Prudential is combining its UK savings and investments businesses to create a single entity to be called M&G Prudential.
The combined business will manage £332 billion of assets for six million customers.
The tie-up of the UK life and pensions business is the latest move to rationalise the savings and investments sector and comes just ahead of the merger of Standard Life and Aberdeen Asset Management on Monday.
Prudential will save £145 million a year by 2022 and it will have 7,300 employees in the UK.
Chief executive Mike Wells said: “M&G and Prudential UK & Europe have a long history of collaboration and we are fortunate to have two highly respected brands.
“Combining these businesses will allow us to better leverage our considerable scale and capabilities.”
M&G, bought by Pru in 1999, currently has nearly 2,100 staff in the UK, while the life and pensions division employs more than 5,200.
M&G Prudential will be led by John Foley, current chief executive of Prudential UK and Europe, while Anne Richards, the former chief investment officer at Aberdeen Asset Management, will continue to head up M&G.
Richards and Clare Bousfield, who leads insurance for Prudential UK and Europe, will become deputy chief executives of the combined business.
Ms Richards said: “This is an exceptional opportunity to bring together M&G’s extensive investment capabilities and Prudential UK&E’s expertise in balance sheet management.
“It will enable our investment teams to offer their expertise to a wider range of customers and across a broader range of investment and savings formats, while continuing to provide our current clients with the same high level of service.”
Shareholders are expected to contribute £250m towards investment to accelerate the combined group’s “transformation into an efficient, service-led, digitally-enabled business”, and in turn will benefit from cost savings of around £145m per annum by 2022, excluding revenue synergies.
Pru said it will also be investing in the newly merged UK arm, with plans to “develop and fund joint product propositions and to build new digital service and distribution to meet fast-changing customer needs”.
Wells added: “In recent years, we have seen a convergence in the investments and savings markets, with customers across all geographies and demographics demanding more comprehensive solutions to their financial needs.”
The plans were announced alongside Prudential’s half-year results, which showed its fast-growing Asian business once again led profits higher, with overall operating profits up 5% to £2.4bn for the six months to 30 June.
In the UK, operating profits edged 1% higher to £480m.
Insurance analyst Eamonn Flanagan, at Shore Capital, said the UK business merger “makes enormous sense.”