AIG's former asset management and international insurance arms have big growth plans in the Middle East after their sales this year by the embattled US insurance giant.
PineBridge Investments and MetLife ALICO, offshoots of the financial giant that flourished before the global crisis, are sorting out their businesses and responding to a new order in which emerging markets in the Middle East and Asia are expected to drive economic growth.
With about US$83 billion (Dh304.78bn) under its control, PineBridge is one of the larger global asset managers in the world. It will open an office in Abu Dhabi's new financial district as part of a regional growth spurt after its sale in March.
The company, formerly called AIG Investments, had planned to increase its presence in the Middle East since before the financial crisis, the chief executive Win Neuger said yesterday.
"We got interrupted for two years in terms of a lot of things we were working on," Mr Neuger said.
AIG sold PineBridge to Pacific Century Group for $277 million as part of a plan to sell assets and repay government bailout money. Pacific Century, a private equity company, is owned by the Hong Kong billionaire Richard Li. PineBridge, which has had an office in Dubai for about four years, operates in 32 countries and manages assets for institutional and individual investors. It has made big hirings recently, including Mervyn Davies, a former Standard Chartered chairman and minister of trade in the government of the former UK prime minister Gordon Brown.
They also took on Marcelle Wahba, the US ambassador to the UAE between 2001 and 2004, to advise on GCC countries. The aim is to invest as entities such as Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, seed new industries to diversify the economy away from oil.
"As an investor we think the opportunities in the region are increasing significantly," Mr Neuger said.
"If we go back prior to 10 years ago the opportunities were all in the energy sector, and that was really locked up by the state-owned companies and the multinational oil companies ...
"I think that's changing very significantly right now, and I think it's changing because of the growth of a meaningful middle class in the region and more and more of an effort by most of the countries in the region to diversify their economies and doing some really interesting things." MetLife, the largest life insurance company in the US, completed its $16.2bn purchase of the American Life Insurance Company (ALICO) last Monday.
Like PineBridge, the new MetLife Alico also wants to latch on to the Middle East's burgeoning growth to build its business. "We expect this region to be a real growth region," William Mullaney, the president of MetLife's US business, said on Wednesday in Dubai. "One of the aspects of the deal that we were most excited about was that we didn't have a presence here.
"The Middle East is a growth region, so I think with growth comes opportunity for associates. Our expectation is that this will continue to be a growing business." Insurance premiums in the Gulf are estimated to account for about 1 per cent of GDP, much less than the 6 to 8 per cent rates in the developed world. This factor, coupled with a relative shortage of insurance products and low spending by insurers on advertising and direct marketing, yielded many opportunities, said Michael Khalaf, the chief executive of MetLife Alico for the Middle East, Africa and South Asia.
"Our plans are to continue to develop our distribution, our products and services," Mr Khalaf said, adding the company could acquire regional insurers as part of its growth. "We recognise that people's needs are changing and we're at the forefront in terms of trying to address and meet those needs. That would be the case in the UAE and the Gulf in general and really throughout the region."
AIG sold PineBridge and ALICO primarily to pay back support of up to $182.5bn from the US government after a liquidity crisis touched off when credit rating agencies downgraded it in September 2008. In exchange for its help, the government took a 77.9 per cent stake in the company.
In addition to those sales, the initial public offering (IPO) of American International Assurance Group, an Asian insurance and asset management firm, generated $20.51bn last Sunday.