Prudential 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 U.S. insurance regulations could force it to hold billions of pounds of extra capital against its U.S.-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. No decision has yet been taken on whether U.S. capital rules for insurers are compatible.
Prudential generates 45 percent of its 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 $35 billion (22 billion pounds) bid to buy local rival AIA, a deal which would have doubled its size in the region.
Prudential will confirm it is reviewing its domicile in its 2011 annual report.
Solvency II is designed to make insurers hold capital reserves in strict proportion to the risks they underwrite, and is expected to lead to an increase in capital requirements for many insurers.
(Reporting by Myles Neligan; Editing by Elaine Hardcastle and Marguerita Choy)