The Prudential is preparing for an all-out assault on the £2bn PMI market after signing a multimillion pound distribution deal with France's largest personal lines insurer.
CNP Assurances, the insurance arm of the French post office, has agreed to offer the Prudential access to its extensive expertise in designing health insurance products. CNP's 20% share of the French insurance market makes it the country's largest insurer.
The Prudential has delayed competing in the UK health insurance market, despite having had a trading licence since 1968, preferring instead to concentrate on its general insurance portfolio of motor and household policies. It launched an online car insurance service this week.
The Prudential's premium income, including life business, was £310m in 1999, and its income for the first quarter of 2000 is £79m.
The general insurance and life group is, however, anxious to break into the niche market, which has an expanding corporate benefits sector.
A Prudential spokesman said its growth plan is to achieve the critical mass it needs to become a significant European insurer by growing organically instead of paying a high premium in an acquisition.
He said: "Prudential's view is that a joint venture of this kind with CNP is the least costly way of expanding in the European insurance market."
Only last week, Axa had to pay a 54% premium to acquire the minority shareholding in Sun Life & Provincial Holdings.
The Prudential-CNP Assurances joint venture provides for the co-branding of products in the UK and French markets starting in the second half of 2000.
In the UK, CNP has agreed to provide health insurance expertise to the Prudential, which will sell new products through its extensive distribution network of 1,800 sales agents and its direct sales arm, Prudential Direct.
In a reciprocal agreement, the Prudential is to link up with CNP's network of 27,000 sales outlets to sell investment products in France.
Prudential has set up an office in Paris in anticipation of the partnership's development and has submitted a trading application to the Financial Services Authority.
The FSA, however, declined to say whether it has received a similar application from CNP related to it trading in the UK.
Exact details of the products to be launched have yet to be announced.