Successful H1 Reports Could Fall Short of Appeasing Prudential Shareholders



Prudential shareholders looking for appeasement through H1 results.

Prudential shareholders looking for appeasement through H1 results.

The plan 18 months ago was for Tidjane Thiam to succeed Mark Tucker, Prudential’s outgoing chief executive, and lead the insurance company to the promised land.  Cheers could be heard across the city as the former highly rated finance director took control, while concurrently the company delivered another full year of growth.  Everything at the time appeared rosy… but roses do wilt if not handled correctly.  A mere 18 months into his tenure as chief executive, Thiam is fighting for his future as shareholders are quick to remind him of the failed takeover attempt of AIA which is still costing them upwards of 450 million pounds.

Mid year results will be shared this week, and Britain’s largest insurance group will try and put the memories to rest.  Analysts are expecting the company to raise its dividend by 5 per cent as operating profits jump 4 per cent to 714 million pounds during the six months to June 30.  The company is also expected to give an update on the true costs associated with the AIA debacle, which some insiders believe has risen to over 500 million pounds.  There is also an expectation for no changes to be made in the management team or structure.

These mid term results for most shareholders would be something to smile about, or at least a small grin.  However, time may not have started to heal any of the deep wounds caused by one of the biggest failed takeover attempts on the Square Mile. 

Although Thiam remains firmly in his position, some leading shareholders are holding on to a strong feeling of retribution. 

At the time of the collapse of the AIA deal, many asked for a review into exactly what went south.  After a few months of increasing revenue, the tone seems to be easing a bit.  One shareholder said: “I give Thiam the benefit of the doubt.  Prudential’s underlying business is doing well, but what the company needs is a chairman that will keep a tight reign on its chief executive.”

If Thiam makes it through this week unscathed, maybe he can get back to the business at hand…making things appear rosy again.

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