Group chief executive and director, Legal and General Group
Born: March 26, 1944, in Wales.
Education: University College of Wales, Aberystwyth, BS, 1965.
Family: Married Rosemary (maiden name unknown); children: two.
Career: Sun Alliance and London Assurance Company, 1965–1969, actuary; Hoare Govett & Company, 1969–1973, stockbroker; National Coal Board Superannuation Investments Department, 1973–1981, responsible for stock market activities; CIN Industrial Investments, 1981–1985, managing director for venture capital activities; CIN Investment Management Company, 1985–1988, chief executive responsible for pension fund assets; Legal and General Group, 1988–1991, group director; 1991, deputy chief executive; 1991–, group chief executive and director.
Awards: Achievement Award, British Insurance Awards, 2001.
Address: Legal and General Group, Temple Court, 11 Queen Victoria Street, London EC4N 4TP, United Kingdom; http://www.legal-and-general.co.uk.
■ David Prosser emerged from the hills of Wales to become one of the leading financial leaders in London in the 1990s. Prosser studied pure mathematics at University College of Wales, Aberystwyth, and initially became an actuary. He was later employed as a stockbroker before eventually moving to an executive position with CIN Investment Management Company. In 1988 he was hired by Legal and General Group to head its investments division, and by 1991 he had risen to the position of chief executive and director of the company. Known for his modesty and desire to avoid the spotlight, he was also considered a highly effective manager, running a tight ship and weeding out directors and other employees who failed to perform.
One journalist described Prosser as a "stereotypical Welshman—pinched face, thin-rimmed spectacles and no sign of extravagance" ( Scotland on Sunday , September 15, 2002). His background stemmed from the hills of Wales, where his grandfather worked as a hill farmer. Prosser was an active boy, standing out as a rugby player, though he reportedly was not ambitious in school. Nonetheless, his family history taught him a valuable work ethic. His first job, he said in a company newsletter sent to Legal and General Group workers, involved breaking stones at a rock quarry. Commenting on the experience, Prosser said, "It can be very hard work until you find the technique. I wouldn't want to do it now" (London Sunday Times, September 12, 1999).
Prosser credits much of his career success to his father, who veered from the family farming trade and studied to become a mathematics teacher. Prosser said in a union magazine, as reported in the London Sunday Times, that his father gave him the best piece of advice. "When I left home to go to university, my father told me to always be true to myself, to always try my best and to remember that a pint of beer eases stress" (September 12, 1999). Prosser followed in his father's footsteps, studying pure mathematics at University College of Wales, Aberystwyth, and earning first-class honors. While he considered teaching as a profession, financial incentive drove Prosser to become an actuary, a career path also chosen by his brother. In 1971 he was appointed a fellow with the Institute of Actuaries.
In 1965 Prosser joined Sun Alliance and London Assurance Company as an actuary. Four years later, in 1969, he moved on to become a stockbroker at Hoard Govett, where he remained until 1973. That year he was hired by the National Coal Board Superannuation Investments Department, where he was the head of a rich pension fund. He rose to an executive position in 1981, when he was hired as managing director of CIN Industrial Investments. In 1985 he was named chief executive of CIN Investment Management Company.
Prosser's career with Legal and General Group began in 1988, when he was hired as group director for investments. Legal and General Group was founded in 1836 by a group of six lawyers. The company expanded throughout the 19th century, survived both world wars, and continued to grow on an international scale for much of the 20th century. However, the company experienced several problems in the 1980s prior to Prosser's arrival. The company was entangled in a scandal involving certain sales of pensions, referred to in British newspapers as "pension misselling," in violation of British regulations. The firm's pension fund asset management also performed poorly, with the amount of assets managed by the investment division of the firm falling from £12.5 billion to £11 billion after the U.S. stock market crash of 1987.
Prosser's first year as head of the investment division was a success. Under his guidance, the division's asset pool increased to £14 billion. His success in the investment division led to his appointment as deputy chief executive of Legal and General Group in January 1991. Months later, in September 2001, he was named the group's chief executive and director.
Within months of taking over as chief executive and director, Prosser faced the unenviable task of announcing £84.6 million in losses resulting largely from failed mortgage-indemnity policies that were sold during the 1980s. The loss was reportedly the first sustained by the company in generations. The company was also required to pay fines and compensation of £600 million as a result of the pension misselling scandal.
Prosser turned the company around immediately. He cut costs and redirected the company. Instead of selling expensive insurance policies that were loaded with commissions for agents, the group began to sell simpler and cheaper mass-market products, such as index-tracking funds. Prosser cut commission rates by up to 25 percent, increased distribution, and bulked up considerably the company's spending on marketing. Legal and General Group reduced its self-employed sales force from more than 3,000 in the late 1980s to about 800 in the late 1990s.
Prosser became incensed in 1997 when Treasury Economic Secretary Helen Liddell announced that Legal and General Group had been placed on a "naming and shaming" list for not assisting in a more rapid resolution of the pension misselling scandal. Prosser's supporters quickly pointed out that the company had, in fact, done a great deal to correct the problems. According to insiders, as reported in the London Sunday Times , Prosser was "ruthless," withholding bonuses from directors when their staff failed to comply with insurance regulations. Said one insider, "People are culpable with David. He holds them accountable, and they are left in no doubt about that" (September 12, 1999).
Despite the controversy surrounding the pension misselling, Prosser directed a complete turnaround of Legal and General Group. In January 1997 Prosser announced that the company had experienced a 54 percent increase in new business during 1996. Prosser's goals were to continue to improve each year in terms of performance. According to Prosser, competitive pricing allowed the company to create a "virtuous circle" of growth in sales and profits, which allowed the company to sell competitive products (March 13, 1997).
Legal and General Group's successes during the 1990s led to speculation that another company, quite possibly a bank, would make an effort to take over the life insurance company. Prosser steadfastly denied the possibility, saying that the company continued to have great promise for expansion as an independent company. The company exceeded expectations in 1997, and company shares had risen considerably. In an interview with AFX News in 1998, Prosser pondered, "Why on earth would one want to quit with such a robust strategy, with such potential and with resources to back it up?" (March 12, 1998).
Prosser apparently had a change of plans in 1999, when his company announced that National Westminster Bank would take over Legal and General Group. Much of the attention over the planned merger focused on Prosser, who would have assumed the third-highest position at National Westminster—executive deputy chairman—reportedly to oversee bank operation, insurance and pension products, fund management, and small and medium-size corporate business. National Westminster at the time of the proposed merger was three times the size of Legal and General Group. One rival said of Prosser, "He's the most important Welshman in commerce, and I think that's a position he rather likes" (London Sunday Times, September 12, 1999).
Despite speculation that Prosser could eventually take over as chief executive of National Westminster, the deal never came to fruition. Royal Bank of Scotland seized an opportunity and took over National Westminster, thus leaving Legal and General Group as an independent company. After the failed takeover attempt, Prosser formed alliances with several other London-based companies to sell his company's products.
As the leader of Legal and General Group, Prosser was described as being modest, mild mannered, "staid and unflashy," and "a naturally cautious and reserved man who often seemed uncomfortable in his role as L&G's public figurehead" (London Sunday Times, September 30, 2001). Underneath his humble outer presence, however, was a precise manager. One colleague told the London Sunday Times, "I think he can be quite frightening to those further down the line. If you don't perform, he will pounce you" (September 12, 1999).
Commentators referred to his qualities as "typically Welsh." On the one hand, Mark Wood of Axa Insurance said of Prosser, "He has all the positive attributes of a Welshman. He is lucid, persuasive and at ease with himself. He is fun to be with" (London Sunday Times, September 12, 1999). On the other hand, the London Sunday Times commented that Prosser "also has some of that dark Welsh temper and has a disapproving stare that could curdle milk" (September 12, 1999).
Despite the apparent duality of his personality, Prosser earned great respect among his peers. In 2001 he was awarded the prized Achievement Award at the British Insurance Awards, a testament to a decade of success with his company. He survived largely by avoiding controversy and sustained periods of poor performance in the company, and he was cheered for guiding his company through a difficult period following the scandal in the 1980s and for his ability to direct the company after the failed merger with National Westminster. A humble Prosser told a reporter for the Sunday Times (London), "You can't be trained to be a chief executive. It's a team-building and team-leading job, but it's not the same thing as being a team member. You have to be a little bit separate. At the end of the day, the buck stops on your desk. Difficult decisions tend to stop on your desk" (September 30, 2001).
Prosser initially planned to retire in 2004 at age 60. However, in 2000 he announced that he would remain as Legal and General Group's chief executive through 2006 in order to direct the company through expected consolidations within the insurance industry. In April 2004 the company announced that it had begun a search for Prosser's successor, though some speculated that Prosser could be persuaded to delay his retirement even further. When the company announced its plans to identify a successor, Legal and General had the highest Standard & Poor's credit rating of any insurer in Great Britain.
See also entry on Legal & General Group plc in International Directory of Company Histories .
Barker, Sophie, "Prosser Stays to Steer L&G Past Consolidation," Daily Telegraph , November 17, 2000.
"The British Insurance Awards 2001 Supplement—The Achievement Award—Captain of Industry," Post Magazine , July 19, 2001, p. 67.
Durman, Paul, "Insurance Boss Still Ahead after 10 Years," London Sunday Times , September 30, 2001.
"Interview: Legal & General's Management Will Defend Its Independence," AFX News , March 12, 1998.
Northedge, Richard. "Profile: David Prosser: Making Sure All the Figures Add Up," Scotland on Sunday , September 15, 2002.
Rushe, Dominic, "Boy from the Valleys Scales City Peaks," London Sunday Times , September 12, 1999.
Smith, Alexander, "Mild-Mannered Prosser May Have More in Mind," National Post , September 7, 1999.
Wickham, Chris, "Interview: L&G Chief Says 1996 New Business More Profitable Than 1995," AFX News , March 13, 1997.
—Matthew C. Cordon