Walter Marlowe blogs at http://thematicinvest.wordpress.com/ and is the author of a forthcoming Searching Finance book on investment management.
“Boris Begs Pru to Stay”
So ran a recent headline in the business free sheet, City AM.
Boris Johnson, our mayor of London apparently wrote a letter to the Prudential Assurance asking them not to move their HQ out of London and to Hong Kong as they have discussed / “threatened” to do.
Boris promised to lobby all and sundry to prevent EU insurance industry regulatory changes which will increase the cost of doing business for insurers such as the Pru which are domiciled in the EU and which will affect their global operations, not just their locally incorporated operations. The proposed “solvency” regulations will require insurers to increase their capital reserves and will undoubtedly also result in increased administrative and reporting costs.
Something around 60% of the Pru’s business is outside the EU (inclusive of the UK) and the Pru has every strategic intention of growing its Asian and Emerging Market activities regardless of EU regulatory issues because it’s just following one of the principal Investing Themes of the early 21st century – the migration of wealth from West to East and to more limited degree, North to South. This is an unstoppable trend and as such it is perfectly reasonable for the Pru to consider moving its HQ to HK. (By the way the Pru’s CEO is a former Ivory Coast international civil servant so his attachment to London is nil by heritage).
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