Prudential wins lawsuit against former top agency manager

Singapore

PRUDENTIAL Assurance Co Singapore has won a lawsuit against its former top group agency manager, Peter Tan Shou Yi, over the poaching of more than 220 agents for rival Aviva.

Compensation will be determined when the insurer's loss of profit has been assessed.

In a 49-day hearing, the High Court heard how Mr Tan who joined Prudential as an agent in late 1996 subsequently became the helmsman of its biggest and most successful agency unit Peter Tan Organisation (PTO), and received S$56.2 million in total remuneration between 2006 and 2016.

The lawsuit in which the insurer is represented by Rajah & Tann Singapore's Senior Counsel Murali Pillai and Luo Qinghui, has thrown the spotlight on how competitive the insurance industry was. The court heard Aviva had offered a S$15.3 million sign-on bonus to Mr Tan and it had a war chest of S$100 million to poach the agents.

Although Mr Tan denied that he had solicited the agency leaders and agents at PTO to jump ship to Aviva's financial advisory subsidiary Aviva Financial Advisers (AFA), his acts were found by Justice Chua Lee Ming to be in breach of his contractual obligation to conduct his insurance business with integrity and honesty.

In orchestrating and executing the en masse migration of the agency leaders and agents in mid-2016, Mr Tan had coached the leaders to persuade their agents to leave, as well as lied that the Monetary Authority of Singapore was "very supportive" of the move to Aviva, and that 200 departing agents would be pre-cleared in their applications.

He also made the agency leaders who attended his discussions about the migration sign non-disclosure agreements, the breach of which would result in them being liable for S$50 million in compensation.

He provided templates for the agents to terminate their agency agreements and decided that these notices would be tendered to Prudential on June 15, 2016 - after consulting his "feng shui" master.

He instructed the leaders to take their agents on a trip to Bangkok, sponsored by Aviva on that day, and to take away their phones during games in order to prevent Prudential from contacting them to get them to reconsider leaving.

However, the judge held that Prudential had proved only 23 leaders and 204 agents, or 227 out of the 244, had left because of Mr Tan's wrongful solicitation. Hence, the 56-year-old is only liable for the profits that the insurer could have earned from these 227.

Justice Chua directed the expert witness of Prudential to re-compute the insurer's loss of profits arising from the sales that these 227 would have made between May 2016 - when Mr Tan started talking to the leaders about moving to Aviva - and July 2016 when he had served out his termination notice and not subject to his non-solicitation obligation thereafter.

Although Mr Tan had to abide by a non-solicitation obligation when he was with Prudential, it was merely an agency instruction. It was not present in the agency agreement or manager agreement that he had with Prudential, Justice Chua elaborated in the 132-page judgement.

Prudential's claim against PTO Management and Consultancy was dismissed after the judge found that Mr Tan did not owe the insurer any fiduciary duty, so this firm that was set up for providing services to AFA could not have assisted him to breach the duty.

Counterclaims by Mr Tan were also not successful, and these included Prudential's alleged inducing of two agency leaders to breach the non-disclosure agreements they had with Mr Tan. The duo had secretly made audio recordings of some meetings where Mr Tan talked about the mass departure and these were heavily relied on during the trial.

Justice Chua said the purpose of the non-disclosure agreements was to conceal Mr Tan's "very own breaches of duties" owed to Prudential. "Allowing such a claim would make a mockery of the law."

The duo have since been sued by Mr Tan, but the proceedings are on hold pending this judgement.

Defended by Senior Counsel Thio Shen Yi from TSMP Law, Mr Tan told The Business Times through his lawyers that he estimated the compensation he has to pay would amount to less than 0.5 per cent of Prudential's claim.

He said: "I have asked my lawyers to study the judgment to see if there is anything they disagree with, so that I can consider all my options in an informed way."

He had left AFA and the insurance industry in March 2020, and is now doing business consultancy.