Prudential PLC (PRU.LN) said Wednesday that the majority of the U.K.-listed insurer's shareholders aren't asking for management changes after a period of turbulence around the company's failed attempt to buy American International Group Inc.'s (AIG) Asian business.

But people familiar with the thinking of two top 20 shareholders said Wednesday that they remain unhappy with the company's handling of their concerns, suggesting that the insurer may yet face a further campaign to remove the management.

Two of the company's largest institutional investors told Dow Jones Newswires that their concerns about Chairman Harvey McGrath and Chief Executive Officer Tidjane Thiam remaining in their jobs haven't disappeared, despite detailed talks with the management on the issue.

"The message coming from Prudential is that they are going to tough it out," a person familiar with one of the shareholder's intentions said. "We can and will act, both individually and collectively on this. There are several people who are still enthusiastic proponents for change."

A person familiar with another top 10 shareholder said: "We've made it clear that we're still unhappy with the way this deal has happened and the communication around it." Both people said that dialog between shareholders as to how to make the case remained active.

Several shareholders called for management changes after the collapse of the $35.5 billion deal to buy AIA Group Ltd. collapsed last month. Schroders PLC (SDR.LN), one of Prudential's top ten shareholders, told a U.K. newspaper "someone at board level should be accountable [for] the losses associated with this deal."

Institutional discontent over the price of the deal and in particular a GBP14.5 billion rights issue that would have been used to fund it, prompted Prudential to cancel the transaction after an abortive attempt to persuade AIG and its shareholders to accept a lower price.

Although McGrath and Thiam have apologized to shareholders for the deal, they insisted that ultimately the strategy behind it--to increase Prudential's exposure to fast-growing Asian markets--was the right one.

At a contentious shareholder meeting in London earlier this month, retail and institutional shareholders publicly called for McGrath and Thiam to stand down. Several major shareholders have since had meetings with the two men and other board members, asking for their resignations.

Speaking to Dow Jones Newswires in London earlier Wednesday on the sidelines of a conference, Prudential's chief financial officer, Nic Nicandrou, said that the majority of shareholders weren't asking for either of the two men to stand down, suggesting that the row had blown over. Nicandrou reiterated that Prudential's board had confidence in both men.

People familiar with the two shareholders concede some of the momentum that built up around the time of the annual meeting to replace Thiam and McGrath has disappeared.

Although there is still a residual resentment among shareholders at the cost of the AIA deal and communication around it, some shareholders are keen to move on and avoid more destabilizing incidents, the people said. Also with no immediate prospect of another shareholder meeting, any further lobbying to remove the men would have to be orchestrated by groups of institutional shareholders against a background where few are willing to publicly lead such a revolt.

Key to any serious attempt to unseat Thiam and McGrath would be the support of Capital World Investors, part of the Capital Group Cos. Inc. (CAP) group of funds; and BlackRock Inc. (BLK), who between them control around 16% of Prudential's equity. Although both were reported in the U.K. media to be opposed to the AIA deal, neither has since commented on whether they would like management to be removed.

A Capital spokesman declined to comment. BlackRock didn't immediately return calls seeking comment.

Nevertheless, both people familiar with the matter said major shareholders remained unhappy with management, would continue to press their case and expected to have further discussions on the issue with the board and other shareholders soon.

One option, one person said, would be for a group of shareholders to write to management, stating that their concerns still hadn't been addressed.

Prudential declined to comment beyond Nicandrou's remarks.

-By Jessica Hodgson; Dow Jones Newswires; +44207 8429373; jessica.hodgson@dowjones.com.

(Vladimir Guevarra contributed to this article.)
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