Prudential's $35 billion bid for AIA

[Mdm Tang]

Brothers , what will happen to my AIA policies when PRU

take over ????


http://sg.news.yahoo.com/rtrs/20100228/tbs-business-us-prudential-7318940.html




Prudential's $35 billion bid for AIA depends on Asian markets

Reuters - Monday, March 1.By Myles Neligan and Michael Flaherty



LONDON/HONG KONG - Prudential's bid to buy American International Group's Asian life unit is a bet against Asian stock markets as falling share prices across the region would make the alternative of listing the business in Hong Kong less attractive.

Prudential has been in on-again, off-again talks to buy the unit, American International Assurance , since early last year, with discussions resuming in late 2009, a source involved in the deal said on Sunday.

AIA embarked on its planned Hong Kong IPO last year, when the city's stock exchange was in the midst of the world's largest boom in initial public offerings as Asian markets surged in the second half of 2009, some as much 100 percent.

But so far this year, Asian markets have fallen, dragging down Hong Kong's IPO market, and opening the door for a buyer to swoop on a business seen as AIG's crown jewel.

"AIG is waiting for the markets, really," the source said, referring to the decision AIA's parent company faces: Sell AIA shares on Hong Kong's exchange should the market hold up, or sell the entire company to a strategic buyer if it continues to drop.

The Hong Kong stock exchange is expected to review AIA's IPO application in late March. The expected approval would clear the way for the offering to take place in April or May.

AIG is expected to pursue whichever option raises the most cash, with the proceeds earmarked toward repaying a $182.3 billion government bailout the company received two years ago.

ASIA AMBITIONS

A takeover of AIA by Prudential would make the company the biggest foreign insurer in Asia by far, further increasing its appeal to investors seeking exposure to one of the world's fastest-growing financial services markets.

"I think what it could do is finally put an end to the treatment of Prudential as a UK life company," said Sanford C. Bernstein analyst Toby Langley.

"I think that's something that's dragged on the stock for quite some time."

Buying AIA would increase the proportion of Prudential's profits generated in Asia to between two thirds and three quarters, from about half currently, Langley said.

The mooted deal with Prudential is worth about $35.5 billion, and the British insurer could finance the acquisition by issuing new shares, sources told Reuters on Saturday.

Prudential has also held talks over selling its UK business to British insurance-focused takeover vehicle Resolution if the AIA deal goes ahead, the Sunday Telegraph newspaper reported.

Prudential and Resolution both declined to comment.

Prudential has previously played down suggestions it might sell the UK unit, arguing that the business generates cash which can be reinvested in its faster-growing Asian and U.S. markets.

Analysts reckon Prudential's interest in AIA could prompt rival approaches, with Canada's Manulife Financial or France's Axa both seen as potentially interested because of their ambitions to grow in Asia.

 

[Mdm Tang]

Brothers , got any news on this Bid ????


Is it a done deal already ????


Thanks

 

[Ramseth]

Brothers , what will happen to my AIA policies when PRU

take over ????

They'll just take over your policies. Receive your premiums and payout your claims. This happened before in Singapore. Nothing new, e.g. AXA takeover of John Hancock and Aviva takeover of ICS, if I recall correctly.

 

[Mdm Tang]

http://sg.news.yahoo.com/rtrs/20100228/tbs-business-us-prudential-7318940.html




Last updated 08:05 01/03/2010SharePrint Text Size




American International Group's (AIG's) board approved the sale
To Prudential




American International Group's (AIG's) board approved the sale of its Asian life insurance business to Britain's Prudential Plc (PRU.L) for US$35.5 billion ($50.8 billion) a source familiar with the matter said this morning.

Prudential, Britain's largest insurer, will pay about US$25 billion in cash and the rest in equity, which could include preferred stock, for AIG's American International Assurance (AIA), the source said, declining to be identified because the deal is not public yet.

A deal, in what would be the largest asset sale for insurer AIG, could be announced as soon as Monday, the source said.

Prudential declined to comment. AIG was not immediately available.
AIG, which is nearly 80 per cent owned by the U.S. government and is trying to pay back taxpayers after a US$182.3 billion bailout, had been planning an initial public offering for AIA in Hong Kong, when Prudential jumped in with an offer.

It would be one of the largest overseas deals to date for a British firm and make Prudential one of the biggest insurers in Asia.

Prudential operates in 13 Asian markets where it has more than 11 million life customers. Asia, which accounted for 44 per cent of Pru's profits in 2008, is also seen as the engine of the group's future growth.

It would also help AIG make a significant dent in its outstanding bill from the US government, which has a US$16 billion preferred interest in a special purpose vehicle that holds AIA.

AIG is also in advanced talks to sell another large foreign life insurance unit, American Life Insurance, to MetLife in a roughly US$15 billion deal. Those talks hinge on a tax issue that the two sides are trying to resolve.

So far, AIG has announced more than two dozen deals to sell assets for over US$11.9 billion.


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[Mdm Tang]

Tks Ramseth .



btw say i got 1 Pru Agt


then my aia agt become Pru agt .


now i got x 2 agt at PRU ....


How ? they now know my "holdings " of all policies ...:(

 

[Mdm Tang]

AIG agrees to $35.5 billion unit sale to Prudential: sources



On Sunday February 28, 2010, 9:53 pm


By Paritosh Bansal

NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News) agreed to the sale of its Asian life insurance unit to Britain's Prudential Plc (LSE:PRU.L - News) for about $35.5 billion, in a deal that would help the U.S. government get back billions of its bailout money, sources familiar with the matter said on Sunday.

The board of AIG approved the sale of American International Assurance (AIA) to Prudential, Britain's largest insurer, and the sides are working on finalizing the terms and financing for the deal, the sources said.

An announcement for what would be AIG's largest asset sale since its September 2008 bailout could come as soon as Monday, said the sources, who declined to be named because the deal is not yet public.

Prudential, whose market capitalization is around $23 billion, will pay about $25 billion in cash and the rest in equity, the sources said.

Prudential is planning a $20 billion rights offering, backstopped by Credit Suisse Group AG (VTX:CSGN.VX - News), JPMorgan Chase & Co (NYSE:JPM - News) and HSBC Holdings PLC(LSE:HSBA.L - News), to finance the deal, the sources said.

The $10.5 billion equity component of the deal will include convertible and preferred stock, as well as about $5.5 billion in common stock, the sources said.

It would be one of the largest overseas deals to date for a British firm and make Prudential one of the biggest insurers in Asia. Prudential already operates in 13 Asian markets where it has more than 11 million life customers. Asia, which accounted for 44 percent of its profits in 2008, is also seen as the engine of the group's future growth.

AIG, which is nearly 80 percent owned by the federal government after a $182.3 billion bailout, will pay the Federal Reserve Bank of New York $16 billion from the deal proceeds for the Fed's preferred interest in a special purpose vehicle that holds AIA, one of the sources said.

AIG is expected to use the rest of the money to further pay down the Federal Reserve's credit facility, the source said.

AIG's outstanding balance under the credit facility is about $25 billion. AIG must also repay roughly $45 billion the U.S. government has put into it in the form of equity.

Paying down more of AIG's debt would give a boost to Chief Executive Robert Benmosche, who since taking over in August last year has moved the insurer away from a wind-down mode to preserving and even growing its core franchises.

Benmosche envisions a smaller AIG in the future, with global property-casualty and U.S. life and annuity operations at its core, although the insurer is still struggling to find its feet. AIG posted a quarterly loss of $8.9 billion on Friday.

AIG is being advised by Citigroup (NYSE:C - News) and Goldman Sachs (NYSE:GS - News) on the AIA deal, while Blackstone Group (NYSE:BX - News) is advising the board, the source said. Credit Suisse, Lazard Ltd (NYSE:LAZ - News), JPMorgan and HSBC are on Prudential's side, the source said.

Prudential, JPMorgan and Citigroup declined to comment. AIG and the rest of the banks were not immediately available for comment.

CASH ATTRACTION

Hong Kong-based AIA is regarded as AIG's Asian crown jewel, a 90-year-old business that manages more than $60 billion of assets and provides coverage to about 20 million customers, or close to a third of AIG's total customer base.

AIG had been planning an initial public offering for AIA in Hong Kong, in what was expected to fetch more than $10 billion, depending on the size of the stake that was sold.

A deal now with Prudential will save AIG from the uncertainty of doing an IPO for the unit in what is becoming a tougher market amid falling share prices in the region and competition from other offerings.

Prudential, which has coveted AIA for a while, had been in talks with AIG on and off since at least the January of last year, but it picked up momentum this January after the news of AIG's talks with MetLife Inc (NYSE:MET - News) for another large insurance unit leaked, according to sources.

In the end, the amount of cash being offered under the Prudential deal proved to be very attractive to both AIG and the government, one source said.

At about $35.5 billion, the deal also prices AIA at more than the roughly $30 billion value that a Credit Suisse analyst arrived at in a research note earlier.

AIG is still in advanced talks to sell American Life Insurance Co (Alico), to MetLife in a roughly $15 billion deal. Those talks hinge on a tax issue that the two sides are trying to resolve.

The Fed has a $9 billion preferred interest in a special purpose vehicle that holds Alico.

So far, AIG has announced more than two dozen deals to sell assets for over $11.9 billion.

(Additional reporting by Michael Erman, Editing by Leslie Adler and Diane Craft)

 

[Ramseth]

Usually, insurance computer systems don't allow agents to see data of policies not sold by them or assigned to them for servicing, e.g. you buy one policy from Pru agent A and another policy from Pru agent B. It's the same company, but agent A can only see one policy and agent B can only see the other policy. It's quite usual for policyholders to spread policies over different companies or agents, so that no single one knows everything for privacy concerns, and no single one holds the master key, so to speak.

However, bear in mind that this firewall is not 100% fireproof. Agents are colleagues and sometimes even buddies. They may talk to each other. Supervisors and managers have overriding access to data.

Tks Ramseth .



btw say i got 1 Pru Agt


then my aia agt become Pru agt .


now i got x 2 agt at PRU ....


How ? they now know my "holdings " of all policies ...:(

 

[krafty]

There was this Prudential agent sounded very stuck up,attitude one. He was trying to recruit me but I was in a conversation with a business friend. Immediately, he told me "Thank you for your time!" to imply dun call him back. What fuckup attitude is that?

 

[Mdm Tang]

tks ramseth


will PRU penalty me if i did not declared what i have

with aia . and will aia penalty me if i did not declared

what i have in Prudential ... remember all those Facts Finds Things

and Declaration forms ... ???


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Prudential buys AIG Asia arm for 35bln dlrs: source
AFP - 1 hour 46 minutes ago


LONDON (AFP) - – US insurance giant AIG has agreed to sell its Asian arm, AIA, to British insurer Prudential for around 35 billion dollars (26 billion euros, 23 billion pounds), a source close to the deal said.

American International Group (AIG), which received a huge taxpayer bailout to stave off collapse during the financial crisis, had been persuaded to let Prudential take over its Asian businesses, said the source late Sunday.

The deal will transform Prudential into the world's top non-Chinese insurer by market capitalisation, ahead of major competitors Allianz and AXA.

It is understood the sale will be unveiled in the coming days, perhaps as early as Monday.

The purchase will be financed in cash, through a rights issue by Prudential, and through AIG taking a minority part of the British insurer, said the source.

Tidjane Thiam, who took up the job of Prudential chief executive in October, had never hidden his desire to expand the business in Asia.

The business chief, who has French nationality but was born in Ivory Coast, went to New York at the end of last week to persuade AIG's board to sell American International Assurance (AIA) to his company.

Prudential stepped in as AIG was planning an initial public offering for its Asian arm in Hong Kong in April.

Estimates had valued the market flotation at around 10 billion dollars -- which would have been the biggest of 2010 on global markets.

Prudential's shareholders, for their part, had welcomed the company's projects, said the source.

AIG was forced into giving up some of its assets after the company's near collapse in the depths of the financial crisis led the US government to hand it a bailout which totalled around 180 billion dollars.

In 2008, the firm tried to sell up to 49 percent of AIA through an auction process but had to drop the idea after failing to receive suitable offers. The company then turned to the idea of an initial public offering.

The US giant reported Friday a worse-than-expected fourth quarter net loss of 8.9 billion dollars -- still nearly 10 times less than in 2008, when AIG recorded 99.2 billion dollars in losses.

Prudential will be transformed by the deal to buy AIA, which will double its size. The company, founded in 1848, currently has a market capitalisation of about 23 billion dollars.

Sales in Asia already make up half of new contracts for Prudential across a number of countries including China, India, Indonesia, Malaysia and Thailand.

The takeover also marks a success for Thiam -- who was the first black chief executive of a company listed on London's benchmark FTSE 100 index -- after leaving rival Aviva to join Prudential in 2008.

AIG almost went under in September 2008, unable to meet its obligations for contracts written to insure mortgage securities and related assets without sufficient capital.

The Federal Reserve, fearing a shock to the global financial system in the event of an AIG default, provided a loan of 85 billion dollars to AIG in September 2008 in what would be the first portion of the gigantic bailout.

AIG generated fresh controversy at the start of February when it revealed plans to pay 100 million dollars in bonuses -- a year after similar payments ignited a political firestorm.

"(President Barack Obama) is frustrated and angry that Wall Street continues to have the sense that excessive compensation should reward some of the excessive risk taking we've seen over... the last couple years on Wall Street," said White House deputy press secretary Bill Burton.







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[Ramseth]

tks ramseth


will PRU penalty me if i did not declared what i have

with aia . and will aia penalty me if i did not declared

what i have in Prudential ... remember all those Facts Finds Things

and Declaration forms ... ???

You won't have to declare anything. When Pru takes over AIA, they take over everything, including all your forms.

Good examples are DBS takeover of POSB and UOB takeover of OUB. Accountholders, even credit cardholders who owe them money don't need to do anything. They know everything.

They'll just send you a letter informing the change in ownership and management, then business as usual.

 

[Cestbon]

Just as I expected . AIG will sell part by part of the company. Too much debt need to be clear. Name/brand are badly damage many will not buy AIG insurance worry that I might collape and burnt out all retirement fund that invested for years.

 

[Mdm Tang]

Just as I expected . AIG will sell part by part of the company. Too much debt need to be clear. Name/brand are badly damage many will not buy AIG insurance worry that I might collape and burnt out all retirement fund that invested for years.

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http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_496719.html

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Mar 2, 2010

Prudential to buy AIA By Lorna Tan, Senior Correspondent




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). -- ST PHOTO: AIDAH RAUF




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.

Read the full story in Tuesday's edition of The Straits Times.