Prudential reviews capital position ahead of M&G demerger

Mike Evans

Ahead of its proposed demerger of M&G Prudential from Prudential plc, Prudential said it expects to rebalance its debt capital across Prudential and the ultimate holding company of M&G Prudential.

In anticipation of commencing this debt rebalancing, Prudential intends to update the prospectus relating to its £10,000,000,000 Medium Term Note programme to include the 2018 half-year results and recently announced changes to the Board of Directors of Prudential.

The updated prospectus will also include additional disclosure to reflect Prudential’s expectation that, at the time of the demerger, the shareholder Solvency II ratio of M&G Prudential will be around 170 per cent, with M&G Prudential holding around £3.5 billion of subordinated debt. This expectation is subject to the M&G Prudential capital risk appetite being approved by the Board of the ultimate holding company of M&G Prudential, once fully constituted to include independent non-executive directors, and reflects the current operating environment and economic conditions, material changes in which may lead to a different outcome.

These actions and their effects are contingent on the demerger progressing in line with management’s current expectations and there can be no certainty that it will be completed as proposed (or at all).