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Pru tries to soothe investors as AIA goes back into play

PRUDENTIAL was trying to mend bridges with its main shareholders yesterday, as the US government began exploring other options for offloading AIG’s Asian arm, AIA.

Prudential chairman Harvey McGrath has spent the past three days scrambling to save his and chief executive Tidjane Thiam’s positions after their $35.5bn (£24.3bn) tilt at AIA was shot down. A brief statement confirmed the deal had been terminated. Prudential will pay a £153m break fee to AIG and £300m to a raft of City advisers, hefty charges that have irritated some investors.

Sources close to Prudential said the board and shareholders were “gauging what each other’s thinking” ahead of the insurer’s annual general meeting on Monday. The meeting, usually a staid affair, will be tense. Thiam and McGrath are battling to stay at the top of the company while shareholders want details of a new strategy for?Asian growth minus AIA.

Meanwhile, Europe’s third largest insurer, Assicurazioni Generali, is understood to be considering an offer for parts of AIA, which is effectively back on the market. A spokesperson said: “It’s premature to talk of deal.”

A source close to the Italian company told City A.M. it had previously been interested in AIA’s assets in the Philippines, and would look at them again. But the source added: “Generali doesn’t want to be Pru number two.”

On Wednesday, US Treasury Secretary Tim?Geithner said AIG was “now free to pursue a bunch of other options [for the disposal of AIA]”.