Prudential eyes prospects in the Gulf countries

Dubai: Fresh off from reporting an operating profit of just more than £2 billion (Dh11.76 billion), with its Asian interests representing the biggest chunk, the UK's Prudential is looking at the Gulf. This is one region where the global life insurance company has yet to mount a major play.

However, that could change. A study is under way to examine whether and how the region should figure in the insurer's future plans, according to a senior official.

"Prudential Plc is looking at new markets across the board and the Middle East is definitely part of the radar," said Gaurav Kumar, CEO of Eastspring Investments Ltd, which was until earlier this year called Prudential Asset Management Ltd.

"My impression is that Saudi Arabia could be the biggest market because you need to have the local people to buy [insurance] products. The UAE, in comparison, has more expatriates.

"As to when it will happen will be based on the internal study by Prudential Plc, which has been in financial services for more than 150 years. And in the UK there is a very easy connection to the brand name by saying ‘The Man from the Pru'."

An attempt in 2007 to break into the Saudi insurance market failed.

While the company considers how to leverage its heritage in newer markets, the asset management side of it went in for a brand new identity earlier this year. Eastspring Investments entered the Asia market, except for India and China where Prudential has been operating through well-established joint ventures.

Brand name

"When you try to put across something to clients in asset management but with a brand name that's steeped in an insurance name, there are a few attributes that don't work very well in the changing world of asset management," said Kumar.

"At some point we had to carve out a separate identity for the asset management business in Asia-Pacific. That's exactly what we did with Eastspring Investments."

Asia will continue to be a buzzword as the new avatar tries to sell its expertise to a Middle East audience. (Prudential Asset Management set up its offices in DIFC in early 2007. During the global downturn in 2009, the firm still managed to report a net inflow of funds for investments.)

"We have not sold our Asian expertise — with the name change, we want to," said Kumar. "Retail investors in the Middle East say they believe in Asia and talking to us on dividend yield strategies from there.

"Over the years the belief in Asia has become far stronger."

Investment strategy

Of the assets that Eastspring Investments manages, the larger allocations are on equity. Its investment strategy is built on seeking long-term growth opportunities. That means snapping up distressed assets or related opportunities is not part of the firm's strategy.

When it comes to tapping retail funds from the region, Eastspring Investments operates through intermediaries. "You can't look at the Middle East investor base with a very developed world lens," said Kumar.

"While the largest pie of the investment funds lies with the region's institutional investors, at some point the retail business will grow further. In a lot of the markets the banks are growing their business selling credit cards, mortgages.

"Their strategies change and it becomes a case of doing business through an entity such as Eastspring Investment rather than pushing business to it.

Local banks will become big players in building a wealth management business and they have a captive client base. We need to partner with them."