Prudential considers ‘other options’ for Jackson alongside IPO amid market woes
24 March 2020, 10:14
The insurance giant said it is having to be ‘flexible in how we execute our corporate strategy’.
Insurance giant Prudential has confirmed it is considering “other options” for its US business alongside a flotation amid stock market turmoil.
The firm – which is heavily focused on Asia – said while it will continue to prepare the planned minority initial public offering (IPO) of its Michigan-based Jackson business, it will “actively evaluate” alternatives.
It comes less than two weeks after it unveiled plans to float Jackson after pressure from an activist investor.
Pru said: “In light of continued turmoil in public equity markets, the board is ensuring that, alongside preparations for a minority IPO, it continues to actively evaluate other options in relation to Jackson, driven by the focus and objectives that underline our strategic priorities.”
Shares in Pru lifted 9% amid a wider market rebound.
Dan Loeb, who runs the Third Point fund, had recently revealed a 5% stake in Prudential and called for Jackson to be split from the fast-growing Asian business.
Jackson has been owned by Prudential since 1986 and the company hopes the spin-off will fund efforts to diversify its products in the US over the next decade.
Prudential chief executive Mike Wells said the company still wants to spin off Jackson, but is having to be “flexible in how we execute our corporate strategy”.
He added: “Covid-19 has now developed rapidly from a largely regional issue into a global pandemic.
“This means we are having to adapt further.
“Our teams in the US, the UK and Africa are learning from the experience of their colleagues in Asia, and I am pleased to report that our business continuity plans have been executed smoothly.”
He gave assurances that the firm remains financially resilient.
Last year, Mr Wells told investors that the company was exploring options to support the US arm, which he said could include “reinsurance and third-party financing”.
The planned shake-up comes months after Prudential spun off its UK and European arm M&G to be floated on the London Stock Exchange.
Pru said earlier in March that the outbreak of Covid-19 had “dampened” its sales momentum in Hong Kong and China and it believed a decrease in new sales in areas affected by the virus could weigh on its profits.
The insurance giant provided the update as it reported a 20% jump in adjusted operating profit from continued operations to 5.31 billion US dollars (£4.11 billion), on the back of strong growth in Asia.