In an effort to expand its reach in the Asian region, U.S.
Prudential Financial Inc.
) has entered into a joint venture with Malaysia based Bank
Simpanan Nasional ("BSN").
Per the agreement, Prudential and BSN will purchase all the
outstanding shares of Uni.Asia Life Assurance Berhad's ("UAL")
from Uni.Asia Capital Sdn Bhd ("UAC").
UAC is a joint venture, which is 51% owned by DRB-HICOM
Berhad's wholly owned subsidiary Gadek (Malaysia) Berhad and the
rest is owned by United Overseas Bank (Malaysia) Berhad.
For the transaction to progress successfully, both Prudential
and BSN have sent a requisition for approval to the Malaysian
insurance regulator, Bank Negara Malaysia. The transaction will
likely see light by the end of 2013.
The purchase of UAL will cost BSN and Prudential $160 million
collectively. While Prudential will hold 70%, BSN will be the
owner of the remaining 30% of the ownership of UAL.
After the completion of the transaction, UAL will sign a
strategic, long-term bancassurance agreement with BSN. The
agreement will require UAL to distribute its conventional life
insurance products by using BSN's banking network in Malaysia
which includes 397 branches, 3,593 Registered Banking Agents and
8.22 million customers.
UAL already distributes its life insurance products via
Posassurance in Malaysia with an existing agreement with Pos
Both the companies Prudential and BSN have picked up
UAL to capture the Malaysian market since UAL has a significant
scale and reach in the market. It has branches across all the
major towns in the country. UAL serves affluent and
emerging affluent class of population via its agents while the
masses are targeted with its Bancassurance and Posassurance
Malaysia seems to be an attractive market growth opportunity
for both Prudential and BSN because of it is an underpenetrated
market and has a well developed regulatory environment.
Prudential is building upon its success strategy deployed in
other Asian markets such as Japan, Korea and Taiwan, now to gain
success in Malaysia.
Upon completion of the transaction Prudential and BSN plan to
develop a high-quality agency sales force based on PFI's highly
successful Life Planner model. This will target customers in the
urban and semi-urban centers and rural areas of Malaysia via
needs-based selling and other attractive alternative
Other life insurers
merican International Group, Inc.
), also have a significant presence in the Asian region.
Prudential carries a Zacks Rank #2 (Buy). Another player
CNO Financial Group, Inc.
) with Zacks Rank#1 (Strong Buy) is worth investing in.
AGILENT TECH (A): Free Stock Analysis Report
AMER INTL GRP (AIG): Free Stock Analysis
CNO FINL GRP (CNO): Free Stock Analysis
METLIFE INC (MET): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis
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