SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of January, 2021
PRUDENTIAL PUBLIC LIMITED COMPANY
(Translation of registrant's name into English)
1 Angel Court, London,
England, EC2R 7AG
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F X
Form 40-F
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
No X
If
"Yes" is marked, indicate below the file number assigned to the
registrant
in connection with Rule 12g3-2(b): 82-
This announcement contains inside information
Prudential plc - Update on separation of Jackson
Prudential announces plan to separate Jackson in Q2 2021 through
demerger; Steven A Kandarian appointed Jackson
Non-Executive Chair
●
Proposed demerger
would accelerate Jackson separation and complete Prudential's
transformation to focus exclusively on its high-growth Asia and
Africa businesses
●
Former MetLife CEO
Steven A Kandarian to serve as Non-Executive Chair of Jackson,
effective 1 February 2021
●
Jackson RBC ratio
expected to be 425-450 per cent at point of separation following
recapitalisation from debt raising
●
Prudential
considering equity raise of around $2.5-3 billion to increase
financial flexibility and take advantage of Asia growth
opportunities
●
2020 operating
performance expected to be in line with current market
expectations
The Board of Prudential plc ("Prudential" or "the Group") has
decided to pursue the separation of its US business, Jackson
Financial Inc. ("Jackson"), from the Group in the second
quarter of 2021 through a demerger, whereby shares in Jackson would
be distributed to Prudential shareholders. The demerger, which is
subject to shareholder and regulatory approval, would lead to a
significantly earlier separation of Jackson from the Group than
would have been possible through a minority IPO and future
sell-downs. This accelerated process would complete Prudential's
transformation into a group focused exclusively on the high-growth
opportunities of Asia and Africa. At the point of demerger,
Prudential would retain a 19.9 per cent non-controlling interest in
Jackson, which the Group would monetise over time to support
investment in Asia.
Prudential is also pleased to announce the appointment of
Steven A Kandarian as Non-Executive Chair of Jackson's
Board of Directors. Mr Kandarian, the former Chief Executive
Officer of the US life insurer MetLife, will assume his new role on
1 February 2021, and will bring substantial and relevant
experience to the governance and leadership of an independent
Jackson. Additional appointments of independent directors for
Jackson will be announced in due course. Following the proposed
separation, Jackson expects to list on the New York Stock Exchange
using the ticker "JXN".
Jackson is revising its hedge modelling for US statutory standards
for calculating reserves and capital from 31 December 2020,
which is estimated to reduce Jackson's Risk Based
Capital (RBC) ratio1 by
around 80 percentage points. Allowing for this change and
other second-half 2020 items, Jackson's RBC ratio as at 31 December
2020 is estimated to be around 340 to 355 per cent. At
the point of proposed separation, Jackson expects to have
an RBC ratio in the range of 425 to 450 per cent and total
financial leverage2 in
the range of 25 to 30 per cent, subject to market
conditions. Jackson expects to achieve this level of RBC
at the point of separation by contributing proceeds
of its debt and hybrid capital raising to its
regulated insurance subsidiaries. As a result, Jackson does not
expect to pay a pre-separation dividend to
Prudential.
Following completion of the separation of Jackson, Prudential will
be wholly focused on its growing health & protection and
savings markets in Asia and Africa. These regions offer attractive
demographic characteristics and have generally low levels of
penetration of insurance products. Prudential expects to
maintain its existing strong credit ratings and growth trajectory,
including a focus on achieving sustained double-digit growth in
embedded value per share. As at 31 December 2020, pro forma for the
separation of Jackson and assuming no pre-separation dividend, the
debt-leverage ratio3 for
Prudential is estimated to be in the low 30s in percentage terms.
Following the demerger, as a pure-play Asia and Africa business,
Prudential will target a debt-leverage ratio of around 20 to 25 per
cent over the medium term. Prudential may operate outside this
range temporarily to take advantage of growth opportunities with
attractive risk-adjusted returns as they arise, while still
preserving its strong credit ratings.
While Prudential is a strongly capital-generative business, in
order to accelerate de-levering during 2021 through the redemption
of existing high-coupon debt, Prudential is considering raising new
equity of around $2.5-3 billion in Hong Kong or London, or both,
with an objective being to increase the Group's investor base in
Asia. Such a transaction, if executed, would maintain and enhance
the Group's financial flexibility in light of the breadth of the
opportunities to invest in growth.
The Group confirms that the overall quarterly sales trajectory in
Asia has continued to improve during the second half of 2020 and
operating performance for 2020 is anticipated to be in line with
current market expectations. Prudential plc expects to
announce its 2020 preliminary results on 3 March 2021.
Mike Wells, Group Chief Executive of Prudential, said: "Our
priorities as a Group remain, first, to ensure our investors fully
benefit from the opportunities of Asia and, second, to pursue, at
pace, a fully independent Jackson. The demerger we are announcing
today will significantly accelerate Prudential's transformation
into a business purely focused on profitable growth in Asia and
Africa. I am delighted that Steve has agreed to join as
Chair of Jackson. He brings an unrivalled track record in the US
life insurance sector, and I am more confident than ever that
Jackson will flourish as a separate business. Any future
equity raising by Prudential will allow us to capture even more
fully the rapid growth in the health, protection and savings needs
of people in our chosen markets."
Steven A Kandarian said: "I am honoured to lead Jackson's board as
Non-Executive Chair at this pivotal time. Jackson is a market
leader in helping US investors meet their retirement income needs
and I look forward to supporting Jackson's growth and success as an
independently listed company."
Michael Falcon, Chief Executive Officer of Jackson, said: "As we
move closer to the demerger, Jackson continues its core focus on
providing industry-leading products and services to our clients,
managing risk and generating capital returns for shareholders.
Steve brings significant insurance sector experience to Jackson
that will serve our firm and stakeholders well. We are excited to
have him on board and look forward to benefiting from
his insights and guidance in years to come."
A conference call will be held for investors and analysts at 09.30
GMT/17.30 HKT/04.30 EST today 28 January 2021. Dial-in details are
+44 20 3936 2999. Pass code 284802.
Contact:
Media
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Investors/Analysts
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Jonathan Oliver
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+44 (0)20 3977 9500
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Patrick Bowes
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+44 (0)20 3977 9702
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Tom Willetts
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+44 (0)20 3977 9760
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William Elderkin
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+44 (0)20 3977 9215
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Notes
1 The RBC ratio,
throughout this announcement, is calculated for Jackson
National Life, Jackson's main regulated insurance entity, and its
subsidiaries
2 Calculated on a US GAAP
basis as the ratio of total debt (including senior debt, hybrid
debt and preferred securities) to total debt and shareholders'
equity (excluding Accumulated Other Comprehensive
Income)
3 Calculated on a Moody's
total leverage basis
Notes to editors
Additional information for investor and analyst conference
call
Alternative numbers:
United
Kingdom
0800 640 6441
United Kingdom (Local) 020 3936 2999
All other
locations
+44 203 936 2999
United States (Local) 1 646 664
1960
Hong Kong
(Local)
580 33 413
Pass
code
284802
Transcript: Following the conference call, a transcript
will be published on the Investor
Relations page of Prudential plc's website on 1
February 2021.
Playback facility: Please use the following for a playback
facility: +44 (0) 20 3936 3001 (UK and international)
replay code 041866. This will be available from approximately
3.00pm (UK time) on 28 January 2021 until 11.59pm (UK
time) on 11 February 2021
Person responsible
The person responsible for arranging the release of this
announcement on behalf of Prudential plc is Tom Clarkson, Company
Secretary.
About Steven A Kandarian
From 2012 to April 2019, Mr Kandarian served as Chairman of the
Board, President and Chief Executive Officer of MetLife, Inc., a
leading financial services company providing insurance, annuities,
and asset management. He was named President and Chief Executive
Officer in 2011 and served as Executive Vice President and Chief
Investment Officer from 2005 to 2011. During his time leading
MetLife, Mr Kandarian spun off the company's US retail business
into a separately listed company, Brighthouse Financial; made
significant technological and operational improvements; tripled the
company's free cash ratio; returned more than $10 billion in
capital through share repurchases; and increased the company's
dividend at an 11.4 per cent compound annual growth rate. Mr
Kandarian has also served as an executive director of the Pension
Benefit Guaranty Corporation from 2001 to 2004, as the founder of
Orion Partners, LP from 1993 to 2001, as the founder of Eagle
Capital Holdings from 1990 to 1993 and as a managing director of
Lee Capital Holdings from 1984 to 1990. Mr Kandarian currently
serves as a director of ExxonMobil, Neuberger Berman and
the Damon Runyon Cancer Research Foundation. He is a
member of the Business Council. Age 68.
About Jackson
Jackson is a leading provider of retirement products for industry
professionals and their clients. The company and its affiliates
offer variable, fixed and fixed index annuities designed for
tax-efficient growth and distribution of retirement income for
retail customers, as well as products for institutional investors.
Jackson is a proud founding member and co-chair of the Alliance for
Lifetime Income, a nonprofit 501(c)(6) organisation formed and
supported by 24 of the nation's financial services organisations to
create awareness and educate Americans about the importance of
protected lifetime income. With $296.6 billion in IFRS assets*, the
company prides itself on sound corporate risk management practices
and strategic technology initiatives. Focused on thought leadership
and education, Jackson provides industry insights and financial
representative training on retirement planning and alternative
investment strategies. The company is also dedicated to corporate
philanthropy and supports nonprofits focused on strengthening
families and creating economic opportunities in the communities
where its employees live and work. For more information, visit
www.jackson.com.
*Jackson has $296.6 billion in total IFRS assets and $265.7 billion
in IFRS policy liabilities set aside to pay primarily future
policyowner benefits (as of June 30, 2020).
Jackson is an indirect subsidiary of Prudential plc.
About Prudential plc
Prudential plc is an Asia-led portfolio of businesses focused on
structural growth markets. The business helps people get the most
out of life through life and health insurance, and retirement and
asset management solutions. Prudential plc has 20 million customers
and is listed on stock exchanges in London, Hong Kong, Singapore
and New York. Prudential plc is not affiliated in any manner with
Prudential Financial, Inc. a company whose principal place of
business is in the United States of America, nor with The
Prudential Assurance Company Limited, a subsidiary of M&G plc,
a company incorporated in the United Kingdom.
Forward-Looking Statements
This announcement may contain 'forward-looking statements' with
respect to certain of Prudential's plans and its goals and
expectations relating to its future financial condition,
performance, results, strategy and objectives. Statements that are
not historical facts, including statements about Prudential's
beliefs and expectations and including, without limitation,
statements containing the words 'may', 'will', 'should',
'continue', 'aims', 'estimates', 'projects', 'believes', 'intends',
'expects', 'plans', 'seeks' and 'anticipates', and words of similar
meaning, are forward-looking statements. These statements are based
on plans, estimates and projections as at the time they are made,
and therefore undue reliance should not be placed on them. By their
nature, all forward-looking statements involve risk and
uncertainty.
A number of important factors could cause Prudential's actual
future financial condition or performance or other indicated
results of the entity referred to in any forward-looking statement
to differ materially from those indicated in such forward-looking
statement. Such factors include, but are not limited to, the impact
of the current Covid-19 pandemic, including adverse financial
market and liquidity impacts, responses and actions taken by
regulators and supervisors, the impact to sales, claims and
assumptions and increased product lapses, disruption to
Prudential's operations (and those of its suppliers and partners),
risks associated with new sales processes and information security
risks. future market conditions, including fluctuations in interest
rates and exchange rates, the potential for a sustained
low-interest rate environment, and the impact of economic
uncertainty, asset valuation impacts from the transition to a
lower-carbon economy, derivative instruments not effectively
hedging exposures arising from product guarantees, inflation and
deflation and the performance of financial markets generally.
global political uncertainties, including the potential for
increased friction in cross-border trade and the exercise of
executive powers to restrict trade, financial transactions, capital
movements and/or investment. the policies and actions of regulatory
authorities, including, in particular, the policies and actions of
the Hong Kong Insurance Authority, as Prudential's Group-wide
supervisor, as well as new government initiatives generally. given
its designation as an Internationally Active Insurance Group
("IAIG"), the impact on Prudential of systemic risk and other group
supervision policy standards adopted by the International
Association of Insurance Supervisors. the impact of competition and
fast-paced technological change. the effect on Prudential's
business and results from, in particular, mortality and morbidity
trends, lapse rates and policy renewal rates. the physical impacts
of climate change and global health crises on Prudential's business
and operations. the timing, impact and other uncertainties of
future acquisitions or combinations within relevant industries. the
impact of internal transformation projects and other strategic
actions failing to meet their objectives. the ability to complete a
potential demerger of Jackson, or one of its related companies, or
other strategic options in relation to Jackson, or one of its
related companies. the effectiveness of reinsurance for
Prudential's businesses; the risk that Prudential's operational
resilience (or that of its suppliers and partners) may prove to be
inadequate, including in relation to operational disruption due to
external events. disruption to the availability, confidentiality or
integrity of Prudential's information technology, digital systems
and data (or those of its suppliers and partners). any ongoing
impact on Prudential of the demerger of M&G plc. the impact of
changes in capital, solvency standards, accounting standards or
relevant regulatory frameworks, and tax and other legislation and
regulations in the jurisdictions in which Prudential and its
affiliates operate. the impact of legal and regulatory actions,
investigations and disputes. and the impact of not adequately
responding to environmental, social and governance issues. These
and other important factors may, for example, result in changes to
assumptions used for determining results of operations or
re-estimations of reserves for future policy benefits. Further
discussion of these and other important factors that could cause
Prudential's actual future financial condition or performance or
other indicated results of the entity referred to in any
forward-looking statements to differ, possibly materially, from
those anticipated in Prudential's forward-looking statements can be
found under the 'Risk Factors' heading of its most recent
Annual Report and annual report on Form 20-F filed with the U.S.
Securities and Exchange Commission, as well as under the 'Risk
Factors' heading of its subsequent Half Year Financial Report.
Prudential's most recent Annual Report, Form 20-F and Half Year
Financial Report are available on its website at
www.prudentialplc.com.
Any forward-looking statements contained in this announcement speak
only as of the date on which they are made. Prudential expressly
disclaims any obligation to update any of the forward-looking
statements contained in this announcement or any other
forward-looking statements it may make, whether as a result of
future events, new information or otherwise except as required
pursuant to the UK Prospectus Rules, the UK Listing Rules, the UK
Disclosure and Transparency Rules, the Hong Kong Listing Rules, the
SGX-ST listing rules or other applicable laws and
regulations.
Cautionary Statements
This announcement does not constitute or form part of any offer or
invitation to purchase, acquire, subscribe for, sell, dispose of or
issue, or any solicitation of any offer to purchase, acquire,
subscribe for, sell or dispose of, any securities in any
jurisdiction nor shall it (or any part of it) or the fact of its
distribution, form the basis of, or be relied on in connection
with, any contract therefor.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: 28 January 2021
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PRUDENTIAL
PUBLIC LIMITED COMPANY
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By:
/s/ Mark FitzPatrick
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Mark
FitzPatrick
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Group
Chief Financial Officer and Chief Operating Officer
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