Posted on Feb 07, 2011 by Sergio Ulloa
Prudential Financial Incorporated has announced the finalization of transactions for the acquisition of AIG's Japan-based insurance companies - AIG Star Life Insurance and AIG Edison Life Insurance Companies.
The US insurer's take-over of AIG Star Life Insurance and AIG Edison Life covers the purchase of both companies for a total price of approximately US$4.8 billion. This is comprised of US$4.2 billion in cash and US$0.6 billion in third-party debt. The deal has been under discussion since September 2009.
Speaking on the completion, John Strangfeld, Chairman and Chief Executive Officer of Prudential Financial said:"With the successful conclusion of this transaction, we look forward to maximizing synergies and realizing the benefits generated by our greater scale to further enhance our services and strengthen our competitive position in this market. This will enable us to bring our products and services to more customers in Japan. The addition of the Star and Edison operations solidifies Prudential's status as the top foreign life insurance company in Japan based on in-force policy values. "
The take-over will see AIG Star Life Insurance and AIG Edison Life Insurance operate as subsidiaries of Gibraltar Life Insurance - a Prudential Financial life insurance company already operating in Japan. Now the deal has been finalized - subject to local regulatory approval - Star Life and Edison Life bancassussurance operations will be integrated with Prudential Gibraltar Financial Life Insurance (PGFL) bancassurance channels in Japan immediately, with full cut-over of the Star Life and Edison Life core businesses by early 2012.
With the completion of the acquisition, Toru Matsuzawa, previously vice chairman of PGFL has been named president and CEO of Edison Life; Star Life will continue to be led by current president and CEO Norio Tomono.
Prudential Financial has confirmed that existing policyholders with AIG Star Life Insurance and AIG Edison Life will not be materially affected by the change in ownership.
The capital raised from the sale of AIG's two Japanese life businesses will be used towards paying back the bailout loan of US$182 billion received by AIG from the US federal government in 2008 in order to save the international insurer from financial insolvency as the worldwide collapse of financial institutions took hold. AIG and the US government recently agreed terms for the insurer to pay back the remaining US$21 billion owed
The New York based insurer AIG has stated that it will continue with its other Japan-based operations in order to provide continued access to the second largest insurance market in the world.
In addition to the completed sale of the two Japanese ventures, AIG is currently working towards selling its Taiwanese life insurance business - Nan Shan
- in a bid to raise further capital as part of the repayment process to the US government. AIG has already sold its Alico brand to US rival insurers MetLife
as part of its divestment strategy and long-term profitability.
Insurance Companies Mentioned:
Prudential Financial Inc
Prudential Financial Inc. is a financial services leader, with approximately US$750 billion of assets under management as at September 2010. Prudential Financial operates in the United States, Europe, Latin American and Asia, with approximately 42,000 employees worldwide
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.