Number crunch

28 May 2010 By John Foley Follow @johnsfoley

The UK life insurer has to cut its offer for AIG’s Asian arm to around $30 bln to win over its shareholders. But the U.S. group may be able to get the same valuation though not as much cash from an IPO. Pru will need to be creative to get AIG to accept less.

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Prudential, the UK life insurer, is in negotiations over cutting the price of its offer for AIA. Prudential offered $35.5 billion for its Asian rival, of which $25 billion would be in cash, and the remainder in shares and other securities.

Shareholders in Prudential will be asked to vote on the deal at a general meeting on June 7, though proxy votes must be submitted during the previous week. Approval must be given by 75 percent of shareholders present.

Prudential's original offer values AIA at 1.6 times embedded value, a common insurance industry metric. Samsung Life, a large Korean insurer, floated shares at 1.3 times embedded value on May 12.

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