AIG banks on the red army for expansion in UK… and China?

When AIG (American International Group), probably the biggest global company most Brits have never heard about, was recently announced as the new sponsor of Manchester United, eyebrows were raised. This week Man Utd chief executive David Gill said, in justifying the choice: “This deal presents both of us with so many possibilities.” Indeed, it does.

The question is whether AIG, the world’s largest insurance company, is about to launch an assault on the UK market, piggybacking on the presence of Man Utd, or going to focus worldwide, its eye firmly on the football club’s extensive Asian following?

Top five global firm AIG is paying &£56.5m over four years to sponsor the Man Utd shirt, taking over from Vodafone. AIG, which already had business relationships with the Glazer family, the owners of Man Utd, was the club’s “surprise” choice. The Old Trafford outfit is also believed to have had extensive talks with gambling firm Mansion, Qatar Airways and Etihad Airways.

The New York-based company carries little brand weight in the UK, and its consumer business is relatively small across Europe. But John Taylor, chairman of sports marketing agency Sports Impact, says Man Utd is a good fit because it reinforces links in the US and Asia. “But it only makes sense for AIG if it’s going to have a major presence in the UK and Europe,” he adds. “This strongly suggests it is planning to develop that presence.”

A financial services commentator says: “If you’re going to spend that amount of money putting your name on a shirt, you are certainly not doing it because you love the game, but for solid business reasons.”

One insurance insider also believes AIG, best known in Europe for its commercial insurance operations, wants to build a higher-profile consumer presence in the UK, either through developing its brand or by acquiring an existing insurer such as Prudential – which is believed to be back “in play” following a failed bid by Aviva.

He says: “Nobody knows what AIG is trying to do – it has certainly not signed this deal to support any existing operations in the UK.” He adds the UK insurance market is heavily regulated, and potential growth would be easier elsewhere. “China, and the Far East in general, is perceived to be a large growth market,” he says. “AIG is not alone in trying to establish a bigger presence out there.”

The English Premiership is China’s mostwatched league, and Man Utd estimates that 40 million of its 74 million fans worldwide live in Asia. The deal is a perfect fit for an organisation looking to bolster its own presence in the region, say experts. Overseas insurers are eyeing up the estimated 90% of the 1.3 billion Chinese population who lack healthcare, as that country relaxes restrictions to comply with World Trade Organisation rules. The Chinese government in December 2004 allowed non-Chinese insurers to operate nationwide, rather than in selected cities, permitting them sell to companies as well as individuals for the first time.

Earlier this month AIG hired a vice-president to boost sales in Asia. It also plans to expand its 23,000-member China sales force and may start advertising on TV and billboards. But Taylor suggests: “What’s the most cost-effective way of creating impact globally? Sponsoring Man Utd will be miles more effective than advertising in all those markets.”

Catherine Turner

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