Prudential’s move to buy AIG’s Asian operation this week has left advisers questioning its commitment to the UK market even though Pru’s chief insists it will remain a “key” area.
The firm announced a deal this week to buy AIG subsidiary AIA for £23.5bn and merge the businesses in a bid to become a leader in the Asian insurance market.
It plans to raise £14bn through a rights issue. Pru’s shares fell by 12 per cent to close on Monday at 530p. Fitch Ratings warned there are considerable risks involved in such a large transaction which could put negative pressure on its ratings.
Resolution put an end to speculation that it was in discussions with Prudential over the acquisition of its UK business.
Pru group chief executive Tidjane Thiam said the UK market remained “key” to the group’s aim of generating sustainable, increased shareholder value.
Syndaxi Chartered Financial Planners managing director Rob Reid says: “The acquisition will stop any significant investment in the UK business, which could have an impact on service.”
Informed Choice managing director Martin Bamford says: “I am sure they would always say they are committed but only time will tell.”
Bamford adds that Prudential as an IFA brand is not as strong as it has been in the past.
He says: “We do not see them being particularly active in the IFA market at the moment compared with a number of other providers.”
Reid adds that consolidators such as Resolution do not have such easy pickings in the life sector as they used to.
He says: “There are not the same opportunities as the companies are better run. In the early days, they could sweep up the basket cases, so whether there is the same ability to make money on deals I am not entirely sure.”