Prudential is looking at plans to switch its main headquarters from London to Hong Kong in response to regulatory burdens from Solvency II.
In a statement released this morning, Prudential revealed that it is looking at switching domicile as part of a range of options to “maximise the strategic flexibility of the group”.
The statement says: “This includes consideration of optimising the group’s domicile, including as a possible response to an adverse outcome on Solvency II.
“There continues to be uncertainty in relation to the implementation of Solvency II and implications for the Group’s businesses. Clarity on this issue is not expected in the near term.”
Prudential was founded 163 years ago and remains the largest insurer in the UK. Some Prudential shareholders have been pushing for the move as Asia is now its biggest market.
According to reports, the move is being initiated by chief executive Tidjane Thiam in reaction to the new Solvency II regulations, which are set to come in next year.
Speaking at the World Economic Forum last month, Thiam said the new Solvency II rules would force the company to dispose of £11bn of investments into UK infrastructure projects as well as reducing the amount it lends to banks.
A conflict between insurance regulations and the Solvency II rules would also force Prudential to hold billions of pounds in additional capital to protect its American life insurer business, Jackson Life.
The Sunday Times says the FSA is understood to have told Prudential to prepare documents illustrating how it would deal with this element of the rules, including the potential to relocate to Asia.
Prudential has previously stated that a break-up of its business would make no financial sense.