Insurance

Pru still labouring under shadow of AIA fiasco

12 Aug 2010

The UK insurer's failed bid for the AIG unit did not harm business: Asian sales boomed in the first half and Pru took market share in the U.S. A dividend hike and lower deal fees will also please. But without a change at the top, Pru's standalone strategy remains a tough sell.

UK insurance giants are hard to beat – or emulate

6 Aug 2010

Aviva shares soared this week on strong interim figures showing how advantageous it is to have size in the insurance sector. That would seem to vindicate attempts by consolidators like Clive Cowdery to build a new scale player. But Aviva's resurgence isn't just about being big.

AIA will struggle to untie AIG’s apron strings

21 Jul 2010

The Asian insurer hopes to use a Hong Kong IPO to reduce its U.S. governmentowned parent's stake below 50 pct. At the mooted $33 billion valuation, that looks unlikely. AIA's freedom may depend on selling some shares more cheaply but the sacrifice looks worthwhile for AIG.

AIA’s new chief could unlock two deals

19 Jul 2010

Hiring the former boss of rival Prudential removes bad blood between the Asian insurer and its biggest shareholder, clearing the decks for an IPO albeit at perhaps a slightly bigger discount. But later on, Mark Tucker may also be able to tee up a valuecreative merger with Pru.

U.S. should keep close eye on petulant AIG boss

15 Jul 2010

The $10 mln a year CEO, Bob Benmosche, has forced out the chairman, Harvey Golub. But unlike under Hank Greenberg, bailedout AIG can't be treated as a fiefdom or even really as a private sector company. The government will be hoping new chairman Steve Miller hangs tough.

AIA bidder would be a glutton for punishment

13 Jul 2010

Four Chinese groups are reportedly stalking the Asian life insurer. They might find it easier than failed bidder Prudential to pay the $36 billion asking price. But winning over regulators could make the deal a nightmare. Suitors might be better off backing AIA's IPO.

UK pension rules are a charter for the rich

28 Jun 2010

The CEO of Man Group is collecting his defined benefit pension aged 50 while carrying on in the job. But UK public sector employees may lose their generous retirement perks and have to work longer. The reform of pension rules signalled in the budget is desperately needed.

Resolution lays down gauntlet on UK rights issues

24 Jun 2010

The UK insurer persuaded half its shareholders to support its 2 billion pound equity offering in advance, reducing the deal s fees by 1015 million pounds. As the UK competition watchdog launches its inquiry into share issues, banks, investors and companies should all take note.

European insurers adjust to new world

22 Jun 2010

Dutch insurer Aegon may sell U.S. assets and is restructuring in the UK. The move comes as Axa seeks to scale back its UK business. New capital rules are making Europe's insurers rethink exposure to lowreturn territories and products. Buyers can expect choice, if not quality.

Pension reform will be France’s reality check

16 Jun 2010

The government plans to raise the legal retirement age by two years to 62. A pension funding gap that could have reached 40 bln euros by 2020 meant it had little choice. Faced with fierce union opposition, it must now explain why the French must work longer, like others do.

UK pensions shocker provides stimulus for reform

15 Jun 2010

The cost of public sector pensions is set to double in four years, and is clearly unsustainable. Reform must reflect the true value of pension promises, end the apartheid between the public and private sectors and stop the betteroff using pension contributions for tax avoidance.

Mark Tucker’s second coming not right for Pru

7 Jun 2010

Some of the UK insurer's investors want to reinstate its former CEO. But having resigned last time, he might lack the longterm commitment needed in the role, and he could be too interfering to be chairman. Either way, Tucker would not solve Pru's real problem its weak board.

Prudential chairman tempts fate

4 Jun 2010

Despite dropping $650 mln in fees and making silly mistakes during its hubristic $35 bln AIA bid, the UK insurer's chairman is signaling no change at the top. Shareholders who resisted the pressure and killed off this bad deal should point out that after hubris comes nemesis.

UK governance code fails at BP and Prudential

3 Jun 2010

Two highly respected companies have suffered catastrophic failures. Both are fully compliant with best practice on corporate governance. A fat lot of good it did them. Unfortunately, chairmen and chief executives who are men for all seasons don't yet exist.

Pru bankers lose out on fees and reputation

2 Jun 2010

Advisors expected 850 mln pounds from the UK insurer's bid for AIA. They will earn just a fraction of that, although Pru is still out 450 mln pounds. The pros should be ashamed of giving bad advice. But London bankers' loss may turn into Asians' gain, if AIA floats in Hong Kong.

AIA mess showed prudence flying out of the window

2 Jun 2010

An inexperienced CEO overpaying for a business that is too big for his company to swallow is a bad start. If the deal won't even do what he claims, the City's analysts should revolt. In Prudential's case, hardly anyone did. Could $650 million of fees have something to do with it?

Prudential should remain focused on Asian growth

2 Jun 2010

The collapse of the AIA bid will make some investors ask if the UK insurer should be broken up. But Pru's existing strategy using its cash cows to fund organic Asian growth is sound. If it needs to be turbocharged, then giving the Asian unit a separate listing could help.

Pru holders should be grateful to stubborn AIG

1 Jun 2010

The UK insurer's $36 bln bid for AIA looks dead in the water after its U.S. owner refused to lower the price. But Pru's latest offer still looked generous, considering the megadeal's regulatory issues and execution risk. After this fiasco, a management overhaul is inevitable.

Pru’s clear out should start with chairman

1 Jun 2010

The whole board is culpable for the fiasco surrounding the UK insurer's failed $35.5 bln bid for AIA. But it would be reckless to remove CEO Tidjane Thiam at this time. A needed boardroom overhaul should start with chairman Harvey McGrath.

Pru may struggle to push down AIA price

28 May 2010

The UK life insurer has to cut its offer for AIG's Asian arm to around $30 bln to win over its shareholders. But the U.S. group may be able to get the same valuation though not as much cash from an IPO. Pru will need to be creative to get AIG to accept less.