It has been more than 2 years and finally, Prudential finally got their hands on AIA, an arm of AIG, who was bailed out by US Government bails with $85 billion loan in 2008
March 1 (Bloomberg) — American International Group Inc. agreed to sell an Asian life insurance unit with 20 million customers to Prudential Plc for $35.5 billion in the company’s biggest divestiture since it was bailed out by the U.S.
Prudential, Britain’s biggest insurer, will pay $25 billion in cash and $10.5 billion in stock and other securities for AIA Group Ltd., the London-based insurer said in a statement today. The insurer said it plans to raise $20 billion in a rights offering and sell about $5 billion of bonds to finance the cash part of its offer.
The sum raised in the sale would exceed the total of more than 20 other deals announced by AIG since its 2008 rescue. The firm had planned an initial public offering for the unit after an auction of the business previously failed to turn up bids that matched what AIG executives thought the company was worth. That included a bid from Prudential that valued AIA at about $15 billion, according to a person with knowledge of the matter.
Read the full story at Bloomberg.
How about AIA Policy holders? I think there is no need to panic and all the policies should be in tact. This is just like the many reshuffles in business world we have seen after financial crisis but in a larger scale.
The action also shows Prudential’s determination to be rooted in Asia, follows her recent buying over of UOB life.
However, people might want to be more careful now as I personally feel Prudential is very aggressive in taking over the management.This can be seen that within one month of acquiring, they have changed the name of UOB Life to Pru Life Assurance Ltd. They may or may not want to keep the AIA brand name even though AIA, the name, has 90 years remarkable goodwill here.
So, policyholders might be affected by the way the how business is run, how the claims are handled, etc.
As for American Home Assurance Company, now re-branded as Chartis, this buy over probably has no impact to the them as the deal is only for Life Insurance Unit.
It is really a pity that all the efforts AIA staff have put in to re-brand the company. After all, it is just business. Now, let’s see what is going to happen, stay tuned….