Prudential axes 2,100 more staff in £175m annual cost savings drive

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The Independent Online

Prudential, the UK's second largest insurer, yesterday clashed with the financial workers' union as it unveiled plans to slash a quarter of its UK workforce in the next two years.

Prudential, the UK's second largest insurer, yesterday clashed with the financial workers' union as it unveiled plans to slash a quarter of its UK workforce in the next two years.

The cutting of 2,100 jobs will include 1,000 compulsory redundancies, mainly made from Prudential's Reading and London operations. It will also enforce 80 redundancies at its office in Stirling in Scotland.

MSF, the Finance Sector Union, said it was "shocked" by the scale of the proposed job cuts, which come after Prudential made its entire direct sales force of 2,100 redundant in February. Roger Lyons, general secretary of the MSF, said: "We are engaging in consultations with the company over the details and the scale of the proposed job losses and we will resist the compulsory redundancy of any of our members."

Prudential said it had consulted the union about the losses and would pay for staff to revamp their CVs and train for job interviews.

The downsizing would lead to annual savings for Prudential of £175m by 2004 and has been introduced as part of a major shake-up of the insurer's UK operations under its new chief executive, Mark Wood.

Mr Wood, whose nickname is "Chopper" for aggressive cost cutting he instituted at his former employer Axa, said: "Prudential has a track record for respecting people in the unfortunate position of facing redundancy. We are optimistic that most people will find it relatively straightforward to find another job."

Prudential also announced that it was effectively selling its UK general insurance business to Winterthur Life, part of the Credit Suisse group, for £353m. The Prudential brand will continue to be used but the policies will be sold and underwritten by Winterthur's UK general insurance arm, Churchill.

The move addresses problems Prudential faced about how to finance its expanding Asian and European operations. Roman Cizdyn, an analyst at Merrill Lynch, said: "Clients would ask me where the capital was for Prudential to fund the expansion, where they and AIG of America want to dominate the market. Well, here is the answer." Prudential shares rose 6 per cent to 782p.

As part of its drive to squeeze growth out of the UK's mature insurance market, Prudential confirmed it would scrap the 175-year-old Scottish Amicable brand it bought in 1997 as a way to break into the market of selling products through advisers. Prudential estimates the move will allow it to use assets more efficiently, so that the group can compete more effectively in the current very low margin world.

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