Prudential PLC, the British financial services company, is in talks with the American International Group (AIG) over a potential deal for AIG’s big life insurance business in Asia that could be worth more than US$30 billion, people briefed on the matter said on Saturday.
A deal for the division, American International Assurance (AIA), could come as soon as the middle of this week, the people who were briefed said, noting that the talks were continuing and might not lead to a transaction.
AIG has been planning an initial public offering of the division, based in Hong Kong, to help repay the more than US$180 billion in bailout money the company has received from the US government. The Federal Reserve Bank of New York, which owns a stake in AIA, is set to receive about US$16 billion from any sale or spinoff of the division.
AIA has long been considered one of AIG’s crown jewels, a prestigious operation with roughly 20 million policyholders throughout Asia. Analysts have said that a public offering of AIA could value the business at well over US$20 billion.
If an alternative deal were struck with Prudential, it would be the largest in the British company’s 162-year history. It would also make Prudential, which is not related to Prudential Financial in the US, the biggest issuer of life insurance policies in Asia.
The company already draws a majority of its revenue from Asia, with more than 11 million policyholders in 13 markets there.
Prudential and other companies had expressed interest in acquiring AIA last year, only to be rebuffed because AIG was seeking a higher price than they were offering.
But acquiring AIA could place some strain on Prudential, whose market value as of Friday was about £15.3 billion (US$23.3 billion). Prudential may need to resort to a big sale of new shares to help finance the deal.
Even as Prudential’s talks with AIG continue, other insurance companies and deep-pocketed investors like sovereign wealth funds could make their own bids for the business, the people briefed on the matter said. But the universe of other acquirers is considered small.
Edward Brewster, a spokesman for Prudential, and Christina Pretto, a spokeswoman for AIG, declined on Saturday to comment on the talks.
News of the talks was first reported by the British television channel Sky News.
AIG was also in talks to sell another life insurance unit, the American Life Insurance Company, to MetLife for about US$15 billion, people briefed on the matter said. Those negotiations have been stymied over a tax issue that requires resolution from the Internal Revenue Service, those people said.
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