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Prudential PLC (PRU)

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daveh
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Prudential PLC (PRU)

#207348

Postby daveh » March 13th, 2019, 8:46 am

Final results discussion here:
viewtopic.php?f=15&t=16729

daveh
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Re: Prudential PLC (PRU)

#244224

Postby daveh » August 14th, 2019, 1:11 pm

Interim results posted on HYP board here:
viewtopic.php?f=15&t=19036

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Re: Prudential PLC (PRU)

#247525

Postby 88V8 » August 28th, 2019, 3:19 pm

Neither Phoenix nor Chesnara were involved in this legal case reported here
https://www.ftadviser.com/pensions/2019 ... uity-sale/
where it was decided by the High Court that Prudential did not have the right to sell £12bn of annuities to Rothesay Life.

Rothesay is an unlisted company with three main backers, Blackstone, GIC (Singapore) and MassMutual.

It was reported that two key reasons for the Court's decision were that Rothesay is relatively new (est 2007), and that Prudential had never told annuitants that a transfer might occur.
Presumably this latter objection would apply to all such schemes?
https://www.ftadviser.com/pensions/2019 ... rs/?page=1

One wonders what impact this may have on the future growth prospects of Chesnara and Phoenix, both of which I hold.

V8

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Re: Prudential PLC (PRU)

#247537

Postby richfool » August 28th, 2019, 4:00 pm

88V8 wrote:Neither Phoenix nor Chesnara were involved in this legal case reported here
https://www.ftadviser.com/pensions/2019 ... uity-sale/
where it was decided by the High Court that Prudential did not have the right to sell £12bn of annuities to Rothesay Life.

Rothesay is an unlisted company with three main backers, Blackstone, GIC (Singapore) and MassMutual.

It was reported that two key reasons for the Court's decision were that Rothesay is relatively new (est 2007), and that Prudential had never told annuitants that a transfer might occur.
Presumably this latter objection would apply to all such schemes?
https://www.ftadviser.com/pensions/2019 ... rs/?page=1

One wonders what impact this may have on the future growth prospects of Chesnara and Phoenix, both of which I hold.

V8

88V8, Thanks for that update.

I'm more concerned currently about the effect on PRU's SP which seems to be descending daily, to a point where my +30%/40% gain has now become a -6% loss on paper. Noted it improves the dividend yield. I did think about topping up, but am aware of the concept of falling knives.

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Re: Prudential PLC (PRU)

#247538

Postby Dod101 » August 28th, 2019, 4:12 pm

This is not new news and was reported in the newspapers last weekend if not the one before. Why do you mention Chesnara and Phoenix Holdings? They do not and as far as I know never were involved in this. I am not sure 'do not have the right' is quite the right expression. They have the right to sell to anyone they like subject to the approval of the Court (which in a sense is their regulator in this sort of case)

The main issue I think is that this was part of the plan by Prudential to hive off its UK business from its Asian business but the said newspaper reported that Pru had said that this set back would not affect that.

Usually if the Court is satisfied that the security is at least as good as existing and no policyholder has made any objection, the transfer is rubber stamped so somebody has not done a very good job here. Pru must know the ropes. I do not think it will have any impact of Chesnara or Phoenix but you never know. Phoenix is much bigger than Chesnara but both firms are well established in the marketplace and I think are much better placed than Rothesay. I wonder why Pru chose Rothesay in the first place? Presumably because they were going to pay more to Pru than the other two

Dod

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Re: Prudential PLC (PRU)

#247570

Postby Alaric » August 28th, 2019, 6:49 pm

Dod101 wrote:The main issue I think is that this was part of the plan by Prudential to hive off its UK business from its Asian business but the said newspaper reported that Pru had said that this set back would not affect that.

Usually if the Court is satisfied that the security is at least as good as existing and no policyholder has made any objection, the transfer is rubber stamped so somebody has not done a very good job here. Pru must know the ropes. I do not think it will have any impact of Chesnara or Phoenix but you never know. Phoenix is much bigger than Chesnara but both firms are well established in the marketplace and I think are much better placed than Rothesay. I wonder why Pru chose Rothesay in the first place? Presumably because they were going to pay more to Pru than the other two


Like Aberdeen Standard, the UK operation of Prudential seems to be intended to be primarily a fund management operation. Hence the use of the M&G name.

Annuities can be profitable, but Companies writing them need a fair amount of solvency capital, be able to get good returns in fixed interest markets and if open to new business, able to get its longevity forecasts correct.

Something must have spooked the Court as usually these schemes go through on the nod. I could suppose that the capital backing of Rothesay and its ability in extremis to raise fresh funds was in doubt, although the FCA didn't raise any objections.

Rothesay already have the assets as initially the transaction took the form of reinsurance.

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Re: Prudential PLC (PRU)

#247600

Postby Dod101 » August 28th, 2019, 8:36 pm

Having read as many reports as I can find, it seems that the Court simply thought that Rothesay Life does not have the long term security and reputation that Pru has and to that extent the annuitants were being short changed. It is a bit like choosing which platform to use; a very personal judgement.

Dod

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Re: Prudential PLC (PRU)

#247608

Postby richfool » August 28th, 2019, 9:15 pm

What I am concerned about, is how that will affect the prospects for Prudential, assuming that is what is driving the SP down, as opposed to it being caused by the impending sale of the M&G part.

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Re: Prudential PLC (PRU)

#247637

Postby Alaric » August 28th, 2019, 10:57 pm

richfool wrote:What I am concerned about, is how that will affect the prospects for Prudential, assuming that is what is driving the SP down, as opposed to it being caused by the impending sale of the M&G part.


The annuities will most likely stay with the M&G part, being UK domestic.

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Re: Prudential PLC (PRU)

#247695

Postby Dod101 » August 29th, 2019, 9:34 am

They seem to be trying to make M & G Prudential into simply a fund manager and want rid of the annuities which do not fit that model. Maybe they will hand them over to another consolidator in due course. I guess if there sufficient reserves to go with them either Phoenix or Chesnara might be happy to take them but the Pru might have to sweeten the deal. Or of course they might get leave on appeal to transfer them to Rothesay after all.

Dod

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Re: Prudential PLC (PRU)

#247743

Postby scrumpyjack » August 29th, 2019, 11:32 am

As the Pru have already reinsured these annuities with Rothesay, it is probably difficult to undo that and then transfer them to another more robust insurer.

I assume a 'Part VII transfer' (which the Court refused) is in effect a novation of the policies (ie the insurance contract is transferred to Rothesay and it is as if it was always with Rothesay - Pru is off the hook completely).

The Pru are still on the hook if Rothesay became insolvent, but otherwise not liable for them, though it is possible they will need to allocate some capital to cover the potential liability for regulatory purposes.

I guess the policies legally will stay with whatever part of the current Pru wrote the policies. It will not be up to the Pru to choose whether they are part of the new M&G Pru or part of the new Asian Pru.

The advisers who arranged the Rothesay deal must be looking a bit silly now?

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Re: Prudential PLC (PRU)

#247962

Postby Dod101 » August 30th, 2019, 6:56 am

Scrumpyjack is correct. The fact that Pru chose to reinsure those contracts with Rothesay (or any other reinsurer) does not absolve them from liability and responsibility to ensure that the annuitants are paid. The reinsurance is an internal, behind the scenes arrangement which should enable Pru to hold fewer reserves against the liabilities than if they held the annuities without reinsurance. Now that the Court has shown (at least by implication) some unease with the reinsurance arrangements though, I wonder if that means that the Pru's regulator will ask Pru to increase those reserves a bit or even disregard the reinsurance altogether?

Pru have said that they are going to appeal the judgement so it is not over yet but I would think that it would be a brave new judgement to overturn the current situation, erring on the side of caution and all that.

If Pru had got the Court's approval for the transfer they would have been off the hook totally. Very often these Part VII transfers are internal such as happened often with Phoenix Holdings where they were originally an agglomeration of smallish life assurers and they did a lot of internal transfers of liabilities to enable them to close down a number of individual funds into one main fund, thus saving on admin by winding up a number of those companies once the transfers had been completed.

Dod

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Re: Prudential PLC (PRU)

#247985

Postby Arborbridge » August 30th, 2019, 9:29 am

It seems to me, that if one had signed up for a cruise with the Queen Mary to to New York, one would feel a bit short changed if you were then told it would be aboard the HMS Pinafore.

I can quite see why the court might not have been happy. Whether the fears are real, I don't know, but would I have signed up with a company called Rothesay of which I had never heard? Certainly not - I would probably have signed up after much hand wringing or research to a trusted name, not a no-name.

Arb.

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Re: Prudential PLC (PRU)

#247991

Postby 88V8 » August 30th, 2019, 9:53 am

Mmm, I posted this as a new topic in HYP Practical, thinking about the implications for Phoenix and Chesnara if the Court is inclined to block future transfers because annuitants hadn't given consent.
Didn't consider the effect on the Pru. My only contact with them was many years ago playing chess in their Holborn office as part of the Insurance chess league.

Time will tell whether it does have potential impact on the portfolio transfer market as a whole. Perhaps as Arb suggests, impact on the smaller players.

V8

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Re: Prudential PLC (PRU)

#253871

Postby daveh » September 25th, 2019, 3:18 pm

More info on the M&G demerger and the future dividend info can be found on the HYP-practical board here:
viewtopic.php?f=15&t=19036&p=253869#p253869

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Re: Prudential PLC (PRU)

#256710

Postby richfool » October 9th, 2019, 7:25 am

I thought this might be of interest. NG are transferring pension risks to Rothesay, and Prudential are appealing the court decision against them doing so:

https://uk.finance.yahoo.com/news/natio ... 03128.html

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Re: Prudential PLC (PRU)

#256987

Postby Alaric » October 10th, 2019, 5:31 pm

Private Eye 1506 has an angle on this.

It claims that some of Rothesay's underlying assets are Ground Rents whose income is perhaps not as risk free as might be appropriate for backing annuities, thus going some way to explain the High Court decision to block the transfer.

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Re: Prudential PLC (PRU)

#257814

Postby scrumpyjack » October 14th, 2019, 4:33 pm

Hasn't been much publicity on this but as I understand it Pru holders will get a dividend of 3.85p next Monday (21st October) at the same time as they get 1 M&G share for each Prudential share. It appears to go xd on thursday 18th Oct. It is described as a 'demerger' dividend.

I don't know what the ticker code for the M&G shares will be (MAG ?)

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Re: Prudential PLC (PRU)

#257841

Postby richfool » October 14th, 2019, 6:42 pm

scrumpyjack wrote:Hasn't been much publicity on this but as I understand it Pru holders will get a dividend of 3.85p next Monday (21st October) at the same time as they get 1 M&G share for each Prudential share. It appears to go xd on thursday 18th Oct. It is described as a 'demerger' dividend.

I don't know what the ticker code for the M&G shares will be (MAG ?)

Scrumpyjack, thanks for this info.

I must say I would have preferred to continue holding the Far Eastern insurer version of PRU. :( I might even have topped up, had that been the case.

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Re: Prudential PLC (PRU)

#257889

Postby scrumpyjack » October 14th, 2019, 9:43 pm

Post demerger Pru will be far east only won't it? You can then sell the M&G holding which represents the UK bits.

Pru will I think then account in USD and, if they've any sense, move their domicile elsewhere to avoid the possibility of a Corbyn government confiscating 10%.

I will probably sell M&G post demerger even though that will trigger a CGT bill.


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