Prudential warns new rules may force it to move from UK

The insurer Prudential fears tighter rules on the amount of capital it must hold may force it to move its headquarters out of the UK.

BBC business editor Robert Peston says the company's chief executive thinks there is a risk that new rules emanating from Brussels will damage the value of millions of British people's pension savings.

They could see the Pru leave the UK to protect other parts of its business.

The new rules are called Solvency II.

They will require life insurers and pension schemes to make sure they have enough capital to protect themselves against sharp falls in the market value of their assets, leaving them with less money to invest, potentially damaging the value of people's savings.

A move abroad would protect the Pru's valuable US business from becoming seriously uncompetitive as a consequence of the Solvency ll rules.

Earlier on Tuesday the Prudential revealed its 2011 profits rose by 33% to £1.9bn, up from £1.5bn a year earlier.

The rise was fuelled by strong growth at its Asian operations.

On an operating profit basis, its Asian profits rose by 22%, compared with a group-wide increase of 8%.

Prudential's main Asian life insurance business is now the biggest contributor to the company's profits.

Tidjane Thiam, Prudential's chief executive, said: "Prudential has delivered another strong performance in 2011 led by Asia."

In 2010, Prudential failed in a $35.5bn (£23bn) attempt to buy the Asian business of US rival AIA.

If it had been successful, it would have doubled Prudential's market share in Asia.

However, the planned takeover collapsed following opposition from Prudential's shareholders.