Prudential to split by year-end

Once listed, this smaller group will be named M&G, better known to investors as the group’s global asset management arm. Somewhat confusingly, it will also continue to operate under the Prudential brand in the service of 5m savers and insurance policyholders based in the UK, Europe and South Africa.

It’s clear why management wants to spin-off the business – its growth is uneven. In the first half, positive net flows and benign equity markets boosted M&G’s funds under management by 6 per cent. But a slowdown in industry-defined benefit pension transfers led to falling sales and a 15 per cent drop in new business profit. Subdued economic growth and Brexit-induced uncertainty only serve to dampen the mood music.

Management and investors tend to lean towards more dynamic markets. As it has been for some time, Asia was the growth engine for the business in the first half of 2019, as the continent’s life insurance division posted a 14 per cent rise in operating profit and a 10 per cent uptick in new business. Performance in some businesses was even stronger: sales through a joint venture with Chinese state-owned firm CITIC rose 45 per cent to £270m, the wider distribution network continues to expand, and operating profits from asset manager Eastspring climbed 12 per cent year on year.

No wonder some investors are keen to see the group unleashed from Europe’s solvency II directive, and switch to whatever Hong Kong regulators decide is an adequate level of surplus capital. On a pro-forma basis, Prudential thinks its surplus capital alone would be 2.4 times the expected minimum requirement.

Consensus forecasts are for full-year adjusted earnings of 158p a share, rising to 174p in 2020.