Prudential sues ex-agency leader for up to $2.5 billion over loss of agents
Life insurer Prudential Assurance Company Singapore is suing former agency leader Peter Tan Shou Yi after 244 agents jumped ship to join him at rival firm Aviva, leaving 70,000 policies without agents.
The insurer said Mr Tan, 54, had offered loyalty bonuses to those who left with him and had agents sign non-disclosure agreements while he planned the move.
In a High Court trial that started yesterday, Prudential is claiming "significant and long-lasting loss" over the alleged poaching by Mr Tan.
It estimates its losses in profits to be around $300 million if the agents had stayed on to 2025; and if they stayed in perpetuity, the losses would amount to $2.5 billion.
The time frames were taken in view of a Pegasus Agreement that Mr Tan signed with Prudential just a year before the mass defection. It contained projections of his and his agents' performance for at least 10 years.
Mr Tan joined Prudential as an agent in 1997 and became a group agency manager in 2006. He built and led Peter Tan Organisation (PTO) until 2016, when he left Prudential.
Prudential accused Mr Tan of "surreptitiously" orchestrating the mass defection to Aviva and its subsidiary financial advisory firm from May to July 2016.
It also said Aviva "furnished a war chest of at least $100 million to $150 million" to recruit from PTO and expected to get a base of 250 agents.
PTO was the top producer at Prudential before the exodus and generated $141 million in new business profits as well as a total annual premium equivalent of $192 million from 2011 to 2015.
If Mr Tan, who earned $9.7 million in the year before he defected, could get another 100 agents on board, he would get an annual bonus as well, Prudential's lawyers from Rajah & Tann, led by Mr K. Muralidharan Pillai, said in their opening statement yesterday.
"The defendants would like the court to believe that this mass migration... was the result of coincidence, normal attrition and possibly even loyalty to (Mr Tan)," lawyer Paul Tan of Rajah & Tann said.
"One swallow may not make a summer, but 244 agents make it an unlawful, illegitimate en bloc solicitation of Prudential's agents."
Mr Tan, represented by lawyers from TSMP Law Corporation led by Senior Counsel Thio Shen Yi, contends the regulatory and commercial landscape made Aviva's model more attractive and it was decisive in causing the defection.
FOR MORE, READ THE STRAITS TIMES TODAY