(Bloomberg) – American International Group Inc. Chief Executive Officer Peter Hancock, who is simplifying the insurer through asset sales, said the shrinking of the life unit doesn’t need to involve drastic moves.
“We are actively looking at ways to reduce the amount of capital tied up in these old legacy portfolios,” Hancock said Wednesday in a Bloomberg Television interview. “It’s really a shift in emphasis of the life business rather than any aggressive exits.”
Hancock has been reshaping AIG under pressure from John Paulson and Carl Icahn, the activist investors who initially asked the CEO to separate the life business from property-casualty operations and then won board representation. Icahn has pushed the company to improve margins and divest assets to escape the too-big-to-fail designation by the U.S. government.
Pretax operating income at the life business jumped 23 percent to $184 million in the three months ended June 30, on lower claims costs for death benefits and reduced expenses for staffing, the New York-based firm said Tuesday. While low interest rates pressured the sale of annuities, “our new business grew quite nicely in the life business,” Hancock said.
That helped the company post its first profitable period in four quarters and beat analysts’ estimates. Hancock also announced a $3 billion share repurchase plan Tuesday. AIG climbed 7.1 percent to $57.98 at 11:44 a.m. in New York, the biggest gain since February and the largest increase in the S&P 500 Index.