Prudential (U.K.), Other Europeans Seeking U.S. Acquisitions

May 16, 2001

Enriched by the $600 million it received as a break up fee from AIG-American General, Britain’s Prudential plc is still looking for opportunities to expand in the U.S. market, but it’s not alone.

According to analysts the AIG/American General merger may be only the first step in further consolidations and takeovers in the U.S. life and annuity sector. Many companies are smaller than American General, and even the largest may be attractive targets for European insurers, lured by the prospects of an expanding market as the U.S. “baby boomer” generation steps up its investments in retirement related products. Annuities, life and health products and asset management services are all expected to show dramatic increases over the next decade.

The U.S. market is currently shared by a number of companies. American General was one of the largest, which means that all of the others are potential takeover targets. The top of the list includes Lincoln National Corp. – estimated value around $9 billion, Jefferson-Pilot Corp. – estimated value around $7 billion and The Hartford, which is valued at around $15 billion. The list would include John Hancock and MetLife, except that both are protected from takeovers for the time being by the terms of their recently concluded demutualization arrangements.

The most often named potential buyers, in addition to Prudential, are the giant European insurers and financial service companies, AXA, Allianz, ING and Aegon, all of whom already have substantial investments in the U.S., and the financial wherewithal to make further acquisitions.

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