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(Alliance News) - Prudential PLC on Tuesday hailed its "resilient" first-half despite seeing a sharp profit drop and the FTSE 100-listed life insurer and financial services firm said it now plans to fully demerge its Jackson unit in the US.
Prudential back in March said it was eyeing a minority initial public offering for its US insurance arm, after the company had been under pressure from activist fund Third Point LLC to demerge the subsidiary.
Prudential Chief Executive Mike Wells said Tuesday, however: "The board of Prudential PLC has decided to pursue the full separation and divestment of Jackson to enable the group to focus exclusively on its high-growth Asia and Africa businesses. This would result in two separately listed companies with distinct investment propositions, which we believe would lead to improved strategic outcomes for both businesses. The group would have primary listings in both London and Hong Kong and secondary listings in Singapore and the US. Jackson is expected to be solely listed in the US."
Wells, who led Jackson before taking over as CEO of all of Prudential in 2015, noted that this would mean Prudential "purely" targets opportunities in Asia and Africa.
"The group expects to commence separation by way of a minority IPO, targeting the first half of 2021, followed by future sell-downs over time, subject to market conditions," Wells added.
The six months to June 30 was "challenging", Wells said, with the period hit by Covid-19 disruption.
Prudential's pretax profit slumped 43% year-on-year to USD663 million from USD1.16 billion. Gross premiums earned slipped 5.9% to USD19.84 billion from USD21.08 billion a year earlier.
Annual premium equivalents - a measure of the new policies sold - fell 27% to USD2.64 billion from USD3.64 billion.
Prudential's dividend was cut 74% to 5.37 cents per share from 20.29 cents a year prior. CEO Wells noted that the payout was one third of its expected annual dividend under its new payout policy. Under the previous policy, its payout for the first half would have been 12.28 cents a share.
"We have delivered a resilient performance in the first half, despite a challenging new business sales environment, which is likely to persist for the rest of the year, and further falls in interest rates," Wells added.
"We believe we are well positioned both to weather the disruption caused by the Covid-19 pandemic as we continue to support our customers and communities in the recovery to come, and emerge stronger and with a more focused strategy."
Prudential shares were 3.4% higher at 1,273.50 pence each in London on Tuesday morning.
By Eric Cunha; ericcunha@alliancenews.com
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