Pru eyes move for AIG's Asian assets

PRUDENTIAL, the UK's largest life insurance group, is set to bidGBP 15 billion to buy Asian assets put up for sale by AIG.

The Pru yesterday declined to comment but is expected to issue astatement on talks in the coming days, possibly this morning. Andunconfirmed reports from new York last night said that the USinsurance giant's board had approved the sale

Chief executive Tidjane Thiam is understood to be in New Yorkholding talks about a bid with AIG's board.

A deal could lead to a major carve up of the insurance sector,amid reports that the Pru is holding separate talks about sellingits UK business to Clive Cowdery's Resolution.

Founded to consolidate UK insurance assets, Resolution boughtFriends Provident last year, but has since failed to land any deals.

An acquisition of AIA, AIG's Asian business, would transform thePru into an insurance powerhouse across the region, where growth ismuch stronger than in Europe. The Pru already has 11 millioncustomers in Asia, and in 2008 - the last figures available - theregion accounted for more than half of its GBP 1.3bn new businessprofits.

AIG - the shirt sponsor of Manchester United - has beenconsidering floating its Asian business in a bid to repay some ofthe money pumped into it by the US government. The firm was savedfrom collapse in 2008, with US authorities injecting about GBP120bn.

AIG had racked up huge losses on toxic derivative deals, but theWhite House decided the business was too important to the US economyto be allowed to fail.

In return, the US taxpayer received an 80 per cent stake in thestricken company.

A year ago, AIG posted a dollars 61.7bn (GBP 43.87bn) loss forthe final quarter of 2008, the biggest quarterly loss in UScorporate history. Last Friday, it reported a much smaller loss ofGBP 5.8bn for the last three months of 2009.

It warned it might need to ask the US government for more funds,although it has made similar statements in previous announcements.The group also raised the possibility of a series of disposals,revealing that it was "engaged in productive discussions with thirdparties" about "a number" of possible deals.

Earlier reports from New York over the weekend claimed a dealwith the Pru could be announced as early as this week.

Most of the proceeds of the deal are expected to come from thePru issuing new shares, which may lead to one of the UK's largestever rights issues.

The company may use proceeds of a sale of its UK business toResolution, although the AIG deal is not thought to be linked totalks with Cowdery, who is believed to have discussed such a deal inthe past with the Prudential.

Meanwhile, Citigroup has denied it is looking to offload its Egginternet bank, just three years after buying it from Prudential forGBP 546 million.

The US bank had reportedly held talks with trade buyers and aprivate equity firm over the potential sale, which would see itvirtually pull out of the UK retail banking market altogether. Itbought Derby-based Egg - the world's largest internet bank - inearly 2007 before the credit crunch and recession struck.