Prudential, Britain’s biggest insurer, is considering moving its headquarters from London to escape tough new capital rules for European insurers, the company said in a statement on Sunday.
The company did not specify where it would move but there has been long-running speculation that Prudential could shift its headquarters to Hong Kong in recognition of Asia’s large and growing contribution to its growth.
Prudential is concerned a conflict between Europe’s Solvency II regime and US insurance regulations could force it to hold billions of pounds of extra capital against its US-based Jackson National Life unit if it remains domiciled in Europe.
“Prudential regularly reviews its range of options to maximise the strategic flexibility of the Group. This includes consideration of optimising the Group’s domicile, including as a possible response to an adverse outcome on Solvency II,” the company said in its statement.
“There continues to be uncertainty in relation to the implementation of Solvency II and implications for the Group’s businesses. Clarity on this issue is not expected in the near term,” Prudential said.
Solvency II, due to come into force in 2014, could force European insurers to hold extra cash reserves against subsidiaries operating in countries that have less exacting capital standards.
This extra capital requirement would be waived for countries whose insurance regulations are deemed by European regulators to be equivalent to Solvency II.