Asian ambition risks a Prudential departure

Marc Sidwell
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PRUDENTIAL boss Tidjane Thiam failed in his bid for AIG’s Asian insurance arm AIA in 2010, but yesterday’s third quarter numbers show the insurer has not turned its back on Asia’s opportunities.

Far from it, with the Asian part of the business showing £828m new business profit in the year to date, as against £683m for the US and £227m for the UK. Sales also grew fastest and brought in most revenue in Asia over the year to date: £1.328bn, up 16 per cent year on year. Increasingly, with the benefit of hindsight, it seems the City was wrong to block Thiam’s AIA deal.

Prudential’s acquisition of Thanachart Life in Thailand, announced at the start of the month, is also a small indication of its commitment to growth in the region, even though, at $590m (£372m), it is a minnow next to the leviathan $35.5bn plan for AIA.

Even without the assistance of a mega-merger, Thiam’s approach looks like a smart strategic call. It gives exposure to economies like Indonesia and Malaysia, which are not only fast-growing but also currently have low insurance penetration. That means Prudential can make the most of expanding into virgin territory rather than simply fighting for market share as in Europe or the US.

An Asian focus, together with the looming impact in Europe of Solvency II regulation, makes the case for Prudential’s relocation from London to a base such as Hong Kong stronger by the day. While Thiam had appeared to blow cooler on any move of late, yesterday he said that contingency planning for a move would continue until there was clarity on Europe’s new rules. Let’s hope the regulators clear this up. The firm – and his visionary leadership – would be badly missed.

Strong online growth of over 20 per cent helped send Sainsbury to the head of the queue with its latest set of figures. General merchandise and clothing grew three times faster than food, as the supermarket continued to extend its reach beyond groceries.

Even with a small jump in market share from 16.6 per cent to 16.7 per cent, Sainsbury remains well behind market leader Tesco, which has 30.5 per cent of the UK market. Yet in tough conditions Sainsbury is performing impressively, thanks to a clear strategy, well-executed.

Christmas may have come early for Sainsbury, however. Forget peace and goodwill to all and think brutal price competition. Only yesterday, Morrison unveiled a 10 per cent disloyalty discount card designed to tempt yuletide shoppers away from rival stores. If such tactics multiply and press down on margins, the end of the year will be more bleak midwinter than season to be jolly.