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Opinion: why Asia is abuzz over AIA sale

Date: 03 Mar 2010

UK life assurer Prudential plans to raise US$21 billion in a rights offering to help it to buy Hong Kong-based AIA. Whether the deal goes through or not, it is set to have widespread ramifications for Asia’s insurance sector.

Keywords (click to search): [Opinion] [AIA] [insurance sector] [Asia]

Richard Morrow
The revelation that the UK’s life assurer Prudential was on the verge of buying Hong Kong-based AIA caused a flurry of anticipation in Asia.

And on March 1, Prudential confirmed that it would buy AIA’s entire issued capital for US$35.5 billion in cash and stock. Provided the consolidation proceeds, it would create a regional insurance powerhouse strides ahead of any international competition.

In many Asian markets it’s either AIA or Prudential that is already the largest foreign insurance company. Match their capabilities and they look like formidable competitors in almost every major Asian country.

In China, Singapore, Malaysia, Thailand and Vietnam alone the two make up more than a quarter of the international insurance industry.

But it’s not a done deal, yet. Prudential’s biggest problem is finding the financing for an acquisition. The company looks set to conduct a colossal US$21 billion rights issue, but...

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