James Moore: The man from the Pru is playing a dangerous game by making threats

Prudential has broached the nuclear option of moving to Hong Kong

So the man from the Pru is thinking of packing his bags and heading for Hong Kong. Yes, it is not only the banking industry that stomps its feet, raises its fists and threatens to stalk off when things look like they aren't going its way. Life insurers can do it too. It doesn't look any prettier, though.

But let's be fairer about this than those insurers have been to their customers for the past 20 years or so (which is one reason why the regulatory screw has been tightening so much and why they might lack sympathy).

The so-called Solvency 2 regime being imposed by Europe doesn't appear to be terribly clever. It could, in fact, be very damaging if (as has been suggested, although admittedly by insurance company bosses) it isn't just the insurers who suffer, but their annuitants and pension policyholders too. You don't really want a generation of people with money purchase pensions coming to retirement and realising that all that saving was hardly worth the effort.

It would also be damaging were Solvency 2 to force another shift out of equities by insurers. Their shareholdings have already been sold down once, as a result of the last set of regulatory reforms imposed by the Financial Services Authority at the worst possible time.

That set of reforms was hardly unjustified. The regulator had little choice but to act after a number of insurers had allowed themselves to flirt with insolvency through a combination of unhelpful markets and basic mismanagement.

A long-term savings institution going down doesn't have the impact of a bank going bust. Governments don't have to step in with truckloads of taxpayers' cash to avert financial armageddon. However, when it happens it is still ugly, and brutal on policyholders. One only needs to say Equitable Life to see that. However, thanks to the reforms and some hard lessons being learned the industry handled the financial crisis remarkably well. The trouble is European regulators aren't listening.

So Prudential has broached the nuclear option, perhaps as a way of prodding British officials into arguing its case more forcefully. It is playing a dangerous game here. Pru denies it is making threats, except that it is. And when you make threats people tend to react badly. In other words, this could easily be seen as another mis-step by Pru's management.

Shareholders might like to meditate on that for a moment. This is a company that has suffered far more from its managers than it has from its regulators down the years. It was Prudential's management which burned through hundreds of millions of pounds on two disastrously mishandled failed acquisitions.

Lest we forget, Prudential was also by a distance the worst mis-seller of personal pensions and for a long time dragged its heels when it came to sorting out the mess. Again, the blame lies with managers.

If the man from the Pru is going would we really be worse off for seeing the back of him?

 

Let's hope the behemoth HSBC is in safe hands

That HSBC is different was writ large yesterday. After a string of very disappointing if not downright dreadful results from the other UK-based banks, here's one that is doing exactly what banks are supposed to do (and used to do before lots of them started playing roulette), namely making pots of money. Actually, there are grounds to be disappointed. The second half was below expectations, and HSBC's costs are rising rapidly. There will be some pain to come as a result, pain that probably won't impact upon the phalanx of dollar millionaires on the bank's payroll, led by chief executive Stuart Gulliver whose package came in at £7.16m.

Nonetheless, when compared with its rivals, HSBC's star remains in the ascendant. One analyst yesterday noted that big in banking is dangerous. Very big, however, can be something wonderful. That may be over-egging it a bit, but Douglas Flint, the chairman, offered up an eye-popping list of crises that the bank not only lived through, but thrived through, just during his period of employment in a conversation with me yesterday. He maintains it is sensible, conservative, and focused on providing for its shareholders and that, this being the case, big need not be bad.

HSBC's biggest folly, its acquisition of US subprime lender Household, was hardly a product of conservative management and the unseemly boardroom spat over who should become chairman before Mr Flint was elevated (I don't believe he was involved in any way) was not a product of sensible governance.

The bank seems to have grown up a bit since then. We'd better hope this is the case, because having a bank as big as HSBC being the cause of one of those crises doesn't bear thinking about.

 

Gentleman insurer takes his leave on a high note

 

Mercurial, entertaining, witty, and politically incorrect, although not in an unpleasant way, Robert Hiscox is something of a lost echo of what the City is once reputed to have been. A capitalist, for sure, even a ruthless one. But also a gentlemanly one in stark contrast to the battery of well-groomed clones who dominate modern boardrooms.

Hiscox, the insurer that bears his family's name, had a tough time last year but the fact that it made a profit at all is something of an achievement given the £270m impact it faced from truly nasty catastrophes.

This will probably prove to be a blip, though. Under his chairmanship, Hiscox has gone from strength to strength. As he prepares for retirement, Robert Ralph Scrymgeour Hiscox says his secret has been hiring people with more talent than himself. Add self-deprecating to that list of virtues.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor