Prudential headed for Hong Kong?
Rumors have begun swirling that Prudential is considering moving its headquarters to better withstand tougher capital rules putting increased pressure on its balance sheets.
Like HSBC, which last month was reported to be considering a headquarters move to Hong Kong, Prudential has remained mum on the issue.
Prudential generates 45% of its sales in Asia and has secondary stock market listings in Hong Kong and Singapore.
Its largest division is Prudential Corporation Asia that has over 15 million customers across 12 Asian markets and is among the top three providers of life insurance in mainland China, Hong Kong, India, Indonesia, Malaysia, Singapore, the Philippines and Vietnam.
Banking industry sources said Prudential is concerned a conflict between Europe's Solvency II Directive 2009/138/EC and U.S. insurance regulations could compel it to retain billions of dollars of extra capital against its U.S. subsidiary, Jackson National Life, if it remains based in Europe.
Solvency II Directive is an EU Directive that codifies and harmonises the EU insurance regulation. It focuses on the amount of capital that EU insurance companies must hold to reduce the risk of insolvency. Solvency II is to be implemented in 2014
This extra capital requirement, however, would be waived for countries whose insurance regulations are deemed by European regulators to be equivalent of Solvency II. No decision has yet been taken on whether U.S. capital rules for insurers are compatible.
Prudential is a multinational life insurance and financial services company headquartered in London.