Prudential has announced an agreement to acquire US insurer’s AIG’s Asian arm, AIA for £23 billion. The deal is likely to make Prudential the biggest insurer in South-East Asia. In a statement the company said the move represented “a highly attractive combination of strong growth and high margins.”
“Asia is complex, dynamic and exciting, and its economies differ significantly, with varying levels of economic development, from the OECD members, Japan and Korea, to the fast growing markets of South-East Asia, such as Indonesia and Malaysia,” the statement continued. “Given our strong presence in this fast-growing and exciting region, and the agreement we announced today concerning AIA, we believe we are uniquely placed to continue to deliver sustained profitable growth for many years to come.
AIG is one of the high profile companies to fail during the credit crunch and subsequent recession, with the US Federal Reserve investing over $182 billion to prevent its collapse. Since then, AIG has been looking to off-load many of its subsidiaries, including AIA.
Commenting specifically on the agreement with AIG, Tidjane Thiam said: “With this agreement we have a unique opportunity to create the leading pan-Asian life insurer. The combination of Prudential and AIA will create a sector powerhouse in the fastest growing markets in the world. This agreement provides Prudential with a one-off opportunity to transform the growth profile of the Group and offers long-term material benefits to our shareholders.”
Thiam continued, “Both parties are committed to a smooth transition process including the commitment to the strong AIA brand and the unique strengths of the sales forces. The combined business will be the largest life insurer in seven major Asian countries, allowing us to continue to create shareholder value through our presence in the world’s most dynamic and attractive markets.”
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