Pru eyes move for AIG's Asian assets

The Pru yesterday declined to comment but is expected to issue a statement on talks in the coming days, possibly this morning. And unconfirmed reports from new York last night said that the US insurance giant's board had approved the sale

Chief executive Tidjane Thiam is understood to be in New York holding talks about a bid with AIG's board.

A deal could lead to a major carve up of the insurance sector, amid reports that the Pru is holding separate talks about selling its UK business to Clive Cowdery's Resolution.

Founded to consolidate UK insurance assets, Resolution bought Friends Provident last year, but has since failed to land any deals.

An acquisition of AIA, AIG's Asian business, would transform the Pru into an insurance powerhouse across the region, where growth is much stronger than in Europe. The Pru already has 11 million customers in Asia, and in 2008 – the last figures available – the region accounted for more than half of its 1.3bn new business profits.

AIG – the shirt sponsor of Manchester United – has been considering floating its Asian business in a bid to repay some of the money pumped into it by the US government. The firm was saved from collapse in 2008, with US authorities injecting about 120bn.

AIG had racked up huge losses on toxic derivative deals, but the White House decided the business was too important to the US economy to be allowed to fail.

In return, the US taxpayer received an 80 per cent stake in the stricken company.

A year ago, AIG posted a $61.7bn (43.87bn) loss for the final quarter of 2008, the biggest quarterly loss in US corporate history. Last Friday, it reported a much smaller loss of 5.8bn for the last three months of 2009.

It warned it might need to ask the US government for more funds, although it has made similar statements in previous announcements. The group also raised the possibility of a series of disposals, revealing that it was "engaged in productive discussions with third parties" about "a number" of possible deals.

Earlier reports from New York over the weekend claimed a deal with the Pru could be announced as early as this week.

Most of the proceeds of the deal are expected to come from the Pru issuing new shares, which may lead to one of the UK's largest ever rights issues.

The company may use proceeds of a sale of its UK business to Resolution, although the AIG deal is not thought to be linked to talks with Cowdery, who is believed to have discussed such a deal in the past with the Prudential.

Meanwhile, Citigroup has denied it is looking to offload its Egg internet bank, just three years after buying it from Prudential for 546 million.

The US bank had reportedly held talks with trade buyers and a private equity firm over the potential sale, which would see it virtually pull out of the UK retail banking market altogether. It bought Derby-based Egg – the world's largest internet bank – in early 2007 before the credit crunch and recession struck.