British insurance giant Prudential is planning to divest its stake in the US insurance arm Jackson National Life as it faces increasing pressure from an activist hedge fund to turn its focus towards Asia.
Jackson accounts for almost half of Prudential's profit, but it is unpopular with UK investors who have complained that it is too complex, and that its fortunes are too closely tied to the performance of the stock market.
The 172-year-old insurer is expected to reveal it is laying the groundwork for its American business - Jackson Life -either to list in the US or form a possible private equity partnership that will allow it to use its own capital to back further expansion in Asia.
Third Point, activist investor Dan Loeb's fund, said Jackson should be separated from Prudential's fast-growing Asia business. The fund has built a near-5% stake in Prudential and is demanding management ditch its London headquarters and separate Jackson from the Prudential's high-growth Asian operations.
Third Point founder and CEO Dan Loeb said: "If PruAsia and Jackson were separated, resulting in a greater focus on reinvesting capital in each unit and streamlining central costs at the group level, our analysis indicates that the interests represented by Prudential shares can double within three years."
He added that there was "no discernible benefit from the two divisions being operated under the same corporate umbrella"
Based in Michigan, Jackson National is valued between $6bn and $10bn and has four million customers in the US.
It is expected that Prudential will be revealing the final plan on 11 March 2020 when it published its financial results for the year 2019. The insurance giant declined to comment on the potential stake sale or IPO, which was first reported by The Sunday Times.
Prudential is one of the largest insurers in the UK valued at £31bn ($35.4bn).