| Maurice “Hank” Greenberg
AIG did not have a good fourth quarter in 2015 and that — and pressure from billionaire investor Carl Icahn — has founder and former CEO Maurice “Hank” Greenberg commenting. Here’s what happened in the fourth quarter of 2015:
• Poor underwriting and equally poor investment returns led to an operating loss of $1.3 billion.
• Operating income hit $1.4 billion.
• P&C losses were $2.3 billion.
That leads to a net loss of $1.4 billion and compares to a profit of $655 million in the fourth quarter of 2014.
Looking at all of 2015:
• After tax operating income — $2.9 billion.
• That’s down from $6.6 billion in 2014.
• Net income dropped more than 70%.
• It went from $7.5 billion in 2014 to $2.2 billion in 2015.
AIG’s leadership promised changes and results. It started with a cut of 400 senior positions toward the end of the year and last week cut two more major positions. Brian Schreiber — who ramrodded a bunch of billion dollar deals from 1997 to 2008 and then in 2008 helped shrink the company — has decided to move on. So has Seraina Maag who ran regional operations since 2013.
“I have served AIG with dedication and distinction for nearly two decades, With AIG’s strategy developed and moving forward, I now have decided to pursue new opportunities,” Schreiber said.
And Hancock said the blood-letting isn’t done. He’s going to do away with 20% of the company’s top 1,400 execs.
Hancock is also doing some reorganizing and named some changes last week. Jeff Hurd is the new COO and he will be responsible for transformation, administration and human resources. He’ll also oversee marketing and communications and global business services.
“The outcome of this effort is a new organizational design structured around clients, capabilities and market opportunities. It gives business leaders at different levels of the organization much greater end-to-end accountability for results and greater transparency into those results,” Hancock said.
Much of this has come about since billionaire investors — and major stockholders of AIG — Carl Icahn and John Paulson started calling for the splitting of the company into three entities:
As to the fourth quarter losses and the so-so 2015, Hancock said, “We’re working to become our clients’ most valued insurer and have a clear plan to maximize shareholder value that balances the interests of all of our stakeholders, including shareholders, debt holders, rating agencies, customers, employees and regulators.”
He noted the company has returned close to $12 billion to shareholders from share repurchases and dividends.
All this leads back to Greenberg. He said the short-term relief stressed by Hancock puts longer-term challenges at risk. And with Hancock letting Icahn and Paulson deeper into AIG’s decision-making is a huge negative.
“By doing that, he let a fox in the henhouse” Greenberg said. And he did it to stay out of a proxy fight. “I think that’s a mistake.”
Greenberg also agrees with Hancock that AIG needs to stand pat and stay diversified. A diversified company — he notes — has more advantages.
Source links: Insurance Journal, Carrier Management, Insurance Business America