`Pru' chief quits as share deal report is due

Mick Newmarch, chief executive of Prudential, Britain's biggest insurer, shocked the industry yesterday by resigning just weeks before the Stock Exchange is due to report on a controversial share sale he made last October. Mr Newmarch was criticised when he exercised share options hours before the release by the Securities and Investments Board of a crucial report on pensions transfers, after which the Prudential share price fell in common with other insurers.

Mr Newmarch exercised a block of share options at 198.9p and sold the shares at 296p netting a profit of £203,000.

But the company said last night that Mr Newmarch had not resigned specifically over the Stock Exchange inquiry into his share dealings. Prudential said Mr Newmarch offered his resignation because "he found that the current relationship between the UK retail financial services regulators and both himself and the company has become unacceptable to him and he feels he is being put in an unacceptable position with regard to his position as chief executive of Prudential Corporation."

The Pru's statement added that the company believed Mr Newmarch had acted properly in his share dealings.

Keith Bedell-Pearce, a director and one of the leading internal candidates to replace Mr Newmarch, said the Stock Exchange inquiry was the final straw. "The questions raised about the share options just added to his feeling that he was becoming increasingly beleaguered. He felt he was having to spend too much time dealing with the nitty gritty of regulatory issues."

Mr Newmarch has been the industry's most trenchant critic of the financial services regulatory regime and had refused to join the new Personal Investment Authority, set up to regulate the sale of financial services to the public. He argued for statutory regulation of the industry rather than the self-regulation represented by the PIA.

A Pru spokesman said the board unanimously backed Mr Newmarch's stance on regulation and that the Pru still had no intention of joining the PIA.

Stephen Dias, insurance analyst at Goldman Sachs, said: "This is an enormous shock. Mr Newmarch was a huge factor in changing the destiny of the Pru in a very big way over the last few years."

Mr Newmarch, who spent all his career with the Pru, became chief executive in 1990 and was paid £834,068 last year. The Pru said any compensation was a matter for discussion, but his three-year rolling contract would not be relevant as he had resigned. Brian Corby, the Pru's chairman, has taken over as chief executive until a successor to Mr Newmarch is found.

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