Prudential Forms JV in China - Analyst Blog
September 16 2011 - 2:02PM
Zacks
Prudential Financial Inc.
(PRU) recently announced that a 50:50 life
insurance joint venture with the Chinese company Fosun
International. The deal has also received the regulatory nod from
China Insurance Regulatory Commission (CIRC).
The joint venture with a capital of $78 million, and will be
headquartered in Shanghai. The company will become operative in the
fourth quarter of 2012.
Prudential eyes the Chinese market as an attractive one with
high growth rate but low insurance penetration. This motivates the
company to expand its operations in the Chinese market, where life
insurance grossed RMB 1.06 trillion in 2010. Prudential has been
running operations in China through Beijing-based Representative
Office of PICA, Everbright Pramerica Fund Management Co., Ltd.
(headquartered in Shanghai), Pricoa Consulting Co., Ltd. and Pricoa
Relocation Hong Kong Limited.
Apart from China, Prudential has a significant presence also in
the Asia Pacific region, with a strong foothold in Japan, where it
has been operating for over thirty years. About 85% of the total
2010 sales in the company’s international insurance segment came
from Japan. It is a market that continues to present attractive
opportunities for Prudential to succeed in protection products and
increasingly address retirement needs. The acquisition of the
Japanese company Star Edison, which closed on February 1, has
broadened Prudential’s distribution, increased the scale of its
operations, and expanded its client base by roughly 50%.
Prudential, competing closely with MetLIfe Inc.
(MET) and American International Group
Inc. (AIG), has one of the best business
mixes in the U.S. life insurance sector, with strong positions in
high margin businesses and a significant diversification. Though
the company witnessed a drag on revenues in the past couple of
years due to the volatile economy, it has consistently increased
its revenues over the past several quarters. A right mix of
business, along with strong fundamentals, has helped Prudential
garner market share from weakened competitors. The company is also
poised to improve its earnings faster than its peers in the
upcoming years.
AMER INTL GRP (AIG): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis Report
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