Redomiciling still an option for dissatisfied Prudential

Prudential may still relocate outside the European Union as its lobbying campaign to alter Solvency II rules has failed to make a breakthrough thus far, according to Reuters.

The British insurer first suggested in February that it might redomicile if the EU did not recognise America's insurance regulations as on a par with the Solvency II regime.

This would force Prudential's lucrative US business, Jackson National Life, to hold more capital than local rivals to meet Solvency II's tougher requirements, making it uncompetitive.

 "We cannot say the issue is behind us. We hope for the best, but we do have to have some contingency planning in place," chief executive Tidjane Thiam is quoted as saying, adding that Prudential is likely to move to Asia if it does not win concessions.

"What we want them to say is that the US has a good solvency regime so that we don't have to change the way we run our business," Thiam said. "They can resolve this with the stroke of a pen."

Solvency II, due to come into force in January 2014, poses a similar threat to other European insurers with major US operations such as Allianz and Axa.

No decision has yet been taken on whether US regulations are equivalent with Solvency II, and companies affected are expected to get a five-year grace period if the issue has not been settled by the implementation deadline.