Prudential’s Taiwan deal boosts capital buffer to £2.8bn

Jun 20 2009 by Iain Laing, The Journal

INSURER Prudential has completed the sale of its Taiwan agency business in a move that will boost its capital strength by £800m.

The life and pensions giant has off-loaded the agency distribution division and agency sales force to China Life after securing regulatory approval earlier this week.

Pru confirmed the deal will raise its capital buffer – a key issue in recent months in view of stock market volatility – to around £2.8bn.

Shares lifted 5% after the move, which comes as the industry searches for ways to increase capital reserves.

Major sector players Legal & General has halved its dividend while Aviva froze its own shareholder payout this year as the duo look to preserve capital.

Tidjane Thiam, Pru’s group chief financial officer, said: “We are focused on capital preservation and on profitable and capital efficient growth in all our markets.”

Pru also said it would keep a presence in the Taiwan market despite the sale through its wholly-owned PCA Life Assurance subsidiary, which specialises in bank distribution, and through its asset management operation PCA securities. The group also bought a near-10% stake in China Life for £45m earlier this year.