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PRUDENTIAL LAWSUIT

Defence questions witness' loss estimate from Prudential agents' mass defection

Plaintiff's expert witness had projected affected profits of about S$300m if period of loss is 10 years, or S$2.5b if the agents had stayed on indefinitely

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The insurer is claiming compensation from its former top agency manager Peter Tan Shou Yi, whom it is accusing of of 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.

Singapore

DEFENCE lawyers on Thursday questioned expert estimates of the future profits Prudential Assurance Co Singapore would forego when 244 of its agents left.

The insurer is claiming compensation from its former top agency manager Peter Tan Shou Yi, whom it is accusing of of 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.

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

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Prudential is alleging that Mr Tan had breached contractual and fiduciary duties by poaching the agents for Aviva while he was still with Prudential. Its claims for compensation include projections for the profits that would have been made by the agents who left.

Based on profitability estimates 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 Tan Eng Chuan, a witness for the plaintiff, 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.

Prudential's internal NBP estimate for PRUshield was positive in 2016, he said. In his role at Prudential, he had access to information about the NBP margins for the firm's products. These projections change "almost every quarter" to reflect the latest circumstances, he said.

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