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Prudential cuts dividend ahead of US sale

Michael O'Dwyer
·2-min read
Prudential logo
Prudential logo

Insurer Prudential has slashed its dividend by more than half and announced plans to float part of its US business on the stock market in the first half of next year. 

The London-headquartered company will pay shareholders an interim dividend of 5.37 US cents per share, instead of 12.28 cents they would have received under a previous dividend policy.

The FTSE 100 insurer cut its dividend to focus on investment in Asia and Africa, where there is rising demand for health insurance and savings products as a new middle class rises.

Bosses also confirmed plans to completely offload American operation Jackson following demands for a break-up from activist investor Third Point Capital.

In future, the Pru will focus on growing in Asia and Africa. It span off European business M&G in a £5.7bn float last year

Prudential said that if it cannot get a float away next year due to market conditions, it plans to de-merge Jackson and give its existing investors shares in the separated entity. The business will be listed in New York.

Analysts believe Jackson - which has been owned by the Pru since 1986 - could fetch in the region of $5bn (£3.8bn). Private equity firm Athene bought an 11.1pc stake this summer. 

Markets Hub - Prudential
Markets Hub - Prudential

Pre-tax profits from continuing operations fell to $729m in the first six months of 2020, half of the profit reported in the same period a year earlier. 

Mike Wells, chief executive, refused to say whether the Pru had been pressured by the Chinese government to support a new Hong Kong national security law criminalising pro-democracy protests.

HSBC and Standard Chartered banks were both criticised for supporting the law and accused of sacrificing civil rights “on the altar of bankers’ bonuses”.

Prudential has remained silent on the law. Mr Wells ducked questions on the issue but appeared to have a veiled dig at companies that supported the new rules. 

He said: “I'm not going to comment on politics. You see what we haven't done there and I'm going to let our actions speak for themselves.” 

Mr Wells insisted Prudential remains committed to its London headquarters, where it has 200 employees despite doing no business in the UK. 

He did not say whether there would be job cuts in London as part of a drive to slash $70m of annual costs by 2023.