American International Group, Inc. (AIG)

[TRUISM]

AIG Names Peter D. Hancock New CEO

Hancock to Take New Post Effective Sept. 1, Replacing Robert H. Benmosche

By LESLIE SCISM and JOANN S. LUBLIN
Updated June 10, 2014 8:59 p.m. ET



Peter D. Hancock, a risk-management expert, has run AIG's property/casualty business since 2011. Philip Montgomery for The Wall Street Journal




American International Group Inc. AIG +0.20% named longtime banker Peter D. Hancock to succeed Robert Benmosche as head of the giant insurer whose woes nearly took down the financial system in 2008.

Mr. Hancock, 55 years old, will take the helm of AIG on Sept. 1, leading a revitalized company coming off almost five years of triage and restructuring under Mr. Benmosche.

Mr. Hancock, head of AIG's property/casualty division since 2011, was seen as a front-runner for the top job, but the move came sooner than many had expected. Mr. Benmosche, who just turned 70, previously had said he was interested in staying through the first couple of months of 2015.

Mr. Benmosche is being treated for cancer, but the company said he is as active as ever.

Mr. Hancock takes over an AIG vastly different than the one Mr. Benmosche inherited when he was brought out of retirement in 2009 to resuscitate the ailing conglomerate. Due to a series of bad derivatives bets placed by a financial-products unit within the firm, AIG went to the brink of collapse in 2008 during the height of the financial crisis and required a bailout of $182 billion.

In terms of employees and total assets, AIG is roughly half the size it was before the crisis, thanks largely to divestitures of two international life-insurance units and sales of numerous other businesses. The company, with a market capitalization of almost $80 billion, returned to profitability and in 2012 finished repaying taxpayers the aid it required in the bailout.

A colorful and at times outspoken executive, Mr. Benmosche was credited by many employees with helping to restore pride in the company.

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Mr. Hancock was born in London and grew up in Hong Kong. A former J.P. Morgan banker and risk-management expert, he will head a company that for more than 40 years has primarily been commaded by executives with forceful personalities: Mr. Benmosche and the man who built AIG into a powerhouse, Maurice "Hank" Greenberg.

Mr. Hancock, who is relatively reserved compared with those AIG bosses, in an interview credited Mr. Benmosche with saving AIG and said "the essential strategic steps of the turnaround" are complete. He said Mr. Benmosche will stay as an adviser "for as long as he feels like it."

AIG's nonexecutive chairman, Robert S. "Steve" Miller, said the company's board approved Mr. Hancock as the new CEO on Monday, in large part to alleviate speculation within the company and elsewhere about who would take over for Mr. Benmosche. The board hoped the decision "would help clear the air so people could get away from the water cooler and get on with life," Mr. Miller said.

Previously
Race for AIG's Top Job Has Two Favorites (May 11, 2014)
AIG Profit Falls 27% (May 5, 2014)
AIG CEO Received 2013 Pay Package of $14.8 Million March 13, 2014)
In a statement, Mr. Benmosche said, "We needed to name a successor. A long transition can become dysfunctional. Peter is ready and extremely capable and is fully prepared to run AIG."

Mr. Hancock's CEO compensation and employment contract haven't been discussed yet.

In recent months, the insurer's board had also looked closely at another internal candidate, Jay Wintrob, who runs the company's big life-insurance and retirement business.

Mr. Miller said he told Mr. Wintrob that "both candidates were viewed as highly valuable," and that Mr. Wintrob said he would stay. "The role Jay has going forward is something for Jay and Peter to talk out," Mr. Miller added. Mr. Wintrob didn't respond to a request for comment.

Mr. Hancock said, "I will work very hard to persuade him to stay."

Mr. Wintrob may be wooed about CEO jobs elsewhere, but "I can't imagine him making a [job] change—at least not quickly,'' said one retired insurance-industry recruiter who knows him well. "Jay is very loyal to AIG,'' the acquaintance added.

After joining AIG in 2010, Mr. Hancock was promoted to run the global property/casualty unit the next year in a move widely interpreted by analysts and investors as setting him up as the heir apparent. AIG's property/casualty unit, which spans more than 90 countries, is based in New York and long has been the heart of the company.

AIG shares weakened slightly after the news in aftermarket trading, down about 0.3% at $54.90.

In running the unit, Mr. Hancock sought to wring out costs and improve selection of risks the company insured, but some Wall Street analysts and investors were dissatisfied at the pace of progress. "We do aspire to have better profitability than we have today," Mr. Hancock said of the company broadly.

Mr. Hancock's background at J.P. Morgan included a stint running a unit that helped pioneer the use of complex derivatives. Those sorts of financial instruments nearly brought down AIG years later after they were misused by some of the firm's employees. Mr. Hancock later served as J.P. Morgan's chief financial officer and chief risk officer. When AIG hired him, it said his experience with such complex financial products would help with its rebound.





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