Peter D. Hancock, AIG’s president and chief executive officer, has announced he is resigning from the titan insurer.
Hancock, 57, will continue to serve as CEO until a successor has been named. AIG’s board will conduct a comprehensive search for a successor.
“I believe this is the right decision to make for the company and all its stakeholders,” Hancock said in a statement. “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.”
Voices at the gate
Hancock has been beset by vocal shareholders desperate for a return to AIG’s previous industry-high profit margins. Its Q4 results, announced on Valentine’s Day, marked a critical crossroads in Hancock’s ambitious, two-year plan announced in January 2016 designed to reverse AIG’s fortunes.
Unfortunately, the carrier’s net loss instead widened to $3.04 billion, or $2.96 per share, in Q4, from $1.84 billion, or $1.50 per share, a year earlier. The insurer has continued to suffer losses in several key lines, among them commercial-vehicle cover and workers’ compensation.
Activist investors Carl Icahn and John Paulson have maintained that AIG should be broken up into three companies, one offering P&C coverage, another providing life insurance and a third backing mortgages. A more scaled-back AIG, they theorize, would be a strong step toward the insurer shedding its regulatory designation as a systemically important financial institution.
On Jan. 20, AIG announced it would pay about $10 billion to Berkshire Hathaway Inc. to assume risks of further losses on many of those policies. It was posited that reinsurance deal could generate a pretax gain of about $2.6 billion in Q1 2017 alone.
Icahn, who has been one of Hancock’s loudest critics, tweeted this morning that he supports the move. AIG’s shares were up 1.75 percent in premarket trading, following the announcement.
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Who will succeed? The speculation game begins
“Peter’s accomplishments at AIG, including his role in the company’s turnaround and in driving shareholder value, are immeasurable,” Douglas M. Steenland, AIG’s chairman of the board, said in a statement. “He tackled the company’s most complex issues, including the repayment of AIG’s obligations to the U.S. Treasury in full and with a profit, and is leaving AIG as a strong, focused and profitable insurance company.”
AIG’s board still has faith in Hancock’s plan, said Steenland, adding that he remains committed to the financial targets and objectives set forth by Hancock and his management team.
Among that team of executives at AIG is head of Commercial Robert Schimek, who could be in the running to succeed Hancock. Nation Underwriter Property & Casualty profiled Schimek in March 2016, at which time Schimek said he was resolute that AIG would improve its commercial property/casualty accident year loss ratio by six points.
An insider at AIG said any speculation as to who would succeed Hancock is just that: speculation: “At this point, there is no heir apparent.”
Hancock was named president and CEO of AIG in September, 2014, when he was also elected to the its board. Before that, he served as CEO of AIG Property Casualty. Hancock joined AIG in 2010 as executive vice president, Finance, Risk, and Investments.
“We are on course to deliver higher quality, more sustainable earnings and have dramatically reduced reserve risk,” Hancock added. “The Board and I are confident in the ability of this team to continue to execute our strategic plan and deliver strong results.”
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