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Prudential could move HQ from London

Britain’s biggest insurer could shift its headquarters to Hong Kong to escape European rules that could force it to hold billions of pounds in extra capital

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.

The company did not specify where it would move to but there has been speculation it 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 mean that European insurers have to hold extra cash reserves against subsidiaries in countries that have less exacting capital standards.

This would be waived for countries with regulations deemed by European regulators to be equivalent to Solvency II. No decision has been taken on whether US capital rules for insurers are compatible.

Prudential generates 45% of sales in Asia, and has secondary stock market listings in Hong Kong and Singapore.

The company uses cash from its mature UK business to fund expansion in the booming economies of southeast Asia, and in 2010 launched an abortive bn (£22bn) bid to buy local rival AIA, a deal which would have doubled its size in the region.

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