Posted on Mar 04, 2010 by Sergio Ulloa
The Insurance Authority of Hong Kong is said to be analysing the potential impact to the local insurance market resulting from the combination of AIA and Prudential
. Of particular interest, whether this deal could diminish the choices of insurance products and services in the market, and what impact would it have on policyholders of the two insurance companies.
In the view of the regulator, Hong Kong currently enjoys an adequate supply of service providers and wants to make sure that the principle of "fair competition" is maintained after the intended sale. The proposed sale of AIA to Prudential (estimated at US$35.5 billion), is subject to clearing the hurdles imposed by shareholder and regulatory approvals.
Assuming there are no policies surrendered, it is estimated that by combining the market share of both companies they would control approximately 21% of the life insurance market, which may impact the dynamics of competition and cause a wave of redundancies, hurting confidence in the insurance industry in Hong Kong.
Whichever the outcome of this proposed merger, the Insurance Authority of Hong Kong aims to secure that the field remains levelled and the sense of fair competition in this industry is not affected.
Insurance Companies mentioned:
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide.