Prudential chairman Harvey McGrath said in an interview on Friday 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 chief executive 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 added. “They are supportive of management and of Tidjane, who they have seen as (Chief financial officer) help to drive the performance of the group.” Prudential’s decision on Wednesday to abandon the takeover came after AIG refused to cut the price tag from 35.5 billion dollars (29 billion euros) to nearer 30 billion dollars.
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 2009, was formerly Prudential’s financial chief. He told the Financial Times: “It is a clever thing to try and connect my inability to seal a 35-billion-dollar deal with my broad ability to run a company, but it is a fallacy.
“To say I’m inexperienced in running a 35-billion-dollar transaction, that’s true. Not many have experience of running a 35-billion-dollar transaction.” The collapsed AIA deal cost Prudential around 450 million pounds (540 million euros, 660 million dollars). McGrath said: “This was an ‘in-strategy’ transaction and was an acceleration of the focus on growing the business in Asia. “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.
“The boards understand that and are behind the strategy and were behind the transaction.” 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 2010. The acquisition of AIA would have doubled the size of Prudential and transformed it into the world’s top non-Chinese insurer by market capitalisation, ahead of major competitors Allianz and AXA.
Sales in Asia make up half of Prudential’s new contracts across a number of countries including China, India, Indonesia, Malaysia and Thailand. The company also has a strong presence in Britain and the United States.
London, June 4, 2010 (AFP)