AMERICAN International Assurance Company Limited (AIA) in Brunei has sent out notices to all its clients that there will be no changes in its operations and products arising from the sale of the company to Prudential.
According to the AIA notice sent out on Tuesday, Prudential is aiming to purchase AIA from AIG for an estimated US$35.5 billion, subject to the British insurer’s shareholder approval, regulatory approvals and customary closing conditions.
No other confirmations on the matter are expected until later in the year. No one at the AIA Brunei offices was available to comment further.
The notice from AIA Brunei assured clients that there are currently “no changes to the policies with AIA and that all policyholder obligations will continue to be honoured”.
A woman walks inside the AIA office in Bandar Seri Begawan. Picture: BT/Rudolf Portillo
Britain’s Sky News television reported recently the Prudential was planning to raise cash to finance the purchase by a share sell worth about £15 billion, which would make it one of the biggest fundraising ever by a British company. Talks had already begun with existing Prudential shareholders, it added.
US insurance giant AIG reported a fourth quarter net loss of US$8.9 billion, better than the worst of market fears, as it strove to repay a multi-billion-dollar taxpayer bailout. AIG said the loss stemmed mainly from charges tied to paying down its debt from the bailout, that eventually ran into US$180 billion, and boosting commercial insurance reserves.
Other news sources such as Reuters have reported that one of the effects of the marriage between the two insurance giants could mean job losses in Singapore and Malaysia.
The two companies would have an estimated US$95 billion in policyholder reserves and market leadership in eight markets including China, and a No 2 position in India in a region that is a growth hub for insurers. But reports noted that while it may look “a perfect fit”, there are integration risks and, for employees, the operational overlap, especially in some Southeast Asia markets, could trigger job losses.
“Synergies in Singapore and Malaysia will have to come from cost cutting since both firms already have large market share,” a former CEO of an insurance company in Asia was quoted as saying by agency reports.
A recent report also stated that the AIG executives were in Asia to meet the Asia staff and that sources have claimed that any job losses from Prudential Plc’s planned US$35.5 billion acquisition of the American International Group’s Asian insurance arm will be mainly in back-office operations and not among sales forces, the companies’ chief executive officers told staff in Asia.
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