AIG is on the hunt for its seventh chief executive since 2005 after shareholder pressure in the wake of a $3bn quarterly loss prompted Peter Hancock to stand aside from the helm of the second-biggest US insurer by market value.
Just a day after AIG directors held a board meeting to discuss his future, the company said on Thursday that the 58-year-old planned to resign. The former JPMorgan banker has struggled to return AIG to former glories after its $185bn financial crisis bailout.
Douglas Steenland, chairman, praised Mr Hancock for tackling AIG’s “most complex issues” during his two and a half years as chief executive and thanked him for his work to repay the US Treasury.
However, Carl Icahn, the activist billionaire who has targeted the group, indicated that directors had shown the Englishman the door after AIG last month disclosed its fourth loss in six quarters.
Mr Hancock appeared to acknowledge wider investor dissatisfaction with the performance of AIG. “Without wholehearted shareholder support for my continued leadership, a protracted period of uncertainty could undermine the progress we have made,” the outgoing chief said in a statement.
Mr Hancock, who succeeded the late Bob Benmosche, was the latest in a series of executives to run AIG after Hank Greenberg, who led the group for almost four decades, left in 2005 during a probe into its accounting practices.
As part of a plan to revive the insurer’s fortunes, Mr Hancock has accelerated cost-cutting efforts and disposed of AIG assets including its $3.4bn mortgage insurance division.
Returns, however, have remained subpar. AIG has taken a series of reserve charges as claims costs have been higher than expected. The latest loss pushed its shares down 9 per cent on the day it was announced as Mr Hancock told investors that AIG was lowering returns targeted for this year three months after it set the goal.
The departure is a success for Mr Icahn, who had called publicly for the chief executive to go before he secured a boardroom seat last year, although he has yet to succeed in breaking up the group. The rebel shareholder said on Thursday he “fully supports” the actions that he said had been taken “by the board”.
Meyer Shields, an analyst at KBW, said the activists were far from the only shareholders to be critical of the insurer’s performance under Mr Hancock. “He hadn’t done what he needed to do,” he said.
Mr Hancock will remain in position until a replacement is found. Amit Kumar, analyst at Macquarie, said it was likely that directors would look outside the company. “We don’t see a natural successor at the firm,” he said.
Douglas Steenland, AIG chairman, said in the statement that Mr Hancock was leaving the company “strong, focused and profitable”. He added that AIG would continue with the strategic plan set out by Mr Hancock and that it remained committed to its financial targets and objectives.
AIG shares were down 0.1 per cent by early afternoon in New York.
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