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Prudential sues former top agency manager for up to S$2.5b over alleged poaching of 244 agents
INSURER Aviva Singapore had prepared a war chest of S$100 million to S$150 million to poach 250 top agents from rival Prudential Assurance Company Singapore, the High Court heard on Tuesday in a high-stakes lawsuit that could see claims as high as S$2.5 billion.
Prudential alleges that its former star group agency manager Peter Tan Shou Yi had instigated 221 agents and 23 agency leaders at his agency Peter Tan Organisation (PTO) to defect en masse to Aviva's subsidiary Aviva Financial Advisers in mid-2016. It claims that the 54-year-old had breached his contractual and fiduciary duties when he carried out the poaching while he was still a Prudential agency leader and being paid handsomely - S$9.7 million in 2015.
PTO was the top producer at Prudential before the exodus took place. It pulled in S$141 million in new business profits and a total annual premium equivalent (APE) of S$192 million from 2011 to 2015.
In the opening statement, Prudential's lawyers from Rajah & Tann detailed how Mr Tan secretly orchestrated the exodus using a "carrot and stick" approach in his targeted and aggressive campaign to "dislodge" the agents from Prudential. He was said to provide a base team of 250 agents under his 10-year deal with Aviva.
Mr Tan had at least 12 meetings with the agents including the one in Guangzhou where attendance was mandatory, gave extensive presentations, promised those who left with him loyalty bonuses while threatening the future of those who remained, the court heard.
To keep his solicitation a secret, Mr Tan warned agents not to make copies of the material distributed to them and also had them write their names on the material so that any photocopy could be traced. "Peter’s surreptitious actions are consistent with his own belief that he was under a non-solicitation obligation," Prudential said in the opening statement.
Prudential saw an unprecedented 70,000 policies suddenly left with no agents, or known as orphan policies, as a result of the exodus. To minimise the adverse impact on holders of these orphan policies, the insurer gave incentives to other agents to service them.
In noting that Mr Tan, who joined Prudential as an agent in February 1997, claimed his agency contracts had gone missing, Prudential made this comment in the opening statement: "Tellingly, Peter... only after the event reported to the police that his contracts with Prudential were 'lost'."
The insurer is also suing PTO Management and Consultancy (PTOMC), which Prudential claims is the directing mind and will of the legally trained Mr Tan. Its claims for compensation from both Mr Tan and PTOMC include the profits that would have been made by the departed agents and the quantum depends on the period of loss.
If the period of loss is calculated based on 10 years, the quantum would be about S$300 million. If the agents stayed forever, Prudential argues that the lost profits would amount to S$2.5 billion.
Mr Tan in his defence said it was not him but PTOMC that contracted with Aviva. He is not only denying he has non-solicitation obligation to Prudential, but also rejecting claims that he persuaded his agents to jump ship. Also, he points out that his departure from Prudential would anyway have prompted some of his agency leaders, and in turn agents to follow suit.
He points the finger at Prudential's refusal to adopt the financial advisory model (that would allow advisers to sell products from multiple insurers), extensive cost-cutting measures after Philip Seah became Prudential's chief executive and Mr Seah's "high-handed" attitude in running the insurer. Mr Seah is no longer helming Prudential.
Mr Tan says that significant and widespread unhappiness was prevalent in PTO as a result, and his agents told him that they wanted to quit and asked him to help explore options for them.
Through his senior counsel Thio Shen Yi of TSMP Law, Mr Tan is counter-suing Prudential, and his allegations include the insurer had invalidly terminated his service and inducing former PTO agency leader Wendy Ho to breach her non-disclosure agreement with PTO.
The trial started on Tuesday before Justice Chua Lee Ming and is scheduled to run 65 days.