The demerger will effectively see the group's business chopped in two, with M&G Prudential a United Kingdom and European asset manager and Prudential being an insurer predominantly focused on Asia, the USA and Africa.
M&G Prudential, a leading retirement and savings business in Britain and Europe, will also sell £12.0 billion (S$21.9 billion) of its shareholder annuity portfolio to Rothesay Life.
Prudential has announced plans to split its business in two, with one focused on the United Kingdom and Europe and the other on worldwide markets including Asia, where it hopes to sell its products to the growing numbers of wealthy consumers.
M&G Prudential will be led by its current chief executive John Foley and will continue its drive to become a more capital-efficient and customer-focused business, targeting growing demand for comprehensive financial solutions. Jackson is one of the largest providers of retirement solutions in the USA, delivering income security to increasing numbers of baby boomer retirees.
M&G Prudential will be a savings and investment provider in the United Kingdom and Europe, while Prudential plc will be an global insurance group targeting growth opportunities in Asia, the U.S. and Africa.
The group announced plans to combine its United Kingdom savings and investments businesses to create a single entity named M&G Prudential in August. Both will remain listed and headquartered in London.
Paul Manduca, chairman of Prudential, said: "The decision to demerge M&G Prudential follows a rigorous review by the board which considered all options, including the status quo, and concluded that it is in the best interest of the group to operate as two separately-listed companies, able to focus on their distinct strategic priorities in their chosen geographies". "Both are expected to meet the criteria for inclusion in the FTSE 100 index".
Prudential group chief executive Mike Wells says: "Following separation, M&G Prudential will have more control over its business strategy and capital allocation". This may include the redemption or debt liability management of issued debt, and new debt issuance. The demerger is subject to shareholder and regulatory approval.
The timing of the demerger will depend on the completion of that annuities sale, the transfer of the legal ownership of its Hong Kong insurance subsidiaries to its Asian division, as well as "prevailing market conditions".
All of those steps would be taken in an effort to "minimise costs" linked to the demerger, though Prudential said it would provide an update in due course.