Tata AIG in focus after Pru's Asia buy

05-Mar-2010

UK Insurer Acquires AIG's Life Business In Asia

PRUDENTIAL of the UK has agreed to buy AIG's Asian life business for $35.5 billion, raising hopes of a host of foreign insurers waiting to partner the Tata Group in its Indian life insurance business in which the troubled US insurance giant owns a 26% stake. Indian regulators have made it clear that Prudential - which already has a 26% stake in a life insurance joint venture with ICICI - would not be able to keep a foothold in both, making it almost inevitable that the Indian business would not be part of the deal announced on Monday.

ICICI Prudential Life Insurance is India's largest private insurance company in terms of assets and total premium and is a rival to Tata AIG. India's Insurance Regulatory and Development Authority (IRDA) has rules in place that bar a promoter from owning shares in more than one insurance company. On Monday, Prudential CEO Tidjane Thiam was quoted by Bloomberg as saying that regulators have said the company would not get two licences in India. Foreign insurance companies that may be interested in joining the Tatas include German insurer Ergo, which aborted a tie-up with the Munjals of the Hero Group last year. Others understood to be interested in the life insurance business in India include US insurer Liberty Mutual, which is said to be in talks with Reliance Life, and other insurance companies from Korea and Japan looking to enter the market.

The Tatas have the option of buying out AIG, if it decides to exit or is acquired. Most senior industry officials contacted by ET expected this to be the likely course of action, giving the Tatas an opportunity to later bring in another partner at a sizeable premium. When contacted, a Tata spokesperson said: "Any comment will be made after studying the statement made by AIG in the US. For Tata AIG, it is business as usual."

Source : www.insuremagic.com