AIG CFO to exit in top-level management shake-up

Thu Dec 10, 2015 11:30am EST
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By Richa Naidu and Sweta Singh

(Reuters) - Four top-level executives at American International Group Plc (AIG.N: Quote), including its finance head, will leave the insurer as part of a management shake-up aimed at simplifying operations and cutting costs.

The news comes amid mounting tensions between AIG Chief Executive Peter Hancock and activist investor Carl Icahn over the billionaire's suggestion in October that the company should split into three - an idea Hancock promptly rebuffed.

AIG's cost structure has remained a cause of concern for investors, and its underwriting operations have suffered from falling rates for commercial property and casualty insurance as pension funds have flooded the industry in search of yield.

The insurer, whose shares were down as much as 1.2 percent in morning trading, has said managing expenses and reducing structural costs are key focus areas. It is currently targeting reducing 23 percent of senior management.

"Hancock is putting in place people he feels more comfortable with," Brett Horn, an analyst from Morningstar said.

"(It) may also be a reaction to the criticism by Carl Icahn, I think that has prompted a greater sense of urgency at the company."

Icahn disclosed last month that he owned 42 million shares in AIG, making him the insurer's fifth largest shareholder, according to Thomson Reuters data.

The billionaire, who recently took stakes in Xerox Corp (XRX.N: Quote) and Freeport-McMoran Inc (FCX.N: Quote), has cultivated a reputation for sweeping changes, often controversial, in the companies he invests in.   Continued...

Peter Hancock speaks during the White House summit on cybersecurity and consumer protection in Palo Alto, California February 13, 2015. REUTERS/Robert Galbraith