Prudential Says U.S. Demerger Is Delayed Until Second Half

(Bloomberg) -- Prudential Plc expects the planned demerger of its U.S. insurance business to be delayed until the second half of this year due to regulatory hold-ups.

The demerger of the Jackson unit, which was originally expected to complete in the second quarter, is still awaiting approval from U.S. regulators, Prudential said in a statement Thursday. The insurance giant’s shares fell as much as 6.1% in London following the announcement.

While Prudential has obtained regulatory approval for the separation from the states of Michigan and New York, it’s still awaiting a review of a document called Form 10, the company said. That form needs to be updated to include Jackson’s first quarter financial information, which will delay completion into the second half subject to regulator and shareholder approvals.

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 said in March it would retain a near 20% non-controlling interest in Jackson following the spinoff. It said it then planned to monetize part of the stake to support investment in Asia, and would eventually own less than 10%.

Plans to raise as much as $3 billion of equity following the demerger are still on the cards, the firm said Thursday. That will likely be done via a public offering to retail investors in Hong Kong, where Prudential also has a share listing, combined with an offer to institutions, it said. The new capital will enhance financial flexibility and reduce debt levels, the firm said.

First-quarter premium sales rose 14% year-on-year in Prudential’s Asia and Africa units, the firm added. That growth came in spite of Covid restrictions on people from mainland China traveling to Hong Kong, historically a strong source of business for the firm.

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