James Moore: Would we really miss the man from the Pru?

So the man from the Pru is thinking of packing his bags and heading for Hong Kong. Yes, it is not only the banking industry that stomps its feet, raises its fists and threatens to stalk off when things aren't going its way. Life insurers do it too. It doesn't look any prettier, though. But let's be fairer about this than those insurers have been to their customers for the past 20 years (one reason why the regulatory screw has been tightening and why they might lack sympathy).

The so-called Solvency 2 regime being imposed by Europe doesn't appear to be terribly clever. It could, in fact, be very damaging if (as has been suggested, although admittedly by insurance bosses) it isn't just the insurers who suffer, but their annuitants and pension policyholders too. You don't really want a generation of people with money purchase pensions realising that all that saving was hardly worth the effort.

It would also be damaging were Solvency 2 to force another shift out of equities by insurers. Their shareholdings have already been sold down once, as a result of the last set of regulatory reforms imposed by the Financial Services Authority at the worst possible time. That set of reforms was hardly unjustified. The regulator had little choice but to act after a number of insurers had allowed themselves to flirt with insolvency through a combination of unhelpful markets and basic mismanagement.

A long-term savings institution going down doesn't have the impact of a bank going bust. Governments don't have to step in with truckloads of taxpayers' cash to avert financial armageddon. However, when it happens it is still brutal on policyholders. One only needs to say Equitable Life to see that. However, thanks to the reforms and some hard lessons the industry handled the financial crisis remarkably well. The trouble is European regulators aren't listening. So Prudential has broached the nuclear option, perhaps as a way of prodding British officials into arguing its case more forcefully. It is playing a dangerous game. Pru denies it is making threats, except that it is. And when you make threats, people tend to react badly. In other words, this could easily be seen as another mis-step by Pru's management.

Shareholders might like to meditate on that. This is a company that has suffered far more from its managers than it has from its regulators. It was Prudential's management which burned through hundreds of millions of pounds on two disastrously mishandled failed acquisitions.

Lest we forget, Prudential was also by a distance the worst mis-seller of personal pensions and dragged its heels when it came to sorting out the mess. If the man from the Pru is going, would we really be worse off for seeing the back of him?