THE man from the Pru is heading for Asia, and he’s right to. If Tidjane Thiam snaps up AIG’s Asian operations – a deal his predecessor Mark Tucker failed to ink – Prudential will become the biggest player in the Asian insurance market.
It already books over a third of sales in the region, and has been quietly cobbling together a series of joint ventures and bolt on acquisitions to boost its presence there. Buying AIA, which has 20m policyholders and $2bn of annual operating profit, would be transformational.
Sales of insurance policies – especially life assurance ones – are set to surge in countries like China and India. In China, hundreds of millions of citizens will cross the $10,000 income threshold by 2012, according to McKinsey, creating a huge pool of customers who can afford life insurance.
In the UK, the life insurance penetration rate is 13 per cent while Japan’s is 8.3 per cent. In India and China it is far lower, around four per cent and two per cent respectively. That leaves huge potential to grow sales; McKinsey estimates that 40 per cent of growth in the life assurance industry will come from Asia, while the compound annual growth rate in China will exceed 15 per cent for the next five years. With markets at home maturing, Thiam’s decision to look east for inspiration is sure to pay off.