Prudential announces plans to list US unit Jackson National Life

Singapore

PRUDENTIAL has unveiled plans to list its US unit Jackson National Life, two weeks after billionaire activist hedge fund manager Daniel Loeb called on the board of the giant insurance group to separate its Asian and US businesses.

Prudential completed the spin-off of its UK and European insurance and asset management businesses under a separately listed entity called M&G in October. Mr Loeb, whose firm Third Point has amassed a nearly 5 per cent stake in Prudential, is betting that another demerger exercise would surface the value of the group's remaining units, particularly its fast-growing Asian unit, Prudential Corp Asia.

"Management should finish what they started with the spin out of M&G," Mr Loeb said in a phone interview with The Business Times two weeks ago. "We think the next step is to spin off or separate PruAsia from Jackson, and then eliminate the UK headquarters and let each company be run out of its local domicile."

Prudential revealed its plans to list Jackson in conjunction wth the release of its results for FY2019 ended December, which underscored the strong growth potential of its Asia business. Adjusted operating profit from the Asia insurance operations was up 14 per cent to US$2,993 million.

The Hong Kong business saw operating profit increase 24 per cent to US$734 million. But it also reported an 11 per cent fall in annual premium equivalent (APE) sales and a 12 per cent decline in new business profit, due to the social and political turmoil over the past several months. Excluding Hong Kong, the insurer's Asian business saw a 17 per cent increase in APE sales and a 29 per cent increase in new business profit. China witnessed a 53 per cent rise in APE sales.

Prudential's Asia asset manager, Eastspring, saw net external inflows of US$8.9 billion, versus net outflows of US$2.1 billion in 2018. Average assets under management rose 15 per cent, while adjusted operating profit for the unit rose 18 per cent to US$283 million.

In the US, Jackson's adjusted operating profit increased by 20 per cent to US$3.1 billion. APE sales increased by 8 per cent, while new business profit declined 28 per cent. "As previously stated, in order to diversify at pace, Jackson will need access to additional investment, which we believe would best be provided by third parties. We are today announcing that the board has determined that the preferred route to achieve this is a minority IPO of Jackson," said Prudential's CEO Mike Wells.

"We have already taken a number of management actions to support this path. We will now begin detailed engagement with our key stakeholders, with a view to ensuring that Jackson will have the capital strength as a separately listed business to support its continued success as a broad provider of retirement solutions for America's aging population," he added.

Prudential's group adjusted operating profit from continuing operations was up 20 per cent to US$5.3 billion. Its European Embedded Value shareholders' funds came in at US$54.7 billion or US$21.03 per share. Prudential is listed on stock exchanges in London, Hong Kong, Singapore and New York. It has a market capitalisation of some US$37.3 billion.