Prudential last week fuelled speculation of a break-up after saying it was merging its UK asset management and life insurance arms to form M&G Prudential. The announcement came alongside the company’s first half results, which showed the Asian operations continued to drive growth.
L&G wants to bulk up its portfolio of closed books of annuities that pay a fixed income for life following its £3bn acquisition of Aegon’s annuity business last year.
A spokesman told The Telegraph that L&G will look at Prudential’s annuity division once a formal process kicks off.
“It’s well-known we’re looking to add back-books as part of our growth strategy, [but] as yet there is no formal process to the sale,” he said. “If there is, we’ll look at it as we do every other asset that comes to the market.”
The move would involve the transfer of thousands of policyholders to a new provider and help the company to fend off competition.
The Sunday Times reported that L&G has already put money aside for a bid when Prudential’s annuity business is officially put up for sale.
Prudential last year said it was exiting the annuities market as regulatory changes and low interest rates have deterred customers and insurance firms. Under new laws since 2015, retirees no longer need to use their retirement savings to buy an annuity, while low interest rates have made annuity price unattractive for buyers.