Third Point Sends Letter to Prudential plc Highlighting Opportunity to Separate US and Asian Businesses

Published

Separating Jackson National and PruAsia Will Allow Increased Investment in Both Businesses, Lower Operational Costs That Serve No Benefit, Optimize Growth and Drive Higher Valuation

NEW YORK--(BUSINESS WIRE)-- Third Point LLC (LSE: TPOU) ("Third Point"), a New York-based investment firm managing approximately $14 billion in assets and a holder of approximately 5% of the outstanding common shares of Prudential plc (LSE: PRU LN) today sent a letter to the Board of Directors of the Company, the full text of which is below.

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February 24, 2020

The Board of Directors

Prudential plc

1 Angel Court

London EC2R 7AG

Dear Members of the Board:

Third Point LLC is a $14 billion asset management firm that takes stakes in companies and seeks to work constructively with boards and management teams to increase growth, improve margins, and optimize capital allocation to promote the success of the companies in which we invest and drive long-term value for all stakeholders. While we applaud Prudential plc (the “Company”) for taking the initial step of separating its European operations into M&G plc, we believe that a more significant opportunity exists: separate the Company’s Asian and United States operations to increase investment in both businesses, optimize growth, and drive higher valuation.

Accordingly, certain entities managed by Third Point (including funds, managed accounts, and a Special Purpose Vehicle raised to invest in Prudential plc) have collectively acquired shares directly and via derivative transactions representing an economic stake of just under 5%, making us the Company’s second largest shareholder. We hope to collaborate with you to effectuate these important changes as we are confident that the majority of Prudential plc’s holders will share our view on the structural and strategic initiatives outlined below.

Background

Prudential plc’s two separately managed franchises, Prudential Corporation Asia (“PruAsia”) and Jackson National Life (“Jackson”), have distinct strengths but share no discernable benefit from being operated under the same corporate umbrella. PruAsia is a leading Pan-Asian insurance franchise with decades of structural growth potential driven by rising middle-class wealth in Asia and low penetration levels in health and protection insurance. Its financial track-record is also impressive, with operating profits compounding at 20% over the past 10 years, and ROEs consistently above 25% (despite under-investment in the business relative to its main peer, AIA). Jackson is a leading US-focused annuity writer with best-in-class distribution, high diversification by vintage, and its own impressive track record; a conservative hedging policy protected Jackson in 2008 and allowed the business to take significant market share following the financial crisis.

Despite the strengths of these unique businesses in Asia and the US, Prudential plc trades for less than 10x consensus 2020 earnings, and has returned

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