Prudential Financial Finalizes Buy of AIG Life Companies in Japan

Prudential Financial Inc. said it's completed its $4.8 billion acquisition of two Japanese life insurers from American International Group Inc.

Prudential acquired AIG Star Life Insurance Co. Ltd. and AIG Edison Life Insurance Co. for about $4.2 billion in cash and $6 million in the assumption of third-party debt, substantially all of which is expected to be repaid with excess capital of the acquired entities.

The acquisitions add about 10,000 employees and $145 billion total of face amount in force as of Sept. 30, said Bob DeFillippo, chief communication officer for Prudential.

The addition of the Star and Edison operations solidifies Prudential's existing status as the top foreign life insurance company in Japan based policies in force, he said.

Prudential started Prudential of Japan about 25 years ago, and grew its footprint there with the 2001 acquisition of Kyoei Life Insurance Co., which was later renamed Gibraltar Life Insurance Co., DeFillippo said.

Star and Edison will now operate as subsidiaries of Gibraltar Life Insurance Co.

Beginning immediately, Star and Edison's bancassurance channels will be transferred and integrated with Prudential Gibraltar Financial Life Insurance Co., a subsidiary of Gibraltar that operates in Japan's bancassurance market. Current plans are to merge and integrate Gibraltar and the core operations of Star and Edison, excluding the bancassurance business, into one entity during the first quarter of 2012. The planned merger is subject to local regulatory approvals. Until the merger is complete, Star and Edison will continue to use their existing legal names, Prudential said.

With the completion of the acquisition, Toru Matsuzawa, previously vice chairman of Prudential Gibraltar, has been named president and chief executive officer of Edison. Star will continue to be led by current president and CEO Norio Tomono.

AIG, which was saved from failing in 2008 by a federal government bailout of up to $182 billion, has been selling off assets to repay its debt.

In November, Prudential Financial (NYSE: PRU) completed common stock and debt offerings to raise about $2 billion for the acquisitions (BestWire, Nov. 19, 2010).

Prudential Insurance Company of America currently has a Best's Financial Strength Rating of A+ (Superior). AIG's subsidiaries currently have Best's Financial Strength Ratings of A (Excellent).

On the afternoon of Feb. 1, Prudential Financial's stock was trading at $63.22, up 2.78% from the previous close, while AIG's stock was trading at $41.26 a share, up 2.26%.

(By Meg Green, senior associate editor, BestWeek: [email protected])