A minority initial public offering of Jackson is planned for the first half of 2021, with "full divestment over time", Prudential said in a statement.
Prudential's shares jumped 4% as investors cheered news of the exit plan, after many had urged the company to follow in the footsteps of fellow insurers Standard Life and Old Mutual, which have both split up their operations in recent years.
Prudential spun off its European funds unit M&G last year.
Reuters reported earlier this year that Prudential was considering a divestment of Jackson.
Pressure had built on the insurer after U.S. hedge fund Third Point took a more than $2 billion stake earlier this year and called on management to split the company in two.
The insurer sold a minority equity stake in Jackson to Apollo Global-backed Athene Holding for $500 million in June, in the first phase of its plan to create an independent U.S. business.
"The separation and divestment of Jackson would transform Prudential into a Group purely targeting the structural opportunities of Asia and Africa," Prudential CEO Mike Wells, a former boss of Jackson, said.
Analysts at Jefferies said a disposal of Jackson would reduce the risk premium currently applied to Prudential, reitrating their hold rating.
Operating profit came in at $2.5 billion, above a forecast of $2.4 billion, according to a company-compiled consensus forecast.
Asia's operating profit was up 14%, but Jackson's profit fell 19%.
Prudential said it was introducing a new dividend policy, aligned to growth in the Asia and Africa businesses.
It said it would pay an interim dividend of 5.37 cents per share, one-third of its expected full-year 2020 dividend.
(Editing by Sinead Cruise)
By Carolyn Cohn