Defence lawyers question estimated losses from departure of Prudential agents

DEFENCE lawyers on Thursday questioned expert estimates of the future profits lost by Prudential Assurance Co Singapore when 244 of its agents left, which relate to Prudential's claims of compensation from former top agency manager Peter Tan Shou Yi.

Referring to a media report of underwriting losses recorded by Prudential in 2015 and 2016, senior counsel Thio Shen Yi from TSMP Law asked how these losses squared with future profitability estimates made by Prudential's expert witness Larry Rubin.

Mr Tan is being sued by Prudential for allegedly instigating the defection of 221 agents and 23 agency leaders at his agency, Peter Tan Organisation, to rival insurer Aviva's subsidiary Aviva Financial Advisers in mid-2016.

Prudential is claiming that Mr Tan had breached contractual and fiduciary duties by poaching the agents for Aviva while he was still with Prudential.

Prudential's claims for compensation include projections for the profits that would have been made by the agents who left. According to profitability estimates prepared by Mr Rubin, the quantum would be about S$300 million if the period of loss is calculated as 10 years, or S$2.5 billion if the agents had stayed on indefinitely.

Mr Thio cited a 2017 report in The Business Times that Prudential recorded underwriting losses on integrated shield plans (IP) in 2015 and 2016. He asked witness Tan Eng Chuan if it was surprising that Mr Rubin estimated a new business profit (NBP) margin of over 200 per cent for Prudential's IP product PRUshield, given the reported losses.

The witness, formerly of Prudential's finance management performance team, said the question was beyond his technical expertise but noted that NBP estimates - projected future profit for a product over time - differ from the profit and loss figures for a given year. To his knowledge, Prudential's internal NBP estimate for PRUshield was positive in 2016, he said.

Mr Rubin is due to be called as a witness later in the trial, which began on Tuesday.