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Biggest US life insurer set for $25bn demutualisation

The biggest US life insurer, Prudential Insurance of America, is to demutualise

Its flotation on the US stock exchange is expected to release shares valued at over $25bn (about £15.33bn), outstripping any UK mutual flotation. The nearest comparison is former building society Halifax&#39s £12bn demutualisation.

The move will make the Prudential, which is unrelated to the UK company of the same name, the 10th-biggest company on the Dow Jones index. It has funds under management of $260bn.

Some experts predict that Prudential&#39s move will trigger a series of demutualisations in the US similar to the spate of conversions in the UK last year.

Mutual Life of New York has already announced similar plans. Others reported to be considering abandoning their mutual status are Metropolitan Life and New York Life, the second- and fourth-biggest US insurers.

But Morgan Stanley insurance analyst Rob Procter denies that the US is copying the UK. He says: "This shows that mutualisation as a concept is becoming outdated around the world.

"I would not say it is a UK idea gone to the US because there were demutualisations in the US last year, too. Demutualisations are occurring in the UK, US, South Africa and Australia, in cases where it is considered to be a more efficient structure."

In the UK, the rush to demutualise was led by the building societies.

Norwich Union was the only full flotation of a UK life office last year.


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