plan.

Panmure analyst Barrie Cornes said the plan was “positive as it will enable a realistic valuation of the US business,” reiterating his buy rating on the stock.

Analysts say Jackson is hard to value because of its complex annuity products. JPMorgan last month estimated its value at $6-10 billion.

Jackson saw a 28 per cent drop in 2019 new business profit, which Prudential said reflected lower interest rates and changes in its product mix.

Story continues below advertisement

DIVIDEND GROWTH

Wells defended the firm’s London headquarters, telling reporters on the conference call it was the logical place to be, given the depth of talent in financial services in the city.

Third Point has also criticized Prudential for prioritizing dividend growth over reinvestment, but Wells said the company’s dividend policy was “appropriate.”

Prudential reported an overall above-forecast 20 per cent rise in 2019 adjusted operating profit to $5.3 billion, compared with a $5.1 billion forecast in a company-supplied analyst poll.

Adjusted operating profit from Asian insurance operations was $3 billion, up by 14 per cent, with Hong Kong up by 24 per cent.

But fewer visitors from mainland China caused a fall in total Hong Kong annual premium equivalent sales – a key revenue measure – by 11 per cent and a fall in new business profit of 12 per cent.

Anti-government demonstrations in the Chinese-ruled territory, which began in June, resulted in a sharp drop in tourist arrivals, mainly those from the mainland, hitting sales of insurance policies.

Story continues below advertisement

Prudential also said it was monitoring the coronavirus outbreak, which has cut economic activity in the region.

Wells said there had been few coronavirus-related claims in Asia so far and the firm’s exposure to the outbreak had been “minimal.”

Prudential said it would pay a second interim ordinary dividend of 25.97 cents per share.

Its shares were steady at 10.98 pounds per share at 1024 GMT, compared with a 0.4 per cent rise in the FTSE 100.

Related topics

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies