Lex: Prudential

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In substance, Prudential’s decision to oust Jonathan Bloomer, its chief executive, is probably right. In style, it is singularly graceless.

Mr Bloomer made serious mistakes, including the failure to buy American General, to sell Egg and to signal properly last October’s £1bn rights issue. But he did a credible job in leading Prudential through terrible times for the insurance industry, restructured the UK operations and produced strong 2004 results. Where the balance between success and failure lies is debatable. In the end, however, this matters less than the fact that Mr Bloomer lost the confidence of investors - as demonstrated by the 5 per cent rise in the share price when his departure was announced on Thursday. Building trust among shareholders, after all, is one of the main jobs of a chief executive.

So is good succession planning for a chairman. Luring back Mark Tucker, who built up Prudential’s successful Asian business in the 1990s, looks like a coup for Sir David Clementi. Still, the timing looks odd. Last winter, when City outrage was at its fiercest, the Prudential chairman stood behind Mr Bloomer. Now that the pressure has abated, he is ushering Mr Bloomer out of the door with unseemly haste - sacking the latter a day after his birthday. If Sir David wanted to prove that he will let neither his executives nor his shareholders push him around, he has done so. He may now have to show a more human side, both to help Mr Tucker settle in and to smooth the ruffled feathers of the three divisional insurance managers passed over for the top job. A chairman, too, has to foster trust.

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