UK-based life company Prudential will be shedding its US business, following calls from its second largest shareholder at the end of last month.
The separation from Michigan-based annuity provider Jackson will happen through a minority initial public offering (IPO) to provide the American company with enough capital to become self-sufficient.
Mike Wells, group chief executive of Prudential, said: “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 announcing that preparations have commenced for a minority IPO of Jackson and we have already taken a number of management actions to support this path.
“We will now commence 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 ageing population,” he added.
Expanding in the American market
Michael Falcon, chairman and chief executive of Jackson, said: “The US is the world’s largest retirement market with trillions of dollars expected to move from savings into retirement income products over the next decade.
“Jackson’s ambition is to play the fullest role possible in this through a strategy of diversifying its product range and distribution network.
“Over time, this is expected to lead to a more balanced mix of policyholder liabilities and enhance statutory capital and cash generation.”
Paul Manduca, chairman of Prudential, added: “Over the past nine months, Prudential has undertaken a significant amount of work with our advisers to assess our options for introducing third party finance into Jackson.
“The board has determined that the preferred route to achieve this is to seek a listing of Jackson in the US in due course, subject to market conditions.”
The UK life firm said updates on the listing and separation will be provided in its half-year results in August 2020.