‘Quit UK? We’re here to stay’, says man from the Pru Mike Wells
Focus: Canadian Mike Wells is now concentrating on restructuring debt
Prudential shareholders began to get twitchy after the FTSE100 giant spun off its American business last month. Just days later, the insurer sold £1.8billion of shares on the Hong Kong stock exchange, home to one of its two Asia headquarters and many of its staff.
That came against the backdrop of renowned activist investor Third Point campaigning for Prudential to close its costly office in the UK, where it no longer sells products.
City investors put two and two together – and the rumour mill went into overdrive. Could this be it?
Could a venerable 170-year-old City titan finally be about to pack up and leave the UK, quitting the London stock market to concentrate on the fast-growing Asian and African markets where Prudential makes most of its profit?
They needn’t have worried. Today, chief executive Mike Wells delivers heartening news to the 40 per cent of Prudential shareholders who own its UK-listed stock (it’s also listed in New York, Singapore and Hong Kong): the FTSE giant is very much here to stay.
‘There are a lot of really good reasons to have a London listing – for one, we’ve got talent in London – and I wouldn’t see any benefit to losing a UK listing,’ Wells tells The Mail on Sunday in a rare interview.
‘To be clear, we have no work streams on relocating out of London, there is no present activity around that at all.
‘It is an incredible market and it’s more expensive to attract some of that talent in Hong Kong right now.’
Luckily for Wells, Third Point seems supportive of his overall strategy.
In a recent investor letter, the hedge fund run by Daniel Loeb – known for full-throttle campaigns against giants such as Sony and Sotheby’s – said Wells’s ‘commitment to long-term value creation gives us great confidence in the future of this business’. Square jawed, Canada-born Wells is speaking from New York City, where he rang the bell in the New York Stock Exchange for the listing of shares in its US business, Jackson. After an intense period focused on both the separation of Jackson and the Hong Kong share sale, the 61-yearold quips: ‘I don’t know what I’m going to do with my time with all this stuff done now!
‘We talked to a couple of hundred investors with the Hong Kong equity raise. You don’t get a lot else done – that was pretty much around the clock.’
Before taking on the top job, Wells had spent two decades at Jackson, latterly as chief executive. He took the baton from Tidjane Thiam, who left Prudential as chief executive in 2015 to lead Credit Suisse.
The Pru was founded in London in 1848, originally as a lender. It soon began recruiting doorstep agents to sell cheap insurance to the British working classes with premiums as low as one penny – leading to the memorable ‘man from the Pru’ slogan. At one stage in the 1960s, its army of roving doorstep salesmen served six million homes across the country.
The company expanded to America in 1986 by buying Jackson National Life.
However, it was Prudential’s decision to push aggressively into Asia that has shaped the business today.
The company formed Prudential Corporation Asia in 1994 and became the first British company to set up a modern-day life insurance business in China in 2000.
The idea was that a fast-growing and increasingly affluent population would need access to insurance – and the market was in its infancy at the time.
Prudential later identified Africa as another fast-growing market and has been building a presence on the continent since 2014.
Just as the Pru has expanded in Asia and Africa, it has scaled back on its traditional operations in Britain. Then when Wells took the helm in 2015, Prudential said it would demerge its UK insurance and asset management business under the M&G brand, bringing down the curtain on its UK operations.
The move saw M&G become home to Prudential-branded products in the UK, such as personal savings and retirement funds. This means the company Prudential no longer manages or sells any services in the UK.
Now Prudential has spun off its US arm, its sole focus is Asia and Africa, where it offers healthcare cover and other types of insurance.
Wells envisages a lot more growth in the pipeline there.
‘There’s tremendous demand for health in Asia,’ he says. ‘And now I think it’s a clearer, more comprehensible story [for investors], when you narrow the scope of the business to Asia and Africa. We have a number of growth markets – those that will move the income needle the most would be China, Hong Kong, Malaysia, Indonesia, and Thailand.
‘The trends to watch are the demand for health, because there isn’t naturally a government health alternative in these markets and Covid has obviously raised people’s focus on health.
‘But the piece to watch in the future in Asia is retirement demand. China has baby boomers, so does Thailand, Hong Kong, and Singapore.
‘The good news is, people are living longer, but the number of people who live to 100 has gone from a dozen to thousands. No government’s retirement model is ready for 100-year-olds.’
Sticking with the subject of health trends, does Wells believe in bringing people back to offices – as Prime Minister Boris Johnson last week urged – or is the Prudential boss a work-from-home crusader?
He says for a global organisation like Prudential, it won’t work to have one simple policy across the entire business.
We’re facing the same challenge everyone does: how many of our people want to come back to an office? How do you make that appealing?’ he says.
‘Breaking up some of our biggest offices into different structures so people can work in smaller groups seems to have a lot of appeal. So we’re looking at that.
‘We’re watching what our employees are comfortable with, which varies by country.
‘Generally, everyone’s learned that employees are going to work at home more than they ever have. But I want people to feel associated with the firm, I don’t want them to feel like contractors.’
His next big task is to complete a restructuring of the company’s debts this year. About $2.25billion of the Hong Kong fundraise will be used to pay down debt, but there is more work to do. Shares dropped after the fundraising, but have since sprung back up to £15.
So after six years in the hotseat, it’s not job done yet for this man from the Pru.
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