Under the agreement, which has been approved by the Financial Services Authority of Indonesia, Prudential Financial’s Pruco Life Insurance Company has acquired a 49% interest in Asuransi Jiwa Mega Indonesia, CT Corp’s wholly-owned life insurance subsidiary.
Prudential and CT Corp said they finalised the joint venture on 3 July.
The companies declined to disclose the financial terms of the joint venture, deeming the partnership “fairly complicated”, according to reports by Indonesian investment specialist website The Insider Stories, which attended the press conference that announced the deal.
“The process is not easy. We have already talked for three years,” CT Corp’s chairman and founder Chairul Tanjung is reported to have said.
The arrangement presents the New Jersey-based company with an opportunity to tap the expanding middle class of Indonesia, the world’s fourth-largest country by population with a projected annual GDP growth of 5.2% in 2017, according to estimates by the World Bank.
Life insurance premiums in Indonesia are projected to increase at a compound annual growth rate of 13% between 2015 and 2020, the companies said, citing industry data.
Still, the number of Indonesians who buy life insurance is small. Premiums underwritten represent 1.3% of the country’s gross domestic product, they said.
“The partnership advances our business growth strategy by expanding Prudential Financial’s international footprint into an attractive market with long-term growth potential,” Charles Lowrey, chief operating officer of Prudential’s international businesses.
Prudential Financial launched its first life insurance business in Asia in Japan in 1988, subsequently expanding to Taiwan, South Korea, India, China and Malaysia.
As of 31 March 2017, the company has over $1trn (£0.77trn, €0.86trn) of assets under management, with operations in the United States, Asia, Europe, and Latin America.
Founded in 1987, CT Corp is the largest Indonesian consumer-focused company, managing more than $10bn in assets and more than 100,000 employees, the firm said in the statement. Its businesses include Bank Mega and other financial services institutions.