Prudential is to float a minority stake in its US business, Jackson, as it responds to pressure from activist investor Third Point for a full break-up.
The UK-based insurer said on Wednesday that a partial inital public offering of the business would give it the resources to expand.
Prudential chief executive Mike Wells said: “In order to diversify at pace, Jackson will need access to additional investment, which we believe would best be provided by third parties.”
The company did not lay out a timeline for the proposed IPO, or say how much of the group it would look to list. Shares in similar US retirement companies have been hit hard by the recent stock market volatility.
Mr Wells said Jackson, which is based in Michigan, was “in extremely good shape from a standalone point of view.”
Analysts at Citi have valued Jackson at about £6.5bn.
“This is a good move,” said Barrie Cornes, analyst at Panmure Gordon, adding that it would “give a proper valuation to the US business that is currently lacking within the combined group valuation.”
Prudential’s share price was flat in response to the news.
Third Point, the activist investor led by Dan Loeb, last month announced that it had bought a 5 per cent stake in Prudential and called on the board to split Jackson from the group’s fast-growing Asian business and close the London head office. The partial IPO announced by the insurer falls short of the full split that Third Point had demanded.
Mr Wells defended Prudential’s decision to keep a London head office: “London has a deep bench in financial services,” he said. “In any scenario, you’d want to tap into the talent you get in this market.”
Prudential also announced its results for 2019, which showed that adjusted operating profits rose by a fifth to $5.3bn.
The company made no change to its progressive dividend policy, which Third Point had criticised as “short-sighted” as it reduced the amount of money available to invest.
Prudential declared a second interim dividend of 25.97c per share.
Mr Wells said the coronavirus outbreak had “slowed economic activity and damped our sales momentum in Hong Kong and China.”
He added: “Given these conditions, lower levels of new sales activity in affected markets are to be expected with a consequential effect on new business profit.”
However, he said that to date, claims from the virus had been “minimal”.
Prudential said it would update investors on its US IPO plans in August.
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