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The planned sale by American International Group (AIG) of its east Asian life insurance business was ultimately just too large a deal. The three-month drama finally came to a close on June 2nd when Prudential dropped its offer for American International Assurance (AIA) after the AIG board rebuffed a request for a cut in the US$35.5bn price.

Still deeply in hock to the US government, AIG now needs a new strategy for AIA. Plan A, keeping AIA, is not a possibility. Plan B was the initial public offering in Hong Kong that the company put on ice when the Pru tabled its offer for the entire firm, Plan C, this past March.

With B and C now looking less appealing, it may be time to consider Plan D: a partial split-up of AIA to allow easier sales to a variety of suitors. After all, insurance companies are still keenly interested in the rapidly growing markets of emerging Asia. They may simply need to take smaller bites.

Read more at Financial Services Briefing: “Time for AIG’s Plan D” (June 2nd)

Prudential’s US$35.5bn bid for AIA, an Asian life insurer owned by troubled American conglomerate AIG, is plenty bold. The price exceeds the British suitor’s current market value and would require a mammoth rights issue. Markets are nervous about the aggressive move, sending the Pru’s share price down sharply since Monday’s announcement.

Prudential may be the boldest, but it is far from the only western life insurer with designs on Asia. The region’s fast growth and low insurance penetration is attracting attention from a number of firms, as detailed in an article on this blog’s parent site.

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