Prudential Jumps on Ping An Stake-Plan Report

Shares in British insurer Prudential jumped over 10 percent on Wednesday after Ping An was reported to be close to taking a $13.8 billion stake in it amid mounting talk China's insurers are looking to invest in western peers.

A report in Chinese business newspaper 21st Century Business Herald said it was likely that Ping An would invest 100 billion yuan to take a non-controlling stake in Prudential, citing an unnamed source.

It also quoted an unnamed senior Prudential executive in Asia as saying he believed "it would be acceptable" for Ping An to buy a minority stake in Prudential.

Prudential declined to comment.

Ping An spokesman Sheng Ruisheng said: "We have no information which should be disclosed according to exchange rules, that we have not already disclosed." He declined to comment further.

Speculation that Ping An or its domestic rival China Life could target Prudential or other western firms has swirled in recent months.

"The company (Ping An) and China Life have both said they are looking to invest in Europe and the U.S. but I think this is very speculative," said Tim Young, analyst at Collins Stewart.

Ping An said at the weekend it wanted to raise $22 billion, which stoked speculation about potential acquisitions, including buying stakes in Prudential and UK rival Aviva.

Prudential shares were up 1.6 percent at the close. Aviva rose 2.4 percent.

Ping An is 17 percent owned by UK-based bank HSBC and bought a 4.2 percent stake in Belgian-Dutch financial services firm Fortis late last year.

It makes sense for Asian insurers to looks at stakes in western firms as talk of growth in the Asian pensions market has been overdone in comparison to growth prospects in the west, Young said.

"There are some critical issues facing the west at the moment and some form of transition to private funded pensions is pretty well inevitable. Given the weakness of valuations in European insurance at the moment this is a great in-point," he said.

Mark Tucker, Prudential chief executive, told CNBC that he intended to continue to focus investment in Asia and the United States, and he would consider bolt-on acquisitions in the U.S.