Published by Asia Asset Management – 13th Aug 2018
China’s Ping An Insurance is considering acquiring UK-based insurer Prudential Plc’s business in Asia, according to a Bloomberg news report.
Citing people familiar with the matter, the August 8 report says the Shenzhen-based insurer has reached out to the Chinese government on whether it would be supportive of a deal, and has also discussed potential financing options with banks.
According to the report, deliberations are at an early stage and Prudential has not been approached.
Spokespersons for Ping An Insurance and Prudential did not immediately respond to requests for comment from Asia Asset Management (AAM).
A fund manager at a European insurance company believes it would be hard to close the deal because “it may be challenging for both parties to agree on the price”.
“Prudential is not going to give up its presence in Asia without an astronomical price tag,” the Singapore-based fund manager tells AAM, speaking on condition of anonymity. “Prudential has been building its presence in Asia for many decades. On top of that, the region’s insurance industry is still at the booming stage and the market is not even close to saturation.”
Nic Nicandrou, chief executive of Prudential Corporation Asia, told AAM earlier this year that the company is committed to grow its business and presence in Asia.
He described the Asian insurance industry, particularly in China, as “pretty much untapped” and said Asia presents a “multi-decade opportunity” because the market is underserved and comprises a growing number of middle income earners and millennial’s.
“Today, six out of the ten policies we sell are to first time buyers. This is the size of the opportunity,” Mr. Nicandrou said in the AAM interview in March.
The market capitalisation of Prudential and Ping An Insurance was £47.27 billion (US$60.42 billion) and 1.28 trillion RMB (US$187.45 billion), respectively, on August 10.
