Posted on 30 May 12 by Annie George
U.K. insurer named Paul Manduca as chairman effective July 2, succeeding Harvey McGrath, who some investors blamed for the company's failed attempt to buy Asian rival AIA Group Ltd. in 2010.
Prudential said Mr. Manduca, 60 years old, will step down as chairman of Aon U.K., the U.K. arm of the global insurance broker, “as soon as possible and reduce his other commitments in order to make Prudential his principal focus.”
The appointment comes as Prudential, the U.K.’s largest insurer by market value, is weighing its options of staying in the U.K. or changing its domicile to Asia to circumvent provisions of a new insurance-solvency regime called Solvency II, set to sweep through Europe in 2014.
Mr. McGrath had announced plans in December to retire from Prudential in 2012, after a successor was named. Mr. Manduca, a senior independent director of Prudential, was supposed to lead the search for the new chairman but was replaced by Andrew Turnbull after the board asked Mr. Manduca to be a candidate.
“It’s a high-profile position and there are not that many potential candidates that could fill such a role," Panmure Gordon analyst Barrie Cornes said. “[Mr. Manduca] is a good fit.”
Shore Capital analyst Eamonn Flanagan said the appointment of Mr. Manduca doesn’t suggest any change in strategy. “It’s a good appointment, although a bit U.K.-centric. He knows the company very well and is viewed as a safe pair of hands, and has a strong pedigree."
Mr. Manduca said in a statement, “Prudential is a renowned financial institution with a track record of strong delivery. The company has generated significant returns for shareholders under the leadership of [Chief Executive] Tidjane Thiam, in spite of significant macroeconomic headwinds. Our strong financial performance, exposure to fast-growing emerging markets and our proactive and prudent risk management clearly set us apart from our competitors.”
A Prudential spokesman said Mr. Manduca wasn’t immediately available for interviews.
“I am very pleased that Paul is to succeed me as chairman of Prudential,” said Mr. McGrath, who served as chairman for 3½ years. “I am confident that he will lead the board and support Tidjane very effectively, and I am pleased to be leaving the business in such good shape to face the challenges and opportunities that lie ahead.”
Mr. Manduca’s annual pay as chairman will be £600,000 ($939,600). Last year, Mr. McGrath's total compensation was £582,000.
In 2010, Prudential launched an audacious bid for AIA, hoping to become a dominant Asian insurance player. Though some shareholders liked the strategy behind the deal, others were worried that the mechanics of the takeover were fraught with problems.
These included the threat that the deal would be blocked by the U.K.’s financial regulator, as well as a complicated £14.5 billion rights issue to fund the deal. In the end, AIA's parent company rejected
Prudential’s bid to renegotiate terms. The failed bid cost Prudential £377 million and led some shareholders to call for the resignations of Messrs. McGrath and Thiam.
Since then, AIA has listed on the Hong Kong stock market, while Prudential has focused on organic growth in Asia and has reaped higher sales and profits from the region.
Prudential shares are up around 40% compared with a low in 2010, but are some 6% lower than a year ago. They edged up 0.1% Monday.
“I am delighted that Paul has accepted the position of chairman of Prudential and very much look forward to working with him,” Mr. Thiam said. “I would like to thank Harvey for all he has done for this company.”
Mr. Manduca founded Threadneedle Asset Management Ltd. in 1994 and served as CEO of both Rothschild Asset Management and Deutsche Asset Management, Prudential said.