Tata Sons is considering buying a stake in the Singapore-based American International Assurance Company Ltd. (AIA), a major Asian unit of AIG after it got hit by financial meltdown, reports Reuters. Another unnamed Indian corporate (present in financial services business) is also in the race to acquire AIA and has been approached by Citibank, the financial advisors to AIA, according to a report in The Economic Times.
AIG, the once formidable US insurance and asset management giant is now 80% owned by the US government. AIA is a wholly-owned subsidiary of AIG and is the largest life insurer in the region. It has a number of branches, affiliates and subsidiaries in various countries including India, China, Singapore, HongKong, Malaysia, Indonesia, South Korea and Thailand. In Singapore, AIA is present for 70 years as of now and has a very strong presence with more than 2 million policyholders.
Tata already has an insurance JV in India with AIG, called Tata AIG Life. It was pursuing this acquisition since last month for buying the remaining 26% stake in the life and non-life insurance ventures of AIG provided the US government is ready to sell them to other insurance companies.
The joint venture agreement between Tata and AIG supposedly contains provisions that allows the Tatas to buy out their foreign partner if it gets acquired by any other company.
Approval of IRDA would be mandatory for any acquirer before moving ahead with stake buy as the regulations does not allow a foreign insurer to hold stakes in more than one company in the same business.
European insurers Allianz, Axa, Generali, Prudential and Zurich Financial are the other potential suitors for various parts of AIG’s insurance business.