British insurer Prudential's management sought to ease shareholder anger over its botched bid for AIG's Asian unit at a meeting on Monday, unveiling bumper sales and apologizing for the misadventure's huge costs.

But Prudential defended having made the $35.5 billion agreed offer for American International Assurance (AIA), which would have made it Asia's top-ranked foreign insurer, and swept aside calls for directors to resign over what one shareholder said was a strategic foul-up of momentous proportions.

We remain convinced we were right to pursue this business opportunity. We feel it was a risk in proportion to the advantage we would have gained, Chairman Harvey McGrath told several hundred shareholders at the annual general meeting in London.

Prudential, Britain's largest insurer, was facing many of its investors for the first time since the Asian takeover bid was pulled last week after a tortuous process that cost it around 450 million pounds ($650 million).

Please believe ... how sorry we are that we incurred costs, only to see the deal fall at the final hurdle, McGrath said, though he dismissed calls for a change of top management.

We do not believe that the failure to consummate the AIA deal should lead to a shake-up of strategy or leadership.

Chief Executive Tidjane Thiam, a high flyer whose reputation has been dealt a body blow by investor negotiations around the Asian bid, vowed during almost three hours of vocal questioning from shareholders to restore strained ties.

I know that some of our, my, actions put a considerable strain on relations with shareholders. I very much regret that, he said. I have two tasks now -- to take advantage of the opportunities ahead of us and (to) start the process of restoring your confidence. I will to do this as long as you wish for me to be your chief executive.

Prudential's share price was down 1.9 percent at 545.50 pence by 1330 GMT, when the STOXX 600 European insurance sector index was down 0.12 percent.


At Monday's rescheduled annual meeting -- originally intended as the meeting for shareholders to approve the Asian takeover -- many expressed their discontent to loud applause.

I don't think the seriousness of what you've done wrong is sinking in. You've got things so fundamentally wrong, you need a radical shake-up here, investor John Farmaton told the board.

Investor Colin Sains said: It's absolutely appalling -- giving away half a million pounds doesn't seem to me like good business sense. I can't see how their jobs are tenable.

But both small and large investors were divided on whether Thiam, who has been in the top job less than a year, should step down over the failed deal.

Thiam has faced demands for his head from top shareholders including British asset manager Schroders.

But he found support for the Asian move among some small investors on Monday and Euan Stirling, investment director at Standard Life Investments, the 17th largest shareholder in Prudential, told BBC radio Thiam should stay.

We look to the future and would it serve our interest best if there were removals of senior executives from the top of the company? I don't think that is the case.


Earlier, the insurer published a 28 percent jump in sales during April and May, ahead of 26 percent growth reported in the first quarter -- numbers it said demonstrated the business remained on track despite the Asian distraction.

The insurer said its strategy of pursuing capital-efficient growth with a focus on Asia was intact despite the failed bid.

A takeover of AIA would have given Britain's largest insurer a commanding position in one of the world's fastest growing financial services markets but it was forced to ditch the bid last week after shareholders complained about the price.

At the weekend the company denied a press report that it planned to resurrect the deal before the end of the year. McGrath told shareholders there was no decision yet on whether Pru could take a smaller stake in AIA in the event of AIG resurrecting a previous plan to sell it via an IPO.

($1 = 0.6831 pounds)

(Additional reporting by Raji Menon; Writing by Clara Ferreira-Marques and Myles Neligan; Editing by Andrew Callus, Greg Mahlich)