Meanwhile, Prudential will include the Asian, US and African operations and retain the listing status in London, Hong Kong, Singapore and NY.
Once the proposed split is complete, Prudential said it expects both companies to be big enough to feature on Britain's benchmark FTSE 100 stock index.
After the merger, shareholders will hold interests in both Prudential and M&G Prudential.
Mike Wells, group chief executive, commented: "Our businesses share common heritage, values and goal".More news: Russia: We will attack United States military if Trump strikes Syria again
Mike Wells, Prudential's group chief executive will lead the worldwide business, Prudential plc.
A spokesman for Prudential told Citywire Selector: 'Eastspring has been a very successful asset manager and will continue to be so for Prudential PLC following the demerger.
The two businesses will have their own distinct investment prospects, the firm said today, with M&G Prudential lined up to be "an independent, capital-efficient UK & Europe savings and investment provider" and Prudential aiming to be a "a leading worldwide insurance group focused on high-growth opportunities in Asia, the United States and Africa".
The transaction which was announced this morning saw life, pensions and longevity re/insurer Rothesay Life providing the reinsurance capacity to back a £12 billion chunk of Prudential plc's annuity book, which was managed under the M&G Prudential brand, as part of a demerger process.More news: Trump fires Tillerson, a moderate; replaces him with hawkish spy chief Pompeo
It will also help the United Kingdom part of the business "continue its transformation into a more capital-efficient and customer-focused business, targeting growing demand for comprehensive financial solutions". As part of that strategy it has agreed to sell a £12bn annuity portfolio to Rothesay Life. It is also subject to regulatory and shareholder approval.
Addy Loudiadis, Chief Executive of Rothesay Life, commented, "I am delighted that Prudential, one of the UK's most respected insurance companies, has chosen Rothesay Life to secure its policyholders' pensions over the long term in a landmark transaction for us and for the industry".
"Looking forward, we believe we will be better able to focus on meeting our customers' rapidly evolving needs and to deliver long-term value to investors as two separate businesses", said Wells. "M&G Prudential's proven investment capabilities and balance sheet management provide an excellent platform from which to serve the demand for comprehensive financial solutions".
M&G Prudential saw "record" flows of £17.3bn, taking its total funds under management to £350.7bn at the end of the period, up 13%.More news: Sunny skies in Boulder today with a high of 55
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