Nick Prettejohn, chief executive of the Prudential’s UK arm, resigned from Britain’s second-biggest insurer yesterday after failing to secure the top job.

Mr Prettejohn, a former head of Lloyd’s of London insurance market, is understood to have been one of two candidates shortlisted to replace Mark Tucker as group chief executive after he said in March that he was leaving.

However, Mr Prettejohn, who was at the Pru for three and a half years, was pipped for the post by Tidjane Thiam, the finance director, who is due to start his new job at the beginning of October.

Mr Thiam was formerly head of the European division at Aviva, the Pru’s main domestic rival. He will become the first black chief executive to lead a FTSE 100 company.

Mr Prettejohn, who will leave in September, has won plaudits in the City for turning around performance at the Pru’s UK operations since his arrival in January 2006 after six years running Lloyd’s. He presided over a review of the British business, including exploring a sale to Resolution, Clive Cowdery’s life funds consolidator, and a possible relocation outside the UK — the group generates 80 per cent of its new business profits abroad.

The Pru committed itself in June 2007 to staying in the UK but with a focus on selling higher-margin products, such as individual and bulk annuities.

In March, the group reported a 4 per cent increase in annual UK sales of £947 million, based on annual premiums earned. New business profits slipped 1 per cent to £273 million because of a decline in margins but Pru UK’s figures compare well with its peers.

Prudential would not say yesterday whether Mr Prettejohn had another job, but said that he believed he had completed the turnaround of the UK concern.

Mr Prettejohn, who as the chairman of the Financial Services Practitioner Panel, which oversees the Financial Services Authority, has not been afraid to criticise the regulator for its inadequacies, said that the UK business had “a much clearer sense of purpose and momentum”.

Insiders said that Mr Prettejohn remained on good terms with the directors, including Mr Thiam.

Mr Prettejohn’s departure from Prudential prompted speculation that he was being lined up to replace Sir Sandy Crombie as chief executive of Standard Life. Sir Sandy told the board of the Edinburgh-based insurer in April that he would step down after a 42-year career once a replacement was found.

However, it is understood that Mr Prettejohn, who has a young family, was not keen to move to Standard’s Edinburgh headquarters and has ruled himself out of the job.

Mr Prettejohn’s replacement was named yesterday as Rob Devey, a former banking and insurance executive at HBOS, now part of the Lloyds Banking Group. He is in charge of the telephone and banking operations at Lloyds’ retail division.

Mr Devey has yet to formalise a start date, but will join on a basic salary of £550,000 a year with a potential bonus of up to 160 per cent, some 40 per cent of which will deferred. He will also benefit from a long-term award scheme that could pay up to 200 per cent of salary.

Shares in Prudential fell 12½p, or 3 per cent, to 400½p.