Insurance giants AIA and Prudential set for battle of the brands

Prudential’s US$35.5 billion deal for AIA creates a formidable player in the fast-growing Asian insurance market, turning two former competitors into one comfortable market leader.

The big question for the marketers and agencies involved is what brand strategy a merged company will take. Given that they both offer similar products, does it make sense to merge the brands, either under one of the existing names or under a new banner such as Prudential-AIA. Or does a dual brand strategy make sense?

The questions are particularly interesting given the effort AIA has put into building its own brand over the past year. Working with M&C Saatchi and Leo Burnett, it has sought to distance itself from disgraced US parent AIG. Originally, the brand was gearing up for an initial public offering and seeking to highlight its long heritage in Asia. It launched a region-wide rebranding exercise using the strapline ‘We are AsIA’, and at the start of this year rolled out the second phase, ‘The power of we’.

One source that has worked with AIA says the brand is now “in limbo” while the deal is being scrutinised by regulators and shareholders (if it goes through, it will take until the end of the year). The firm recently moved its non-China media to Universal McCann, and an insider at that agency confirmed it was “business as usual across Asia.”

There is talk of a joint headquarters in Hong Kong, and other sources indicate that, if the deal goes ahead, the combined firms’ ad accounts are likely to be pooled at a single agency. Ogilvy & Mather currently works with Prudential.

But so far nothing seems certain. The source close to AIA believes the brand will survive for three years, but the pressure to create marketing synergies will then force consolidation. “When it comes to deciding which brand survives, it may come down to a battle between dominant egos within the business rather than what benefits the firm.”

At a meeting with staff, the companies’ CEOs pledged to keep the AIA brand, and there is a strong case for doing so. The two companies have complementary geographic footprints - AIA is strong in China, Hong Kong, Singapore, Thailand and Philippines; Prudential is strong in India, Indonesia, Vietnam and Malaysia. What’s more, although both offer insurance, they have in the past taken quite different stances. Prudential, has tended to highlight its caring side. AIA, according to one agency source, tended to rely on more of a “fearmonger” approach to selling insurance before its recent, more people-focused brand building.

Martin Roll, CEO of VentureRepublic, believes that making back-office savings but maintaining two brands makes sense. “Having two brands allows for competition and a larger scope and scale - despite the cannibalisation it may create too.”

He points to L’Oreal’s purchase of Maybelline in 1996 as an example - L’Oreal continued beyond the purchase as a separate brand with a separate headquarters to maintain its culture.

This could be particularly important when trying to gain share in a fast-growing market. McKinsey estimates that Asia will account for 40 per cent of the growth in the global life insurance industry in the next five years on the back of rising incomes, a growing middle class with wealth to protect and an increasingly long-lived population.

Jonathan Chajet, Interbrand’s China MD, agrees that it is “hard to imagine” ditching the AIA brand equity in China, a key insurance market. But he adds: “The market is still wide open in terms of consumer perceptions, and now is a critical moment for brands to establish themselves in the minds of their potential customers.”

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This article was originally published in the 8 April 2010 issue of Media.