Insurance

Pru squeezes its bankers to win over investors

17 May 2010

Subunderwriters of the UK insurer's $21 billion rights issue will receive a generous 200 basis point fee. That leaves less cash for the Pru's bankers, who are also backing a 1 billion pound emergency credit line. But if shareholders are won over the sacrifice may be worth it.

Pru’s Asian deal stretches investor tolerance

17 May 2010

The UK insurer has tweaked the terms of its delayed $35.5 billion takeover of AIG's Asian operations, and upped its estimate of the deal's financial benefits. The changes have eased the UK regulator's concerns. But they offer little reassurance to Pru's sceptical shareholders.

TPG shows why private equity bothers with China

14 May 2010

The U.S. buyout firm has made a 16times return on its 2004 investment in Shenzhen Development Bank, illustrating the potential gains on offer in China. But managing investments is labourintensive, as rival Bain has found. And exiting well requires more than a pinch of luck.

Pru deal delay shows regulatory shift on insurers

10 May 2010

The Financial Services Authority has held up the UK insurer's takeover of AIA after raising concerns about the $35.5 billion deal. It's a reminder that regulators are taking a tougher line with insurance conglomerates, as well as banks, writes Nicholas Dunbar.

Pru could use regulatory woes to cut AIA price

10 May 2010

The UK insurer can address FSA objections to its $36 bln purchase of AIG's Asian business, but only by making the transaction even more expensive. Investors were already rebelling. The Pru should tell AIG that it needs keener terms to get the deal past watchdogs and shareholders.

Pru investors need answers on AIA shambles

5 May 2010

The UK insurer has delayed details of its $35.5 bln Asian acquisition after its regulator raised concerns over capital. The episode casts further doubts on Pru's ability to handle such a big deal. It will need to offer a watertight explanation in order to win investors' support.

Banks must walk fine line on Pru rights issue

4 May 2010

Underwriters of the UK insurer's $20 bln share offer want to price it at a big discount amid increased market volatility. But investors have had two months to price in the share sale. With UK antitrust watchdogs on the prowl, Pru can afford to push its banks for a tighter price.

Pru revolt is premature but welcome

27 Apr 2010

The UK insurer's biggest investor would prefer a breakup to a $36 bln bid for AIA and its 12 percent stake may cause real problems. Until Pru releases its prospectus it is too soon to damn the deal. But it is good to see large shareholders behave like responsible owners.

Four questions Pru shareholders need answering

26 Apr 2010

The UK life insurer's investors have been forgiving about its $35.5 billion tilt at AIG's Asian business. But much is yet to be explained about the deal. When Prudential releases its prospectus on May 5, here are some questions that shareholders should insist are answered.

Generali could do with more capital

13 Apr 2010

The Italian insurer's outgoing chairman has attacked top shareholder Mediobanca as an obstacle to raising equity. Antoine Bernheim's claim that capital is needed to tackle new regulation is unproven. Still, a share issue would help Generali participate in European consolidation.

Ambac regulator’s move threads CDS needle

25 Mar 2010

The Wisconsin insurance watchdog is forcing haircuts on holders of CDS contracts written by the troubled bond insurer. The move also protects muni bond insurance policies. It s an echo of what might have been done with AIG had regulators had the power and the guts.

Big pharma, the uninsured among healthcare winners

22 Mar 2010

President Barack Obama s reform plan is close to becoming law. For sure, Americans without health insurance will benefit, as will drug makers. Insurance companies are widely touted as likely to suffer. But there are myriad winners and losers from the sweeping bill.

Geronzi not the right man for Generali

19 Mar 2010

The Italian chairman of Mediobanca is the favourite to become chairman of Europe's thirdlargest insurer. But Geronzi's controversial past should rule him out of contention. While Generali needs a firmer hand at the helm, it would benefit from a more outwardlooking candidate.

Asian spin-off may create more value for Pru

10 Mar 2010

The $35 billion takeover of AIG's Asian operations has two charms: synergies and a possible rerating of the UK insurer's business. But AIG may be getting most of the financial benefits. Pru could release value without the risks of a big merger by spinning off its Asian arm.

Pru rights issue row misses the target

8 Mar 2010

The insurer's $20 bln cash call is sparking controversy. With sovereign funds helping underwrite the deal, current shareholders fear they will miss out on lucrative subunderwriting. But if rights issue fees weren't so high to begin with, subunderwriting wouldn't matter so much.

Prudential’s Asian deal has painful precedent

5 Mar 2010

The UK insurer's bid for AIG's Asian arm is not its first attempt to double in size. A 2001 offer for American General was billed as transformational, but plunging share prices invited a counterbid from AIG. Pru shares have fallen again, but this time a rival bid is unlikely.

Why Prudential’s Asian mega-deal is a stretch

3 Mar 2010

The UK life insurer is placing a far higher valuation on AIG's Asian unit than investors give its own business in the region. That may look fair next to local rivals. But the deal brings big integration risks. With a jumbo rights issue on the way, investors are justly spooked.

Uncle Sam can breathe easier with giant AIG sale

1 Mar 2010

Prudential s purchase of AIG s Asian insurer means the New York Fed retrieves not only $16 bln owed by the unit but another $9 bln borrowed by AIG. The U.S. government will still have more than $100 bln tied up. But it s nonetheless a big step towards making taxpayers whole.

UK’s Pru has some convincing to do with AIA deal

1 Mar 2010

The UK life assurer's $35.5 billion takeover of AIA would create an Asian superinsurer. The growth story is juicy, but AIA has been through years of turmoil and the integration risk is high. Pru will need to persuade investors that doubling the group's size isn't too big a leap.

Pru’s jumbo cash call is calculated risk for banks

1 Mar 2010

Prudential will launch the UK's biggest rights issue to fund a deal that will double its size. That looks risky for the three banks underwriting the $20 bln issue. But they won't fix a price for Pru's new shares for two months. Fees of $700 mln should help ease their fears.