Pru: Time to forget AIA

David Hellier
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At the end of a torrid week in which the UK’s insurers and banks have all reported financial figures, today is the turn of the Prudential, the insurer that has been given the hardest of times over recent months for its botched attempt last year to take-over AIA.

The Prudential and its super clever chief executive Tidjane Thiam has paid a high price for failing to complete that transaction, with calls for its chairman to go still ringing in the ears.

But it is time for the back-biting to stop. The Prudential’s performance, as I am sure will be confirmed today, shows a group that is firing on all cylinders, making the most of its propitious exposure to the growing economies of the east.

Prudential makes 25 per cent its profit from Asia, 35 per cent in the US and 40 per cent in the UK, and is less dependent on the shaky UK market than most of its other rivals. Not surprisingly, those looking for excitement find organic growth less attractive than go-getting mergers. But in the end sensibly planned organic growth can often be more sustainable than the mergers route, whatever fee hungry investment bankers might say.

When Thiam joined the Prudential from Aviva, where he had been CEO of Europe, in 2008, the two insurers’ market capitalisations were roughly equal at a little more than £13bn. The Prudential was worth around £18bn at the half-year, way above Aviva’s £12.6bn valuation. Thiam deserves to be judged on the figures and the strategy going forward rather than for the ill-fated venture over AIA.