New AIG Chief: Let’s Make a Deal
June 30, 2017 by Leslie Scism
American International Group Inc.’s new chief executive Brian Duperreault said Wednesday he is open to slowing down the firm’s share buybacks and instead using the capital for acquisitions.
“Shareholders want to see value creation,” he said to reporters following the company’s annual meeting. “If I can present them something that is better value creation than a share buyback, I won’t get a hard time. “
Mr. Duperreault, a onetime lieutenant to former AIG CEO Maurice R. “Hank” Greenberg, was named CEO in May. His predecessor, Peter Hancock, agreed to depart following pressure from the board.
Mr. Duperreault’s task is to improve AIG’s profit margins after years in which it has trailed many peers. Many of its woes stem from its near collapse in the 2008 global financial crisis. A U.S. government bailout required it to sell off some prized businesses to fully repay nearly $185 billion provided by taxpayers.
Some activist investors—including Carl Icahn, who has a representative on AIG’s board—last year called for the insurance conglomerate to improve its results by splitting itself apart. But those same investors have since given AIG some leeway to improve returns using other methods. Mr. Duperreault has promised investors he wouldn’t split up AIG and instead would “grow it.”
The prior CEO, Mr. Hancock, pledged to complete at least $25 billion in share buybacks and dividends over the two years ending Dec. 31. Through early May, AIG had made good on $18 billion of that pledge.
But Mr. Duperreault said Wednesday he will be more receptive to other uses of the cash generated by its businesses.
“I prefer to apply the capital to grow the company and create some strategic moves that ultimately benefit the shareholder,” he said.
”The likelihood we would continue the [buyback] pace we’ve been on is low, because I think there are other things that I can use the money for,” he added.
The new CEO said he didn’t arrive at AIG with a specific acquisition plan, or list of deals, in mind.
“But I’m open for business,” he added.
AIG sells property and a wide range of liability insurance to businesses globally, and is well known for its coverage of multinationals. It also has a large U.S.-based life-insurance and retirement-savings business, and is a leading insurer of cars, homes and other property of wealthy people.
Mr. Duperreault praised AIG’s global footprint and diverse businesses and said there are “lots of growth opportunities,” internationally in particular.
He spent 21 years at AIG before leaving in 1994 to run three other companies, including consulting and insurance-brokerage firm Marsh & McLennan Co s., and insurer ACE Ltd.Last year, ACE acquired Chubb Corp., one of AIG’s biggest rivals, and now is known as Chubb Ltd.
His last stop before rejoining AIG was Bermuda-based Hamilton Insurance Group Ltd., which he helped found in 2013 with principals of hedge fund Two Sigma Investments. Hamilton’s goal was to apply computing to underwriting and pricing insurance. Since last year, AIG, Hamilton and Two Sigma have had a joint venture to sell insurance online to small businesses, using data analytics.
As part of Mr. Duperreault’s move to AIG, the three companies announced an expansion of that partnership. At AIG, Mr. Duperreault told shareholders Wednesday, he wants to use technology to “help us operate more efficiently and cost-effectively and to get the best information into underwriters’ hands more quickly.”
Write to Leslie Scism at leslie.scism@wsj.com
