AIG Gets a CEO Who Can Stand Up to Icahn -- Heard on the Street
May 11 2017 - 11:27AM
Dow Jones News
By Aaron Back
American International Group is poised to choose a strong hand
to restore confidence in the insurance giant.
AIG plans to name industry veteran Brian Duperreault as chief
executive, The Wall Street Journal has reported. Mr. Duperreault
spent more than two decades at the company, leaving in 1994, but
that was a different AIG in a different era. His experience running
three other companies since then is what makes him a good choice to
lead the firm now.
Most notably, as chief executive of ACE Ltd., which eventually
acquired Chubb, Mr. Duperreault gained a reputation in the industry
as a prudent underwriter who priced plans and set reserve levels
conservatively.
This is precisely what AIG needs now, having taken surprisingly
large increases in reserves in its property and casualty book twice
in two years. The most recent, $5.6 billion reserve boost spooked
investors and prompted the resignation of Chief Executive Peter
Hancock. AIG's reinsurance deal with Berkshire Hathaway should cap
its losses on policies written through 2015, but questions still
hang over AIG's underwriting practices since then.
Mr. Duperreault should have the credibility to reassure
investors and rating agencies like A.M. Best, which is considering
an AIG downgrade. Importantly, he also has the stature and track
record necessary to stare down challenges from activist investors
like Carl Icahn, who was a thorn in Mr. Hancock's side.
Mr. Duperreault's main shortcoming may be his age. At 70, he is
unlikely to have a very long tenure at the head of AIG. That is a
pity, since he will be the insurer's sixth chief executive in 12
years.
At the moment, however, stabilizing the situation at AIG is the
priority. Mr. Duperreault looks to be the right man for the
job.
Write to Aaron Back at aaron.back@wsj.com
(END) Dow Jones Newswires
May 11, 2017 11:12 ET (15:12 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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