Posted on Mar 17, 2010 by Sergio Ulloa
Once the ink dries on the deals for AIG to divest American Life Company (ALICO) and American International Assurance Company (AIA), there will be a stakeholders shift in the Life Market in Asia, as observed by market analysts.
Since the effects of the global financial crisis started to be felt over a year ago, there has been a transformation of the insurance markets in Asia, with the sale of American Life Insurance Company to MetLife Inc.
and the purchase of AIA Group by Prudential plc
becoming the most recent adjustments in the Asian markets.
It is envisioned that the acquisition of Alico by MetLife in Japan will bring about a refreshed competitive environment for both local and foreign players in the Japanese life insurance market. This latest deal by MetLife together with the IPO next month of Dai-ichi Life's stock may exercise some pressure to the leading life insurers such as Nippon Life Insurance Co. Ltd., Sumitomo Life Insurance Co. and Meiji Yasuda Life Insurance Co. to consider their strategic alternatives.
The combination of MetLife and Alico in Japan is likely to produce innovative life products that meet the demands for savings and long-term care for their ageing population and transitioning demographic. Foreign players entering the Japanese market are well positioned to introduce new savings products, something that the local insurers must factor in whilst drafting their new competitive strategies.
In general, the competitive landscape of the Asian insurance market has been altered by the financial tsunami. One of the noticed effects in the Japanese market is that local insurers have gained a larger share at the expense of the portion of business held by foreign insurers disposing of their Asian operations, as exemplified by the acquisition made by MetLife. Likewise, Prudential is now well positioned to gain market share in the rest of Asia, following the acquisition of AIA.
Increased global reach will be another positive impact for MetLife, increasing its presence from 17 to 64 countries as a result of its Alico acquisition. MetLife move into the top-five tier in many emerging markets including Latin America, the Middle East, Central and Eastern Europe among others.
The integration of Alico into MetLife is scheduled for completion towards the end of this year. The majority of employees currently working for Alico will be retained, in favour of a smooth integration process into MetLife.
Insurance Companies mentioned:
American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Paris and Tokyo.
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.
Alico provides a broad and innovative range of insurance and savings products to individual customers, corporate clients and high net worth customers. With products to support every aspect of their customers' lives, and provide comprehensive cover for the employees and commercial needs of their business clients.
Possessing over 140 years of insurance expertise, MetLife aims to be an innovator in the field of international Life insurance. Globally, MetLife is able to offer its clients accident and health insurance, life insurance, disability income protection, and retirement and savings products.
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.