Prudential to buy AIA

Bangulzai SG

BRITISH insurer Prudential is set to dominate the life insurance scene in Singapore and much of Asia after a huge new takeover deal with its origins in the global financial crisis.

Prudential confirmed yesterday that it plans to pay US$35.5billion (S$50billion) to buy American International Assurance (AIA), the Asian life insurance arm of American International Group (AIG).

The deal will allow AIG to pay back some of its US$182.5billion debt to the US government, which bailed out the insurance giant at the height of the financial crisis in late 2008.

As a result of the planned deal, Prudential will become the largest life insurer in Singapore, Hong Kong, Malaysia, Thailand, Indonesia, the Philippines and Vietnam, said its chief executive Tidjane Thiam. It will also become the leading international player in China and India, he said.

In Singapore, the combination of Prudential and AIA will create a powerful giant with a combined agency size of 7,800 insurance agents and more than 3.2million policies.

The merged entity's closest rival here will be local insurer Great Eastern (GE) Life with just 2,700 agents and three million policies. Market observers said it was too early to tell if there would be job losses.

Bangulzai SG

THE long-established American International Assurance (AIA) brand name is not destined for the dustbin of history as a result of Prudential's US$35.5 billion (S$50 billion) takeover of the US giant.

According to British-based Prudential chief executive Tidjane Thiam, who unveiled on Monday his company's acquisition of AIA, the Asian life insurance unit of American International Group will keep on trading as AIA.

'Prudential pursues a multi-brand strategy... Prudential and AIA are fantastic brands built over decades... And we will not destroy a good brand,' he told a phone media conference.

Prudential already operates in the United States where its products are sold under its US arm, the Jackson National Life Insurance Company, which was set up in 1961.

And, in Britain, Prudential's fund management arm operates under M&G Investments, a business founded in 1931 and bought by Prudential in 1999.

However, despite its track record of retaining successful brands, some market observers say that Prudential is likely to do away with the name AIA in the long term - especially if both the Prudential and AIA brands are targeting the same consumer segment in markets such as Singapore.