AIA Agents Much In Demand - But Not Easy To Entice

[Mdm Tang]

[COLOR="_______"]Hmm... my Agent was formerly from AIA ...[/COLOR]

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http://www.businesstimes.com.sg/sub/news/story/0,4574,384127,00.html?

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Business Times - 04 May 2010


AIA agents much in demand - but not easy to entice


Insurer's provident fund scheme makes it harder for rivals to lure its agents

By SIOW LI SEN

(SINGAPORE)

Life insurers here such as Manulife are recruiting big time and their efforts may get a boost from the uncertainty facing some 4,000 AIA agents worried about the takeover by Prudential.

But it won't be cheap for those targeting AIA agents - especially the more senior ones - because the company is the only insurer here which has an agents' provident fund, said one AIA agent.

'They are trying to entice us . . . they may have to offer a lump sum to compensate for the provident fund,' the agent said.

Uncertainty is said to be building up in AIA, which is being sold by parent AIG to UK-based Prudential in a US$35.5 billion deal.

Defecting AIA agents would be welcomed with open arms by other insurers who always prefer experienced agents, said insiders.

Manulife intends to double its agency force to 2,000 while Great Eastern Life is looking to add another 800 agents.

'Recruitment is important in our agency expansion and central to our growth strategy,' said Annette King, president & chief executive of Manulife Singapore.

'Currently, we have about 1,000 full-time professional financial planners and we aim to grow our agency to 2,000,' said Ms King.

Asked if Manulife (which is the largest insurer in North America) has a special scheme to target AIA agents, Ms King said the company 'welcomes both new entrants into the industry, as well as experienced agents and managers in the industry. We have received enquiries from a number of different areas exploring opportunities with us.'

The industry prefers experienced agents because selling life insurance is tough. In addition, there are exams to pass, continuous training and the need to be updated on compliance issues.

'It (insurance) is not an easy sell; you can't see or touch it. It's a challenge, and for a newcomer, you don't know if the person can last,' said one insider.

That's why the mantra for the industry is 'recruit or die,' said another.

Great Eastern Life Singapore chief executive Tan Hak Leh said that, over the past three years, its agency force grew 32 per cent, compared to 9 per cent for the industry.

'We recruited a total of more than 650 new life planners in 2009, and the agency strength now stands at 2,800. Not only is our agency force the fastest growing, it is also among the most productive in the industry,' Mr Tan said.

'In 2009, our agency productivity surpassed the industry average by 28 per cent,' he added. 'For 2010, our target is to recruit 800 new life planners.'

AIA agents said it will be harder for the more senior agents to leave because of the agents' provident fund.

It is the only insurer here to have set up a provident fund to provide for agents' retirement income. This has set AIA apart from the rest because agents are regarded as self-employed and do not enjoy Central Provident Fund (CPF) contributions.

Contributions from the company come from renewal commission after the sixth year into the agent's provident fund and can be withdrawn at 55. If agents leave before 55, they can opt to have their provident fund money transferred to the CPF or leave it with AIA, which invests the money in equities and bonds.

The takeover, which is expected to go through in the third quarter, would make Prudential the largest life insurer in Singapore, Hong Kong, Malaysia, Thailand, Indonesia, the Philippines and Vietnam. The merger of Prudential and AIA here will create a giant with a combined agency size of 7,800 agents and more than 3.2 million policies.

The combined market share here of Prudential, AIA and local insurer UOB Life, which Prudential acquired in January, will be about 32 per cent. This is based on the three entities' total new weighted premiums of nearly $500 million last year.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.




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[Mdm Tang]

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Business Times - 03 May 2010


Prudential bets its future on AIA deal




(LONDON) Tidjane Thiam has changed the face of Britain's Prudential for good, regardless of whether his US$35.5 billion bid for AIA succeeds or not.

The insurer will either land one of the most audacious takeovers since the start of the credit crunch - still the most likely option by a slim margin - or be left behind looking vulnerable as a takeover target itself.

'Large and small shareholders have reservations about the price of this deal, although they don't dispute the strategic logic,' said James Chappell, a financial services strategist at UK broker Olivetree Securities.

'Management will need to show how buying AIA will create more value for shareholders than spinning off lower growth businesses like the UK or US.'

Prudential has already started meetings with its largest investors in a final attempt to win over sceptics ahead of the issue of prospectuses for its US$21 billion rights issue and Hong Kong and Singapore listings on or around Wednesday.

Under the deal, AIG will receive US$10.5 billion in Prudential shares, while the UK insurer will also raise US$5 billion in debt to round out its financing.

The takeover of AIA - AIG's Asian life insurance business - will make Prudential Asia's biggest foreign insurer overnight, boosting its exposure to soaring demand across the region as growth slows in its home market.

But investors are wary of the the sheer size of the rights issue, equal to Prudential's market cap, that will dilute their exposure to the company.

'I think it will be quite difficult for Pru to get this through given they need 75 per cent (approval from shareholders) - that's quite a big hurdle rate. I think it's only 50/50 it will go through,' a top 20 Prudential shareholder told Reuters.

Prudential's largest shareholder, Capital Research & Management, last week fired the first shot in what might become a shareholder revolt, revealing its misgivings about the deal, a person familiar with the matter told Reuters.

Another top 10 investor also said that the deal might struggle to get the required approval, and that there might be more value in breaking up Prudential.

A vote against the AIA deal will leave Mr Thiam's role at the head of the company in doubt and put Prudential in play as a takeover target, investors and analysts said.

'If they don't get the 75 per cent, a few heads are going to roll, not least the CEO's. He has staked his career on this,'said another investor, who added that he thought the deal would just scrape through.

Mr Thiam, a French- speaking national of Ivory Coast where he was once a government minister, has made his mark at Prudential, launching the transformational deal after just five months at the helm and only a few years with the company.

While expectations of a break-up bid before a shareholders' vote on the deal are cooling, potential buyers for Prudential assets are in all likelihood already waiting in the wings in case the rights issue is voted down.

'Buyers would be queuing up to get their hands on Prudential Asia, but it will be far more difficult to sell the slower growing US and British parts of the business,' said an investment banker who is not involved in the deal.

Mr Thiam has admitted to holding talks with Resolution, a British buyout firm founded by Clive Cowdery, over the sale of the insurer's UK arm, which analysts at Shore Capital have valued at around £5 billion (S$10.47 billion).

The prospectus would have to include some 'jam today' for shareholders, Eamonn Flanagan of Shore Capital said, possibly in the form of asset sales to bring down the purchase price.

He suggested that this could include parts of Asia or China, given anti-trust issues there.

But bankers say that Resolution is the only buyer for the business, meaning it would drive a hard bargain on price which would not compensate Prudential adequately for the loss of cashflows generated by the British unit.

Asian insurer Ping An and Prudential's British rival Aviva have also been named as players in a potential break-up bid. 'Aviva has the guts for a break-up but its shareholders are not happy with management so they wouldn't give it the money or the authority to go ahead,' said an analyst.

Chinese insurer Ping An made huge losses from a wrong bet on its investments in Belgo-Dutch bank Fortis during the financial crisis. Its chairman Ma Mingzhe said in March the group was not interested in teaming with Prudential for the AIA bid. -- Reuters

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.



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