By Lorna Tan

THE long-established American International Assurance (AIA) brand name is not destined for the dustbin of history as a result of Prudential's US$35.5 billion (S$50 billion) takeover of the US giant.

According to British-based Prudential chief executive Tidjane Thiam, who unveiled on Monday his company's acquisition of AIA, the Asian life insurance unit of American International Group will keep on trading as AIA.

'Prudential pursues a multi-brand strategy... Prudential and AIA are fantastic brands built over decades... And we will not destroy a good brand,' he told a phone media conference.

Prudential already operates in the United States where its products are sold under its US arm, the Jackson National Life Insurance Company, which was set up in 1961.

And, in Britain, Prudential's fund management arm operates under M&G Investments, a business founded in 1931 and bought by Prudential in 1999.

However, despite its track record of retaining successful brands, some market observers say that Prudential is likely to do away with the name AIA in the long term - especially if both the Prudential and AIA brands are targeting the same consumer segment in markets such as Singapore.

'How can you leverage on economies of scale, management and so on and have two brands?' asked an industry insider who declined to be named. 'Still, it is possible that Prudential retains the AIA brand in some markets and the Prudential brand in others.'

AIA's new parent says that it is business as usual for both Prudential - which is unrelated to US insurer Prudential Financial - and AIA.

When queried on possible job losses, a Prudential spokesman said it was 'too early' to comment on how the operations would be streamlined.

Prudential expects the merged entity to generate cost synergies of US$340 million pre-tax by the third year.

Despite Prudential emphasising how the takeover will create a unique business with highly complementary products across the region, industry observers are predicting job losses due to the overlap of certain functions.

'Job losses are inevitable given the duplication of operations like human resource, IT and policy servicing,' said one insurance chief who wished to remain anonymous.

It is understood that any job losses will not involve insurance agents paid sales commissions.

The Prudential purchase of AIA has prompted the Consumers Association of Singapore (Case) to call on Prudential to take steps to ensure policyholders' interests are not compromised.

'Prudential should communicate with all AIA policyholders on the matter and be transparent in disclosing its future plans. For instance, policyholders will certainly expect Prudential to state its bonus policy clearly once the takeover is effective,' said Mr Seah Seng Choon, Case's executive director.

AIA policyholder Janet Tan, 40, welcomed the takeover.

'I've never been comfortable with AIA since it declared zero terminal bonuses for some of its policies several years ago. Prudential buying it over will result in a bigger combined entity. Its management philosophy - and how this impacts returns on my five AIA policies - shouldn't be any worse,' she said.

Most rival insurers were surprised by the price agreed for AIA.

The US$35.5 billion asking price was well over 50 per cent greater than Prudential's market capitalisation of roughly £13.5 billion (S$28.8 billion).

Rival insurer Great Eastern has been the market leader here for many years, riding on the strengths of its tied agency force and bancassurance distribution channels.

Its managing director (Singapore), Mr Tan Hak Leh, said: 'We will continue to focus on growing our business and providing excellent service to our customers.'