Prudential suit: Exodus 'a long time coming'

Mr Peter Tan Shou Yi is being sued for up to $2.5 billion for allegedly instigating a mass defection to insurer Aviva Financial Advisers.
Mr Peter Tan Shou Yi is being sued for up to $2.5 billion for allegedly instigating a mass defection to insurer Aviva Financial Advisers.LIANHE ZAOBAO FILE PHOTO

Personal reasons the root cause of departure of 244 agents and agency leaders, say ex-manager's lawyers

The departure of 244 agents and agency leaders from Prudential Assurance Company Singapore in 2016 was "a long time coming" and accelerated by a cost-cutting exercise, the High Court heard yesterday.

Regardless of whether the life insurer's former top agency manager Peter Tan Shou Yi had attempted solicitation, the root cause of the departures would have been personal reasons, said Mr Tan's lawyers, led by Senior Counsel Thio Shen Yi.

These could include unhappiness with the firm and better prospects elsewhere.

Mr Tan is being sued for up to $2.5 billion for allegedly instigating the mass defection to rival insurer Aviva Financial Advisers.

His lawyers called it a "covetous and anti-competitive attempt by a corporate giant to wreak vengeance on a former independent contractor".

Mr Thio said the claim amount was "not genuine and not made in good faith", taking issue with the way it was calculated.

Prudential made a case that Mr Tan breached contractual and fiduciary duties by poaching the agents while he was still with the company, but Mr Tan is disputing this.

While Ms Wendy Ho Xiang Yu, a former agency leader from the Peter Tan Organisation (PTO) which Mr Tan built, testified this month that she was driven by a culture of fear to go along with defection plans, Mr Tan contends there was already discontentment to begin with.

  • 1,137

  • Number of people who left Prudential in 2016, a record number even if the 244 defecting agency leaders and agents in the current case were excluded, the defence said.

Since 2010, market and regulatory changes drove many agency leaders in PTO to want to switch to a financial advisory model, allowing them to sell insurance products from multiple companies instead of just Prudential, said Mr Tan's lawyers in an opening statement.

"There were several attempts by PTO to discuss a financial advisory with Prudential," the statement added. "Time after time, Prudential changed its mind at the last minute and was unresponsive. At the same time, and also as a result, the agency force accumulated distrust and unhappiness over the years."

After Mr Philip Seah became the chief executive of Prudential in December 2015, it introduced changes including cost-cutting measures that hit PTO. A top-performing agent could stand to lose over $30,000 in annual incentives.

A group of senior agency leaders started meeting in January 2016 to discuss the changes. They approached Mr Tan the following month for advice and by April, the senior agency leaders and a majority of others in PTO reached a consensus to leave Prudential.

While Ms Ho earlier testified that her fear of Mr Tan motivated several of her actions - including joining a Guangzhou trip to discuss the move despite her misgivings - Mr Tan's case is that undecided parties had been informed they should not attend the meeting.

The defence also said 1,137 people left Prudential in 2016, a record number even if the 244 defecting agency leaders and agents in this case were excluded.

It added that Mr Tan did not have any non-solicitation contractual obligation, is not a fiduciary of Prudential and did not engage in any alleged acts of solicitation.

 
 
 

"Peter falls outside the traditional categories of fiduciary relationships," the defence said. "He was an independent contractor."

In an oral statement, Mr Thio said Prudential is unable to prove that Mr Tan made representations to each of the agency leaders who left.

PTO Management and Consultancy (PTOMC), whose sole director and shareholder is Mr Tan, also denied yesterday it was his "alter ego" and that it assisted in his breaches of fiduciary duties.

Among other matters, the alleged acts of solicitation occurred in April and May 2016, before PTOMC even existed, said its lawyers led by Mr Nicholas Poon.

Mr Tan also did not need PTOMC to secure payments from Aviva, or a long-term business partnership.

A version of this article appeared in the print edition of The Straits Times on August 31, 2019, with the headline 'Prudential suit: Exodus 'a long time coming''. Print Edition | Subscribe