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Pru FY'17 profit rises amid demerger plan; Munich Re launches €1B buyback

S&P Global Market Intelligence offers our top picks of insurance news stories and more published throughout the week.

Profit and loss

* Prudential PLC reported full-year 2017 net profit of £2.39 billion, up from £1.92 billion a year ago. The British insurer plans to demerge M&G Prudential, its U.K. and Europe business, resulting in two separately listed companies with different investment characteristics and opportunities, subject to shareholders and regulatory approvals. M&G Prudential also announced the sale of £12.0 billion of its shareholder annuity portfolio to Rothesay Life PLC.

* France-based Groupama Group reported net income of €292 million for full year 2017, down from €322 million in 2016. The result was impacted by exceptional charges of €187 million due to regulatory changes in France relating to tax surcharges, as well as impairment of goodwill in Turkey. Groupama SA — which will become Groupama Assurances Mutuelles, the group's new national mutual — reported full-year 2017 net income of €87 million, up from €79 million a year earlier.

* Generali's operating result reached €4.90 billion in 2017, up from €4.78 billion in 2016. The Italian insurer will propose increasing dividend payments for 2017.

* The U.K.'s Phoenix Group Holdings reported a full-year 2017 consolidated loss attributable to owners of the parent of £27 million, compared to a loss of £101 million in 2016. The group proposed a final dividend for 2017 of 25.1 pence per share, up 5% from 23.9 pence per share a year earlier.

* Poland's PZU SA booked full-year 2017 consolidated net profit attributable to the equity holders of the parent company of 2.91 billion Polish zlotys, up from the restated 1.94 billion zlotys in 2016.

Capital distribution

* Munich Re Co. will repurchase up to 11 million shares for a maximum price of €1 billion. The reinsurer is also aiming for a 2018 consolidated result of between €2.1 billion and €2.5 billion.

* U.K.-based Aviva Plc said it would return more than £500 million of capital to shareholders, including a potential cancellation of about £450 million of preference shares, which will not count as regulatory capital from 2026. This indication has incited criticism and caused other insurers to clarify their stance on such shares.

Old Mutual

* Old Mutual Plc reported a 59% year-over-year increase in 2017 annual profit to £909 million, as the company is set to complete its £130 million breakup plan in 2018. It will list two separate entities on both the London and Johannesburg stock exchanges.

* Old Mutual acquired a stake in Arrowhead Properties Ltd. Meanwhile the company's Old Mutual Wealth Private Client Advisers Ltd. completed the acquisition of Wiltshire, U.K.-based A&M Financial Services.

* A claim was lodged against Old Mutual in a U.S. court in connection with pre-existing head office legacy items linked to previously disposed-of assets in the U.S. The claim was filed by U.S. insurance company Travelers Cos. Inc. and unit St. Paul Fire & Marine Insurance Co.

On the deal table

* Slovenia-based Pozavarovalnica Sava d.d. completed the acquisition of a 100% stake in Macedonian pension fund NLB Nov Penziski fond AD Skopje from Nova Ljubljanska banka d.d. and NLB Banka AD Skopje.

* Argo Group International Holdings Ltd. acquired Italian specialty insurer Ariscom to boost its presence in continental Europe. Ariscom will be rebranded in the next few months.

* Legal & General Group PLC, via its Legal & General Capital division, bought the 52.1% stake in U.K.-based homebuilder Cala Homes that it did not previously own.

* U.S.-based NFP Corp. acquired U.K.-based Wentworth Employee Benefits Ltd.

* Slovenian insurance holding company Prva Group - Skupina Prva, zavarovalniški holding, d.d. and group member Prva osebna zavarovalnica dd completed the acquisition of a 25% stake plus 1 share in Deželna Banka Slovenije d.d.

Potential transactions

* NEX Group Plc confirmed it has received a preliminary takeover approach from CME Group Inc., noting that the talks are in the early stages and may not necessarily lead to a deal.

* Berkshire Hathaway Inc., Enstar Group Ltd., Catalina Holdings (Bermuda) Ltd. and Armour emerged as likely bidders for Zurich Insurance Group AG's North American asbestos book with around $500 million of reserves.

* Slovenia-based KD Group financna družba d.d. invited selected investors to carry out due diligence of fully owned insurance unit Adriatic Slovenica Zavarovalna druzba d.d..

Executive moves

* Sompo Canopius AG named Laurie Davison group COO and Nigel Meyer group CFO. Japan-based Sompo Holdings Inc. recently sold its entire stake in the Swiss insurer to Fortuna Holdings Ltd., owned by a fund managed by a Centerbridge Partners LP affiliate.

* U.K.-based Direct Insurance Group Plc named David Flint chief commercial officer, a newly created role within the firm. He will lead the company's wholesale division, Direct Insurance London Market.

* Robin Spencer will step down as CEO of the Netherlands-based NN Group NV's international insurance division and as a member of the group's management board, effective June 1.

In other news

* Hiscox Ltd. revealed a mean hourly gender pay gap in its U.K. operations of 31.1% and a mean bonus pay gap of 71.1%, saying this was driven by fewer women in senior posts. The median hourly and bonus pay gap was 26.2% and 49.5%, respectively.

* General Insurance Corp. of India, or GIC Re, obtained approval to kick off operations at Lloyd's of London in April.

* Central Bank of the Russian Federation intends to strengthen the supervision of investment life insurance products, arguing that banks have been too aggressive when selling these and other complex financial products.

* Standard Life Aberdeen Plc's Standard Life Investments Ltd. will offer up to 8.01% stake in HDFC Asset Management Co. Ltd. in the Indian asset manager's IPO.

* Singapore-based GrabTaxi Holdings Pte. Ltd. will provide financial services through Grab Financial within its mobile app, tying up with Credit Saison Co. Ltd. and Chubb Ltd.

Featured during the week in S&P Global Market Intelligence

Generali disposal proceeds will 'definitely exceed' €1B: CEO: Philippe Donnet told analysts that more disposals will be announced soon, and that Generali is close to making a decision on whether to sell its German life run-off book.

Prudential PLC CEO says timing was right as market welcomes business split: Mike Wells said U.K. and Europe-focused unit M&G Prudential is big enough to compete on its own and that the benefits the group brings to it are "diminishing."

Berkshire Hathaway, Swiss Re end crisis-era adverse development pact: Deals with AIG and Ironshore helped push Berkshire Hathaway's retroactive reinsurance business to new heights in 2017, but the commutation of one agreement could signal a near-term plateauing of the expansion.

Hannover Re speeds up efforts to fix 'problematic' US life book: A closed book of ING mortality business bought from Scottish Re in 2009 caused Hannover Re to miss its life operating target for 2017, and CEO Ulrich Wallin said there could be further losses from the book in 2018.