Aviva has warned against Prudential’s Asian bet, claiming evolving regulation in the region will eat into margins.
Chief executive Andrew Moss says growth in Europe opportunities are more attractive. His comments came after Pru unveiled a £23.5bn deal last week to buy AIG’s Asian arm AIA.
Moss says: “As regulation in Europe has developed, it has become more focused on consumer protection. Asia has not gone in that direction yet but may follow the same pattern.
“Two things happen in that environment. The regulator looks at charging customers, meaning margins can change, and can take retrospective action on things it decides were not good for customers.”
Moss cites figures from consultancy Oliver Wyman which suggest that the European market will grow by £1.13trn by 2015 while Asia excluding Japan will grow by just under £1trn.
Aviva’s results last week revealed a dramatic turn-round to a profit of £1.8bn for 2008 on an IFRS basis after a loss of £1.3bn in 2008. On a market-consistent embedded value basis, a firm made a profit of £3.7bn after a loss of £11.3bn.
The firm says the results reflect a recovery in equity markets and its disciplined business management and cost control.
Moss insists the firm is set on growing the business organically but refuses to rule out a bid for Prudential’s UK arm following a plunge in the Pru’s share price after news of its acquisition plans.