If Prudential's beleaguered management team were thinking they might just be turning the corner from the disastrous early days of the company's ill-starred bid for the Asian insurer AIA, they have been given yet another rude awakening. Having finally satisfied the Financial Services Authority about the enlarged company's capital structure (attempting to plough on without the watchdog's agreement left Pru with egg all over its face and a two-week delay), the company has been knocked off course again.
Reports that Mark Wilson, the highly regarded boss of Prudential's target in the Far East, was planning to quit if the British company's $35.5bn (£24.6bn) bid was a success came as Harvey McGrath, the Pru's smooth-talking chairman, was telling journalists "the vast majority of shareholders are comfortable with the AIA transaction" as its shares began trading in Hong Kong.
That comment has eerie echoes of the former boss Jonathan Bloomer's suggestion that "only three or four" investors had a problem with a planned cash call of £1bn, which created a storm of controversy back in 2004. The AIA deal sees Pru attempting to raise £14.5bn.
Cue furious back-pedalling. A spokesman said for the Pru said yesterday: "We are not making assumptions about how investors are going to vote. We are out there explaining the deal to them." So that's all right, then.
Is there, perhaps, an explanation for the reports of Mr Wilson's planned departure (the reports have yet to be denied)? Well, not really, no. "We have not had any indication from Mark Wilson that he intends to leave AIA and we will not comment further on speculation," the spokesman added. "We have every confidence in the strength and depth of the management teams in both businesses and in our ability to deliver an effective integration. We believe this deal will deliver substantial long-term value for our shareholders."
Prudential might be trying to play down the significance of its latest little local difficulty but it clearly has yet another problem on its hands. Two senior AIA executives have already walked out, disappointed that the US government's planned flotation of the business might not now be going ahead.
While Prudential acted relatively swiftly to put in place a retention package with the aim of staving off an exodus, the rumours suggest that more may follow in a part of the world where there is heavy competition for staff.
Eamonn Flanagan, an analyst at Shore Capital, said the departure of Mr Wilson himself might actually make Pru's job easier in the short term (assuming 75 per cent of its shareholders are "comfortable" enough to vote in favour of the deal). "The fact is in Mark Wilson and [Prudential Asia head] Barry Stowe, you've got two very successful, headstrong guys. Are they really going to want to swallow their pride and work for somebody else?" he pointed out.
The problem for Pru, however, is likely to come further down the line, as it tries to make good on its promises to rapidly grow AIA and so justify the substantial premium its shareholders are being called upon to pay to satisfy the ambitions of the chief executive, Tidjane Thiam. "The real danger is if he [Mr Wilson] pops up somewhere else a year or two down the line. These guys tend to attract a following and he could easily pick off a lot of the sales force. There will doubtless be non-compete clauses in his contract but in a couple of years he could take out half the business, " warned Mr Flanagan.
And he was not alone. Barrie Cornes, an analyst at Panmure, also saw danger. "Pru has put in place a retention strategy to try to retain key staff but the effectiveness of this policy must be in doubt given the high level of competition for experienced staff and agents in the region," he said. "We have recently spoken to former senior staff running comparable businesses in Asia, who privately highlighted they would view the integration risk as being the greatest risk for shareholders – greater than too high a price being paid for AIA."
If Pru was hoping for comfort from the market, there was none. Its shares finished the day down 19p at 51p. "The problem is it is just too ambitious a transaction," said David Buik, of the City bookmaker Cantor Index, who still rates the deal's chances of passing at odds-against. "Markets are nervous at the moment. They're very reluctant to countenance this sort of thing given the economic climate."
Time is now running out to convince shareholders of the merit's of this "unique" deal that would make the Pru the biggest foreign insurer in Asia. An observation by Mr Flanagan ought to worry Messrs Thiam and McGrath and cause them to take a close look at the tactics they and their advisers have cooked up in an attempt to sell the AIA deal.
"The problem is that I think the people that don't like this deal, don't like it more than the people who like it like it," he explained. "You get the feeling that they are much more likely to turn out and vote. You don't really hear anyone out there banging the table in favour."
Bumps in the road: The British insurer's plethora of problems
1 March 2010 The Prudential unveils its $35.5bn deal to buy AIA, a unit of American International Group (AIG), telling shareholders they will have to stump up £14.5bn through a rights issue. The Pru's share price tumbles as investors head for the exit.
26 April Reports circulate that Capital World Investors, Prudential's biggest shareholder, is unhappy with the deal and has sounded out Clive Cowdery, the boss of Resolution, about a possible break-up. Capital declines to comment.
4 May Prudential hurriedly arranges investor and media briefings for the next day as it prepares to price its rights issue.
5 May The briefings are cancelled. It emerges that the Financial Services Authority is unhappy with the Pru's capital structure. It subsequently comes to light that the watchdog has made its position clear over the preceding weeks. No alternative date is given but Harvey McGrath, the chairman, says the company is "on track to complete within the timing set out on 1 March".
7 May More backtracking. Prudential says "all aspects of the timetable for the rights issue announced on 23 April" will be revised. That includes the general meeting and the shares' introduction to listings on the Hong Kong and Singapore stock exchanges. Neptune's founder, Robin Geffen, seeks to rally opposition to the deal among smaller shareholders, with the aim of securing a no-confidence vote in the Prudential's new chief executive, Tidjane Thiam.
24 May The AIA boss Mark Wilson reportedly plans to quit if Pru wins.