Pru boss hits back as critics say break-up is ‘a disaster’

Industry experts have berated Prudential for the controversial split – sparking a fierce rebuttal from the chief executive.

Analysts and insurance insiders claimed the company had messed up its plan to slim down and focus on Asia, which started in earnest in 2019.

But Prudential’s interim chief, Mark FitzPatrick, hit back, claiming the company had quietly strengthened its balance sheet so it had the “firepower to take advantage” of new opportunities.

Once a proud British life insurer, whose ‘Man from the Pru’ agents became commonplace in towns and villages in the last century, the Pru is now barely present in the UK.

The 174-year-old company sold its UK operations to savings and wealth company M&G in 2019, before parting ways with its US company Jackson last year.

What remains of Pru – which is still listed on the London Stock Exchange – is now fully focused on Asia, where it hopes the ballooning middle class will fuel its growth.

The premise behind the split was that the value of Pru’s constituent parts would be worth more than their sum. But so far, that hope has been dashed.

Prudential was worth around £50 billion before the 2019 split from M&G. Now it’s worth just £23 billion. Jackson is trading at £2.8 billion and M&G at £4.1 billion.

“It’s been a total disaster,” said an analyst at an investment bank, who wishes to remain anonymous.

“I think it would have been a great plan – and still can be. But [Prudential’s management] screwed up the execution.’

Farooq Hanif, an analyst at JPMorgan, said: “The vision was great. Some investors had been with Pru for a while to focus on Asia, because that’s where the growth was.’

But he agreed that the way the breakup was handled left a lot to be desired.

Hanif noted that Prudential repeatedly said its capital position — how much money it has available to meet its requirements — was strong.

But the returns for investors aren’t impressive, he said, especially when compared to rival AIA Group.

“They need to give clearer direction to capital — how much surplus they think they have and what they want to do with it,” Hanif said.

FitzPatrick, who took charge of Prudential after former boss Mike Wells stepped down in the spring, brushed aside criticism that the company was not transparent enough. “We have tremendous long-term growth opportunities to pursue,” he told The Mail on Sunday.

“Over the past four years, we have prepared ourselves for the situation we find ourselves in now: a purely Asia-Africa-focused group.”

He added that Prudential was building its balance sheet “so that when those opportunities arise, we can go in and have the firepower to take advantage.”

But it has undoubtedly been a year of turmoil for the Pru. A City source suggested there had been tensions between Wells and chairman Baroness Shriti Vadera.

Allegations of bullying against Vadera by an employee caused another headache, though an independent investigation cleared her of any wrongdoing.

FitzPatrick, formerly the company’s finance chief, stepped in to fill the void left by Wells in March, but wanted to emphasize that he didn’t want the role on a permanent basis.

Anil Wadhwani, CEO of Canadian insurer Manulife, will take over in February.

Hanif said, “The lack of CEO is a problem for investors. You can see that in the share price.’ Prudential is down more than 40 percent from a year ago.

FitzPatrick refuted critics’ suggestions that he was just a janitor boss.

“So that’s not who I am,” he said. ‘The business is too exciting, the opportunities ahead are too real to tread water.

‘I have helped the company move forward. We were able to bring in new blood. I’ve cleared the runway so Anil can move on pace.’

A spokesperson for Prudential said: “We did an investor audit late last year.

‘They all understand the great structural opportunity.’