Prudential chief eyes break-up
Thiam's look into radical restructuring could lead to reform of giant insurer within the year
Sunday 30 December 2012
Tidjane Thiam, Prudential's ambitious boss, is planning to review the company's structure next year in a move that could lead to the long-mooted break-up of Britain's biggest insurance group.
Prudential is on course to meet the tough profit targets set by Mr Thiam two years ago and experts believe this could be the catalyst for the most radical re-shape in the company's 164-year history.
Mr Thiam, who has been chief executive of Prudential since 2009, has spoken of creating “optionality” for the group's UK, US and Asian operations as well as its asset management arm M&G.
However, a final decision is unlikely to be taken until more clarity is given on Solvency II, the long-awaited new European capital rules. Prudential has already warned that when introduced they could force it to re-domicile overseas.
The Association of British Insurers, last week told The Independent on Sunday of the industry's anger that these rules, which force insurers to put huge sums of money on their balance sheets, have been delayed once again.
Prudential's share price has climbed strongly, to over £9, this year and the economy remains uncertain so the board could decide to maintain the business in its current form.
Speaking as the group's third quarter results earlier this year Mr Thiam strongly hinted at the review, stating that he wanted to make sure that there was the possibility of splitting some businesses from the core group.
He said: “If a business can survive on its own, then it is an option to separate it from the group, and that option has value, and that value will be reflected in our share price, which is good for our shareholders.”
However, he added: “I have to say this doesn't mean we intend to sell any part of the group. We just want to create that option.”
A spokesman for Prudential declined to comment, although it is understood that a formal announcement on next year's review is expected in early 2014.
Last month the group said it on course to meet its 2013 targets. These will see Prudential double the £719m in new business profits across Asia in 2010.
The progress made towards reaching the targets shows how well the company has recovered since its bungled $35.5bn (£21.9bn) bid for rival AIA in 2010.
At the time, Prudential was forced to pull out of the deal following a shareholder revolt. The collapse left investors footing a £377m bill.
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