PRUDENTIAL, Britain’s second biggest insurer, is aiming to grab a 10% share of the life insurance and protection business after teaming up with South African group Discovery. The two have set up a new joint venture, Pru Protection Holdings, and will invest £30m in the first year.

The move comes after Prudential linked up with Discovery four years ago to sell innovative private medical-insurance plans through Pru Health, a joint venture. The two companies have so far invested more than £70m in Pru Health, which will be folded into the new combine.

This week, Prudential will launch a series of 25 protection plans covering life insurance, critical illness, income protection and disability insurance. The insurer is planning to move into the group protection or corporate market next year.

Prudential claims it will “revolutionise” the protection market. The plans will use a similar structure to Pru Health products, where customers gain discounts on their insurance premiums by leading a healthier lifestyle. Customers get “vitality” points for going to the gym, giving up smoking and eating more healthily.

Discovery, set up in 1992, has used its points-based system to win a 28% share of the South African health-insurance market and close to 20% of the protection market in the past seven years. Some observers believe Prudential’s expansion plans could spark a price war.

Prudential already has deals with gym clubs Virgin Active, LA Fitness and Cannons. It has also signed up supermarket group J Sainsbury to participate in the points scheme. Customers who are rated the healthiest are likely to see the cuts in their premiums of more than 3% a year.

Prudential once held a 10% share of the British protection insurance market, but has in effect been out of the market in recent years as it concentrated on sales of annuities, corporate pensions, equity release plans and investment bonds.

Since launching Pru Health in 2004, Prudential has sold more than 130,000 private medical insurance policies and grabbed a 1.1% share of the overall market. However, in new business terms it is second only to Bupa.

The insurer, led by chief executive Mark Tucker, is trying to turn round its struggling UK business. Some shareholders have suggested the group should look at spinning off or selling it to concentrate on its faster-growing Asian and American operations. Tucker has not ruled out the possibility of a shake-up.

“We believe we can revolutionise this market. Some parts of the protection industry have been stagnant, but we are aiming to revive it by bringing innovation and the chance for people to be rewarded for being healthier,” said Shaun Matisonn, the head of Pru Protection.

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