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S&P downgrades Prudential Plc, core operating units following spin-off plan

S&P Global Ratings on March 15 downgraded Prudential Plc and some of its main operating subsidiaries following the announcement that the company plans to split its U.K. & European businesses — M&G Prudential — from the rest of the group.

The rating agency downgraded the long-term issuer credit ratings of Prudential to A from A+, and the long-term issuer credit and insurer financial strength ratings of its core operating subsidiaries, Jackson National Life Insurance Co., Jackson National Life Insurance Co. of New York and Prudential Assurance Co. Singapore (Pte) Ltd. to AA- from AA. The long-term issuer credit rating of Prudential Assurance Co. Ltd. was downgraded to A+ from AA.

Additionally, S&P affirmed the short-term ratings of Prudential and Jackson National Life Insurance at A-1 and A-1+, respectively, while the outlook on all the entities is stable.

The downgrade of Prudential's core operating units is based on S&P's view that the carve-out of the U.K. operations makes the group less diversified, while U.K.-based Prudential Assurance's rating downgrade reflects the agency's view of the subsidiary as nonstrategic to the group now, instead of core.

The stable outlook is based on S&P's expectation that Prudential's management will protect the group's capital adequacy and balance sheet, despite the demerger plans.

Fitch Ratings has also downgraded Prudential, while A.M. Best placed Jackson National Life Insurance and its affiliates under review with developing implications. Moody's on March 14 affirmed Prudential's A2 senior unsecured debt rating, Prudential Assurance Co.'s Aa3 insurance financial strength rating and Jackson National Life Insurance Co.'s A1 insurance financial strength rating.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.