Ping An Insurance, China’s largest insurer by market value, is considering an acquisition of Prudential Plc’s Asia business, according to sources at Bloomberg.
The move would allow Ping An to expand into new insurance markets from Singapore to Indonesia, and would bring it into competition with international companies such as AIA Group and Manulife Financial Corp.
It would also mark a departure from Ping An’s strategy of incubating tech businesses, which has allowed the company to grow its brand value by 60%, or $9.8 billion, in the last year alone.
“An acquisition is a good strategy for Ping An to expand into other regions” as it seeks to mitigate the risk of concentrating on its home market, Lu Yunting, a Shanghai-based analyst at Zhongtai Securities Co., told Bloomberg. “Its fintech is for sure a lot stronger than global insurers’ and its hardware and software are both very competitive.”
“Ping An’s tech capabilities are driving a lot of cross-selling for the full financial services provider,” added Steven Lam, a Hong Kong-based analyst with Bloomberg Intelligence. “It’s sensible to think whether Ping An can leverage its tech prowess to take a leading role in Southeast Asia’s insurance markets.”
Asia is Prudential’s fastest-growing region, and the life insurer has reported that it plans to take advantage of the region’s growth potential with new retirement solutions for the ageing population, which it developed in the U.S.
Asian markets, led by Indonesia, Hong Kong, and Singapore, contributed roughly 42% of Prudential’s operating profit in the first half of 2018, up from 35% for the whole of 2017, according to data compiled by Bloomberg.
Sources stressed that Ping An has not yet approached Prudential regarding a potential deal, and Prudential’s Chief Executive Officer (CEO) Mike Wells has also said publicly that the company’s Asian operations are not for sale.