The CEO of AIG, Peter Hancock had lost confidence in the company’s board members and most of the big name investors. He also squandered many of his staff’s faith in him even before the board members and investors lost confidence in him.
After American International Group Inc.’s disappointing quarter in November 2015 when Peter Hancock had been CEO for a year only, he told his employees that they should not be counting on lifetime jobs. A lot of those employees felt insulted – some cried and some even quit the company.
Hancock quit AIG on Thursday, and this was just like the long leader line at the insurer who believed in making promises, but was not able to deliver them. Peter Hancock, who was a former banker who had drawn a lot of skepticism for his vision of turning AIG Inc. into a technology enterprise, will be staying as interim CEO till a replacement is named for him.
While Hancock was CEO, AIG used up higher-than-expected funds on almost all segments they operate in (like commercial vehicles, environment liabilities, workers’ compensation, and the guaranteed accident victim payments too). Although these policies were drafted before Hancock took the helm, it was not easy to avoid blaming him for it. The quarterly loss of the company was $3.04 Billion in February and the profitability target for 2017 was lowered because of that. The decision to take a hefty reserve charge was made by Hancock and it was the right decision, which would make the job of the next CEO easier, said AIG Inc.’s former general counsel, Tom Russo. Tom retired last year.
There was a drop of 23 cents for AIG to $63.21, which extended the loss after Dec 31 to 3.2 percent. Carl Icahn, one of the shareholders said that they support the actions that were taken by the AIG board today fully.
Both Icahn and John Paulson, another activist investor, who won the representation of the board last year, are wanting immediate moves to push up the price of the shares. The comments by analysts at Evercore Partners Inc. and Barclays Plc didn’t help shape the company as they said that the company was losing their credibility. The ratings by S&P Global were downgraded for AIG in January and AM Best gave the company another blow when they said that they would be reviewing the grades of the insurer in these challenges in risk management and reserving.
Even other board members, including a director that was chosen by Icahn, were growing impatient with Hancock. They discussed the future of the company on Wednesday. On Thursday, Hancock announced that there was no sense in sticking around without the complete support of the company’s shareholders. AIG said that he wasn’t available to comment on Thursday.