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A.I.G.’s Chief Executive to Resign After Turnaround Setback A.I.G.’s Chief Executive to Resign After Turnaround Setback
(35 minutes later)
A little over a year after staving off calls by activist investors to break up the American International Group, Peter D. Hancock, the insurance giant’s chief executive, said on Thursday that he would resign after investors had lost faith in his efforts to turn around the company.A little over a year after staving off calls by activist investors to break up the American International Group, Peter D. Hancock, the insurance giant’s chief executive, said on Thursday that he would resign after investors had lost faith in his efforts to turn around the company.
Last month, the insurer reported a fourth-quarter loss of $3.04 billion — one of its worst quarters since the 2008 financial crisis and a major setback in Mr. Hancock’s efforts to reshape the company.Last month, the insurer reported a fourth-quarter loss of $3.04 billion — one of its worst quarters since the 2008 financial crisis and a major setback in Mr. Hancock’s efforts to reshape the company.
As part of a transition plan, A.I.G. said on Thursday that Mr. Hancock would remain as chief executive until a successor was chosen after a “comprehensive” search by its board.As part of a transition plan, A.I.G. said on Thursday that Mr. Hancock would remain as chief executive until a successor was chosen after a “comprehensive” search by its board.
The announcement came just over a year after Mr. Hancock unveiled a plan to simplify A.I.G. and reduce its costs and risk following a monthslong dispute with the activist investor Carl C. Icahn and others, who had called for a breakup of the company.The announcement came just over a year after Mr. Hancock unveiled a plan to simplify A.I.G. and reduce its costs and risk following a monthslong dispute with the activist investor Carl C. Icahn and others, who had called for a breakup of the company.
In a message on Twitter on Thursday, Mr. Icahn said, “We fully support the actions taken today by the board of $AIG.” Mr. Icahn is the company’s fifth-largest shareholder, with a stake of 4.7 percent as of the year end, according to Bloomberg data.In a message on Twitter on Thursday, Mr. Icahn said, “We fully support the actions taken today by the board of $AIG.” Mr. Icahn is the company’s fifth-largest shareholder, with a stake of 4.7 percent as of the year end, according to Bloomberg data.
In late morning trading on Thursday, shares of A.I.G. were up about 0.6 percent.In late morning trading on Thursday, shares of A.I.G. were up about 0.6 percent.
“I believe this is the right decision to make for the company and all its stakeholders,” Mr. Hancock said in a news release. “Without wholehearted shareholder support for my continued leadership, a protracted period of uncertainty could undermine the progress we have made and damage the interests of our policyholders, employees, regulators, debtholders, and shareholders.”“I believe this is the right decision to make for the company and all its stakeholders,” Mr. Hancock said in a news release. “Without wholehearted shareholder support for my continued leadership, a protracted period of uncertainty could undermine the progress we have made and damage the interests of our policyholders, employees, regulators, debtholders, and shareholders.”
Mr. Hancock, a longtime J.P. Morgan executive and former vice chairman of KeyCorp, was named chief executive of A.I.G. in September 2014 after previously heading the company’s property-casualty arm. He joined the insurance company in 2010 as executive vice president for finance, risk and investments.Mr. Hancock, a longtime J.P. Morgan executive and former vice chairman of KeyCorp, was named chief executive of A.I.G. in September 2014 after previously heading the company’s property-casualty arm. He joined the insurance company in 2010 as executive vice president for finance, risk and investments.
He is the fifth chief executive to head the insurer since Maurice R. Greenberg resigned from the company in 2005 amid an investigation into its accounting by the New York attorney general at the time, Eliot Spitzer, and the Securities and Exchange Commission. After a 12-year court battle with the attorney general’s office, Mr. Greenberg and the insurer’s former chief financial officer, Howard I. Smith, agreed to a $9.9 million settlement last month.He is the fifth chief executive to head the insurer since Maurice R. Greenberg resigned from the company in 2005 amid an investigation into its accounting by the New York attorney general at the time, Eliot Spitzer, and the Securities and Exchange Commission. After a 12-year court battle with the attorney general’s office, Mr. Greenberg and the insurer’s former chief financial officer, Howard I. Smith, agreed to a $9.9 million settlement last month.
Mr. Greenberg, who is known as Hank, had built the company into a global insurance goliath over four decades.Mr. Greenberg, who is known as Hank, had built the company into a global insurance goliath over four decades.
But at the height of the 2008 financial crisis, A.I.G. teetered on the brink of collapse and had to be rescued in a $185 billion bailout by the federal government.But at the height of the 2008 financial crisis, A.I.G. teetered on the brink of collapse and had to be rescued in a $185 billion bailout by the federal government.
The company is one of three nonbank financial giants to be designated as systemically important financial institutions by the federal government. (The others are MetLife, which won a court battle last year to lift the designation, and Prudential Financial.) That “too big to fail” label means higher capital requirements and stricter oversight, although those are expected to be loosened under the Trump administration. The company is one of three nonbank financial giants to be designated as systemically important financial institutions by the federal government. (The others are MetLife, which is in a legal battle to have that designation lifted, and Prudential Financial.) That “too big to fail” label means higher capital requirements and stricter oversight, although those are expected to be loosened under the Trump administration.
Mr. Hancock replaced Robert H. Benmosche, a former MetLife chairman who came out of retirement in 2009 to head the insurer. Mr. Benmosche died two years ago.Mr. Hancock replaced Robert H. Benmosche, a former MetLife chairman who came out of retirement in 2009 to head the insurer. Mr. Benmosche died two years ago.
“Peter’s accomplishments at A.I.G., including his role in the company’s turnaround and in driving shareholder value, are immeasurable,” Douglas M. Steenland, the company’s chairman, said. “He tackled the company’s most complex issues, including the repayment of A.I.G.’s obligations to the U.S. Treasury in full and with a profit, and is leaving A.I.G. as a strong, focused and profitable insurance company.”“Peter’s accomplishments at A.I.G., including his role in the company’s turnaround and in driving shareholder value, are immeasurable,” Douglas M. Steenland, the company’s chairman, said. “He tackled the company’s most complex issues, including the repayment of A.I.G.’s obligations to the U.S. Treasury in full and with a profit, and is leaving A.I.G. as a strong, focused and profitable insurance company.”
To repay the government, A.I.G. sold dozens of businesses and other assets, cut its size in half and narrowed its focus, but that was not enough for some investors.To repay the government, A.I.G. sold dozens of businesses and other assets, cut its size in half and narrowed its focus, but that was not enough for some investors.
In October 2015, Mr. Icahn wrote an open letter to A.I.G., urging the company to sell or spin off additional assets and focus on becoming a property-and-casualty insurer. Mr. Icahn and John Paulson, the hedge fund manager, ended their threat of a proxy fight after the insurer gave up two seats on its board last year.In October 2015, Mr. Icahn wrote an open letter to A.I.G., urging the company to sell or spin off additional assets and focus on becoming a property-and-casualty insurer. Mr. Icahn and John Paulson, the hedge fund manager, ended their threat of a proxy fight after the insurer gave up two seats on its board last year.
A.I.G. chose a less severe plan to turn around its operations by selling assets, cutting costs and jettisoning less-profitabe insurance policies. A.I.G. chose a less severe plan to turn around its operations by selling assets, cutting costs and jettisoning less profitabe insurance policies.
But the insurer reported a large loss for the fourth quarter and was forced to bolster its reserves by $5.6 billion. A.I.G.’s shares declined 9 percent the day after its results were announced.But the insurer reported a large loss for the fourth quarter and was forced to bolster its reserves by $5.6 billion. A.I.G.’s shares declined 9 percent the day after its results were announced.
Despite Mr. Hancock’s impending departure, Mr. Steenland said the board believed that his two-year strategic plan announced last year was “the right plan” for the company and that it remained committed to financial targets and objectives previously announced.Despite Mr. Hancock’s impending departure, Mr. Steenland said the board believed that his two-year strategic plan announced last year was “the right plan” for the company and that it remained committed to financial targets and objectives previously announced.