David Prosser: The man from the Pru fights for his future


Outlook Should he stay or should he go? There is no doubt the credibility of Tidjane Thiam, of whom so much was expected on his accession to the chief executive's office at Prudential just eight months ago, has been severely damaged by the AIA debacle. But has it been damaged so badly that he cannot continue in the role?

The problem for Mr Thiam is that he has so publicly misread the mood of the shareholders who employ him. And that he made that mistake at an insurance company with a very recent history of management falling out with key investors – witness the ousting of the previous-chief-executive-but-one following a rights issue 14 times smaller than the scheme Mr Thiam envisaged – makes that all the more unforgivable.

From the moment Prudential unveiled its Asian adventure, shareholders wondered out loud whether it was paying too much for AIA while understanding too little about the risks the deal entailed. That this acquisition might be to Prudential, in other words, what ABN Amro was to Royal Bank of Scotland.

Despite the chuntering, Mr Thiam had to be publicly embarrassed into turning down a lucrative non-executive role at the French bank Société Générale. And then he made another error. Prudential's spinners have tried to suggest that the Financial Services Authority's intervention in this affair, which delayed the deal and gave rebel shareholders yet more fuel for the fire, was unexpected and last-minute. In fact, the regulator warned the insurer about its concerns weeks in advance of its veto of the official launch of the rights issue, but Mr Thiam appears not to have properly focused on the problem.

Nor should we forget the cost of this affair. There's a break fee of a little over £150m to hand over to AIG, plus millions more to pay in advisory charges.

What, then, is the case for the defence? Well, at least Prudential's strategy looks to be the right one: almost every independent insurance analyst now thinks Asia is the place to be for future growth prospects and rivals that have not taken that view in recent times are scrambling to catch up. Also, as finance director, Mr Thiam has already played an important role in building an impressive recent performance by the insurer.

On the specifics of this deal, AIG's reluctance to cut the sale price does do Mr Thiam a back-handed favour. It must be sure that offloading its Asian operation via an initial public offering would secure it greater value than Prudential is now offering – and by quite a margin, given the relative uncertainties of that route to disposal. The view that Prudential's initial offer hugely overvalued AIA, in other words, genuinely appears not to have been shared by its American parent company.

We shall see. Assuming AIG gets AIA to market, we'll get a real yardstick of its value, rather than the theoretical prices about which Prudential has been arguing with its shareholders. Unless that process makes Mr Thiam look utterly daft – and since the scale of his ambition is being tilted in the right directions – he should, on balance, get more than eight months to prove himself at Prudential.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea