Most chief executives are known for what they do. Not Prudential’s Tidjane Thiam. He’s best known for something he failed to do: buy AIG’s Asian insurance business, AIA, for $35.5 billion in 2010.
Not doing that deal is the one thing everyone recalls about the 5½-year reign of the man now leaving the insurer to run Credit Suisse. It could look tough on him, too, when you think Mr Thiam has trebled the Pru’s market value to £43 billion since taking over in October 2009, despite the AIA farrago. Yet his non-deal is the defining moment of his Pru tenure for a simple reason: history has proved him right.
Today, the Hong Kong-listed AIA is worth $75 billion, more than twice as much. True, there was execution risk, not least from combining Pru’s Asian and AIA’s sales forces — and, who knows, regulators might have woken up to the dominant Asian insurance business that Mr Thiam hoped to create. Yet Pru investors who blocked the AIA deal, squealing over a $21 billion rights issue and forcing him to cut the offer price until the bid fell over, now look silly — even allowing for Mr Thiam’s one error of judgment, when he agreed to become a non-exec at Société Générale midway through the bid, a decision swiftly reversed.
It got worse, too, for the only black chief executive in the FTSE 100, lampooned for supposedly getting a deal wrong and landing the company with a £377 million bill for adviser fees. Shareholders claimed the scalp of the Pru’s former chairman Harvey McGrath, while, in 2013, the Financial Services Authority signed off as a discredited regulator with its stupidest decision of all: fining the Pru £30 million and censuring Mr Thiam for failing to notify it ahead of the AIA bid. He didn’t because he could not trust the FSA not to leak it, having seen an earlier AIA approach get out. How crazy, too, that he was the sole financial crisis boss censured despite all those libor-rigging, tax-dodging, drug-money-laundering bankers.
Yet, despite all these provocations, Mr Thiam has done a fine job, only bowing out when all four divisions — Asia, US, UK life and M&G — are humming, with full-year operating profits up 14 per cent to £3.19 billion. Expected successor Mike Wells has a tough act to follow, as the market implied yesterday, adding almost £2 billion to Credit Suisse’s market value, while removing £1.3 billion from the Pru’s. Money talks.
Advertisement
Secure progress
Having botched a London Olympics security contract, charged for tagging dead criminals and sacrificed its cuddly image at Guantanamo Bay, the only way for G4S was up. But reshaping a security group built on disparate contracts and systems was never a five-minute job.
Ashley Almanza became chief security guard in May 2013 on the ousting of Nick Buckles, since when he has been painstakingly rewiring a group with too many low-margin contracts and a relationship with the British government in disarray. He’s sold eight businesses for £248 million, including the Guantanamo detention centre one, discontinued another 20 and got G4S back on the UK government contract list.
It’s no easy gig. Yet the full-year figures show progress: underlying profits 7.9 per cent higher at £424 million, a final dividend up 5 per cent and future growth via new contract sales of £2.1 billion. True, an extra £45 million of provisions for UK government contracts, mainly for housing asylum seekers, shows that Mr Almanza is yet to escape the past, while the Serious Fraud Office is still sniffing around. The shares, down 1.7 per cent to 286p, aren’t exactly cheap either on 19 times earnings. But, from here the turnaround should be quicker.
Advertisement
The final cut
Chairmen cutting the dividend just a week before a new chief executive arrives might look rude. But it would be no surprise to see Morrisons chairman Andrew Higginson do just that tomorrow — even if David Potts doesn’t pitch up until March 16.
Morrisons had previously pledged to raise the dividend by 5 per cent to 13.65p at this week’s full-year results, even if the 6.6 yield on shares down 1.5 per cent to 205p suggests it can’t last. The latest Kantar data implies that, too. Morrisons lost another 0.37 percentage point of market share in the latest four weeks to March 1, when like-for-like sales fell 2.8 per cent — and that, as Barclays analysts point out, was against a comparable period when they were “also down by about 3 per cent”. That divvy sell-by date looms.
Advertisement
New depths
Not everyone remembers big anniversaries. So here’s a reminder: today is World Plumbing Day. Don’t forget the flowers. It’s been celebrated in the past by an “Anglican bishop” in a “London sermon” and by “street theatre with a plumbing theme in India”. Or so says the organisation behind the big day.
It has tips, too: put “food colouring in your toilet tank. If it seeps into the bowl, without flushing, you have a leak.” You’ll also have a visit from a plumber — to make the exciting celebrations even pricier.