Prudential may quit UK to escape new EU regulations - Sunday Times

(Reuters) - British insurer Prudential PLC (PRU.L) may shift its headquarters from London to Asia to escape new European Union regulations, the Sunday Times reported citing people familiar with the matter.

The so-called Solvency II rules, which take effect in January 2016, aim to ensure that insurers hold enough capital to honour policyholder commitments even when markets turn sour.

The paper, citing analysts, said Solvency II could slash Prudential's reserves from 9 billion pounds ($13.66 billion) to 3 billion pounds.

This may prompt Prudential to sell its British operations or spin them off into a separate listed company and shift its headquarters to either Hong Kong or Singapore, the Times reported.

Asked by Reuters for comment, Prudential said: "We have always said that, as a large, international group, we regularly look at the structure of our business to ensure that it remains optimal. Solvency II will affect less than one fifth of our operations."

Britain's top insurance regulator said in July the country would not use the new EU insurance rules, as the system already has an appropriate amount of capital.

In September, Dutch insurers ASR, Aegon (AEGN.AS) and Delta Lloyd (DLL.AS) warned that their capital buffers would fall sharply under the Solvency II rules, raising concerns over how well prepared the broader European industry is for the rules.

(Reporting by Ankush Sharma in Bengaluru and Carolyn Cohn in London)