Coverage: AIG CEO will leave after turnaround fails
American International Group CEO Peter Hancock will depart the insurer after less than three years on the job as the New York-based company continues to report losses.
Suzanne Barlyn and Nikhil Subba of Reuters had the news:
Hancock, 58, will remain as CEO until a successor is named. In a joint statement, neither he nor Chairman Douglas Steenland gave any clues as to who might replace him.
“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,” Hancock said.
Billionaire activist investor Carl Icahn, who is AIG’s fourth-largest investor, cheered Hancock’s departure: “We fully support the actions taken today by the board of AIG,” he tweeted.
AIG’s shares were down 0.4 percent to $63.21 on Thursday at the close of trading in New York. The stock trades at less than 85 percent of the stated value of AIG’s assets.
When Icahn first began acquiring his stake in 2015, he advocated splitting up AIG into three parts. The insurer instead embarked on a two-year turnaround plan developed by Hancock, which intended to return $25 billion to shareholders. Last year, AIG returned a total of $13.1 billion of capital to shareholders, the company said.
Lauren Gensler of Forbes reports that AIG has had six CEOs in the past 12 years:
The board met in New York on Wednesday and had been discussing whether to penalize or oust Hancock over the setback in the turnaround plan, according to the Wall Street Journal.
“[Hancock] 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,” said chairman of the board Douglas Steenland.
AIG was brought to its knees during the financial crisis and rescued by a $182 billion bailout from the government. It has cut costs and aggressively sold off businesses in an effort to boost profitability but has posted losses in four of the last six quarters.
AIG’s corner office has been a revolving door since Maurice “Hank” Greenberg left the company in 2005 amid allegations of fraud. Greenberg had built AIG into a global insurance juggernaut over four decades. When Hancock was named chief executive in 2014, he became the company’s sixth CEO in nine years.
Berkeley Lovelace Jr. of CNBC.com reports that AIG stock rose on the news:
Shares of AIG were up 1.75 percent in premarket trading after the news.Hancock, 57, will remain CEO until a successor is named, as part of the company’s transition plan.“It has been an incredible privilege and honor to run this great company and work with the many talented colleagues who serve the needs of their clients every day,” Hancock said in a statement.“I’m extremely proud of our organization and the steps we have taken to position the company for success long into the future,” he said.Last month, the Wall Street Journal reported that AIG’s directors were discussing whether to penalize or oust Hancock over a major setback in the insurance firm’s turnaround plan.AIG’s fourth quarter marked a critical midpoint in the ambitious two-year strategic plan aimed at turning the company around. AIG’s net loss widened to $3.04 billion, or $2.96 per share, in the fourth quarter ended Dec. 31, from $1.84 billion, or $1.50 per share, a year earlier.