Insurance giant agree's new deal

Prudential has confirmed that it has agreed terms with American International Group to acquire AIA, the Asian business of the embattled US insurance giant.

Prudential will pay £23 billion in cash and shares for the business, in a bid to become South East Asia’s leading insurer.

It is also planning a rights issue to help fund the transaction, in what could create a £14 billion UK record.

Commenting on the deal, Fitch Ratings advises that it will generate increased presence and cost savings for Prudential in Asia.

However, the credit ratings agency cautions: “The considerable risks involved in such a large transaction could put negative pressure on the ratings”.

According to Fitch: “The risks relate primarily to the execution of the transaction, and the potential impact on leverage and interest coverage.”