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Sat, Jun 05, 2010 - Page 10 News List

Prudential chairman says no heads to roll over AIA

AFP , LONDON

Prudential chairman Harvey McGrath said in an interview yesterday that no heads would roll at the British insurer after it abandoned an ambitious takeover of AIG’s Asian unit, AIA.

“The board is completely behind the management team. No one has offered to resign and no one has been asked to resign,” McGrath told the Financial Times.

The aborted takeover had been masterminded by Prudential CEO Tidjane Thiam, and many commentators said his career had been badly tarnished.

“There are a couple of shareholders calling for change, but they are outliers. The vast majority of our biggest investors are saying they don’t want to see change at the top,” McGrath said.

“They are supportive of management and of Tidjane, who they have seen as [chief financial officer] help to drive the performance of the group,” McGrath said.

Prudential’s decision on Wednesday to abandon the takeover came after AIG refused to cut the price tag from US$35.5 billion to around US$30 billion.

McGrath said the top team at Prudential was “quite devastated” when it heard AIG had rejected the renegotiated price.

“But we were not worried at all about our positions,” he said.

Thiam, who became chief executive in October, was formerly Prudential’s financial chief.

“It is a clever thing to try and connect my inability to seal a US$35 billion with my broad ability to run a company, but it is a fallacy,” he told the Financial Times.

“To say I’m inexperienced in running a US$35 billion transaction, that’s true. Not many have experience of running a US$35 billion transaction,” he said.

The collapsed AIA deal cost Prudential around £450 million (US$660 million).

“This was an ‘in-strategy’ transaction and was an acceleration of the focus on growing the business in Asia,” he said.

“Just because this transaction ... did not work — or failed if you want to say that — it doesn’t mean that the underlying strategy has a problem,” he said.

“The board understand that and are behind the strategy and were behind the transaction,” he added.

Despite the collapse of the AIA deal, Thiam had stressed earlier this week that Prudential would maintain a strong focus on growing its business in Asia.

He also said the group’s existing Asian business had helped it deliver a “record performance” in the first quarter of this year.

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