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Pru M&G deal sparks talk of break-up

Pru is also looking to sell part of its £45bn annuity book, with likely bidders including Rothesay Life, Legal & General and Aviva

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Prudential’s proposed merger between its UK arm and its asset management business M&G has prompted talk of a break-up of the insurer along UK, US and Asian lines.

The Times reports Pru chief executive Mike Wells has refused to rule out carving up the insurer, following the announcement of the M&G merger plans yesterday.

He told the newspaper: “Any time you improve efficiency and effectiveness, that increases value and increases optionality.”

The combined business of Pru UK & Europe and M&G will bring together six million customers with £332bn in assets under management. The merger is expected to deliver £145m in annual cost savings and will operate under the name M&G Prudential.

Bernstein analyst Edward Houghton says: “Prudential’s announced intention to combine M&G and Prudential UK & Europe lends further credence to the idea that Prudential will look to dispose of its UK annuity book. It will also intensify speculation around a broader break-up of the group.”

Pru manages a £45bn annuity book, but Wells says it was not looking to get rid of the “entire” book.

Bidders have been tipped as including buyout specialist Rothesay Life, Pension Insurance Corporation and Legal & General, as well as Aviva and Scottish Widows.

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