Prudential International, the Dublin-based investment arm of UK insurance giant Prudential Group, currently has a small presence in Europe, with expatriate-focused products in Malta, Gibraltar and Cyprus and a Belgium range for nationals of that country.
However, its entry into the Spanish market will be seen as a major, if not unexpected, strategic move by a company best known for its domestic UK market presence.
Filippo Madonia, head of international marketing at Prudential International, said the company was aiming for an “end of November, beginning of December” launch of the new bond, which will carry the already established International Prudence Bond name.
“We have registered with the Spanish authorities, and the Irish regulator also knows that we will be doing business in Spain. So we have all the i’s dotted and t’s crossed that we need to go and do business there,” Madonia said.
Market sources say the company has been looking at expanding into other foreign markets, including Europe, for some time, and suggest that Spain might be the first of a series of new foreign markets for the Pru brand, which is well known in expat circles. Madonia admitted that the company is indeed looking at other markets, but stressed that it would not rush into any other markets right away.
“We want to do Spain right, and do well by the advisers and their clients there who are looking for an investment product from a well-known brand,” he said.
Prudential is planning to distribute its new Spanish product through Spain-based advisers who specialise in catering for expatriate Britons, as well as UK and international advisers outside of Spain who have clients there. It said it has been in discussion with a number of such firms, "many" of which Madonia says have expressed an interest in offering it to their clients.
Initially Prudential will look after its Spanish IFA distributors out of its existing offices through telephone support, reinforced by regular account management visits to the country, although it will look towards a permanent local presence eventually. Madonia said Pru has already appointed a local “fiscal representative” in Spain “to assist with local tax matters” on behalf of the company, and by extension its clients.
Given Spain’s much publicised economic problems recently, the country might not seem an obvious choice for Prudential, but Madonia said the Pru’s research revealed that it was a good fit, with an estimated 750,000 British expats concentrated in particular parts of Spain like the Costa Brava and Costa del Sol. Many of these are retired or about to retire, and at a stage in their lives when they are taking sizeable lump sums from pensions, UK property sales and other transactions.
Spain is seen as a “long term investment” by Prudential, according to Madonia, who pointed to forecasts that more Britons are expected to move abroad in the future, for various reasons that typically include an ageing baby boom population with a taste for the sunny Mediterranean lifestyle, the growth of regional airlines and airports and the recently-introduced 50% top tax rate.
At the same time, he noted, the recent financial crisis has driven home for many people the importance of sound financial planning.
Spain in expat ‘top 10’
Earlier this year, expatriates ranked Spain seventh for the second year in a row in NatWest International Personal Banking’s annual Quality of Life Index, which asks respondents to rate the country in which they now live on a range of quality of life issues. Portugal was rated sixth and South Africa, Singapore and the United Arab Emirates were eighth, ninth and tenth respectively.
Expats surveyed by HSBC in 2009 for its Expat Explorer Survey, meanwhile, ranked Spain ninth overall in terms of quality of life, just below the US and above Hong Kong, based on a similar set of variables.