Prudential defends AIA bid, backs managers amid fury

Prudential Chairman Harvey McGrath defended the British insurer’s failed $35.5 billion takeover of AIA Group after investors called for him and Chief Executive Officer Tidjane Thiam to quit.

Prudential is “convinced” that the attempted purchase of AIA was the right strategy and that it was “in the best interests of investors,” the chairman told shareholders at the company’s annual general meeting in London today. The board doesn’t support management changes, said McGrath, who also apologised for the costs of the failed bid, while calling them “affordable.”

McGrath and Thiam are trying to show shareholders they have a plan to expand in Asia after the acquisition failed amid disagreements with large investors, the UK regulator and AIA’s parent, American International Group. The 47-year-old CEO has already apologised to investors for spending $651 million in fees on the deal, and Prudential yesterday ruled out making another attempt to acquire AIA.

“We want a couple of heads to roll,” shareholder Paul Ferro said at the meeting. “There’s been a huge amount of mismanagement. We could have had a year’s extra dividend for all that’s been wasted.”

Investors voted 94 per cent in favour of the insurer’s pay report at the meeting.

The insurer’s revenue in the first five months of the year grew 27 per cent to $1.97 billion, compared with the same period in 2009, as policy sales in Asia rose 33 per cent, Prudential said separately in a statement. The company’s Asian unit had its highest rate of sales growth on record in April and May, up 38 per cent from 2009.

Thiam said in a June 4 interview his main priority in Asia will be to hire more agents to sell policies in the region.