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Prudential PLC CEO bats away rumors of Asian unit sale

Prudential PLC is not in any talks to sell its Asian operation and does not have any imminent plans to follow Axa in spinning off its U.S. business, according to the company's top executive.

CEO Mike Wells faced questions from analysts about possible unit sales during a first-half earnings conference call amid rumors that companies are interested in buying the separate parts of the life insurer. Bloomberg News reported Aug. 8 that Chinese insurer Ping An Insurance (Group) Co. of China Ltd. has looked at acquiring Prudential's Asian business.

Prudential is working on spinning off its M&G Prudential U.K. and Europe arm into a separately-listed company, which will leave the U.S. and Asian operations in the current group.

Concerned that his earlier comments about his recent trips to China would fuel further rumors about a sale, Wells said Prudential is "in no current talks with anybody" about a sale of the Asian business, which was the best-performing of Prudential's three geographic units in the first half as measured by operating profit.

Wells did acknowledge that Prudential's businesses in Asia and elsewhere are potentially attractive to would-be suitors.

"Clearly as we are shining more light on the quality of each of these businesses people in boardrooms are sitting around and saying, 'We don't have growth and they have growth," Wells said. Though he denied Prudential is in active deal discussions, he declined to comment on whether there would be such talks in the future.

Wells did not rule out unit sales completely, pointing out that the larger group is not being run solely for scale, as shown by the plans to spin off the U.K. and Europe business.

"If something came that created massive value for our shareholders we would look very seriously at it," he said.

Demerger progress

Prudential has not given a firm time frame for when it expects the spinoff of its U.K. and European business to complete. The transaction is contingent on the company transferring the liabilities for £12 billion of annuities to Rothesay Life; Rothesay is reinsuring the liabilities until they are transferred. Wells told journalists on a separate conference call that the transfer is "likely to likely to finish late next year."

Prudential also announced that Hong Kong's Insurance Authority would regulate the group after the U.K. and Europe business is separated. The U.K. and Europe business will continue to be regulated by the U.K. Prudential Regulation Authority and Financial Conduct Authority after the split, and both companies will be headquartered and listed in the U.K. Prudential expects both companies to be part of the FTSE 100 large-cap stock index.

Asked why the group would retain its U.K. headquarters when its business and regulator were elsewhere, Wells said the company has a "really good team here and there would be no reason to disrupt that given our primary listing and the bulk of our shareholders are here."