By Leslie Scism and Joann S. Lublin
American International Group Inc. on Monday named Brian
Duperreault -- a onetime lieutenant to former CEO Maurice R. "Hank"
Greenberg -- as the firm's new chief executive.
Mr. Duperreault, 70 years old, is the founder and CEO of
Bermuda-based Hamilton Insurance Group Ltd. Mr. Duperreault spent
just over two decades at AIG before leaving to run three other
companies. His résumé includes a widely praised turnaround of
consulting and insurance-brokerage firm Marsh & McLennan
Cos.
News of Mr. Duperreault's hiring was first reported Wednesday by
The Wall Street Journal.
In returning to AIG, Mr. Duperreault will face the challenge of
improving its financial results amid fierce industry competition.
The insurance conglomerate has paid off a nearly $185 billion U.S.
government bailout extended during the global markets meltdown of
2008, but it had to sell many businesses to repay taxpayers. AIG's
profit margins have notably lagged behind many of the insurer's
rivals since its near collapse.
Separately, AIG said Monday that it had agreed to acquire
Hamilton's U.S. platform for an estimated price of $110 million, a
move seen as deepening AIG's push into big data and analytics. AIG
and Hamilton also announced a reinsurance partnership, and AIG
agreed to pay Hamilton as much as $40 million for the firm
releasing Mr. Duperreault from restrictive covenants that could
have restricted his hiring.
The past six months have been particularly tumultuous for AIG.
Just a few weeks after the firm posted disappointing fourth-quarter
results, CEO Peter Hancock in March said he would resign from the
insurance giant after less than three years at the helm. Many board
members were unhappy about setbacks in the company's plan for
boosting profitability, while several also feared a potential fight
with AIG shareholder and activist investor Carl Icahn.
Mr. Hancock agreed to stay until a successor was found.
AIG executives are carrying out a two-year strategic plan
unveiled in January 2016 -- in response to pressure from Mr. Icahn.
Many goals are on track to be achieved, such as cutting costs and
returning $25 billion to investors through dividends and share
buybacks, analysts have said.
AIG board members don't expect their new leader to change the
current strategic direction at the giant insurer, the people
familiar said.
In brief comments Monday at a previously planned AIG event
highlighting its consumer-insurance businesses, Mr. Duperreault
said, "I didn't come here to break the company up, I came here to
grow it." It was an apparent reference to some activist investors'
calls over the past two years for the insurance conglomerate to
improve its results by splitting itself apart. Mr. Duperreault
noted AIG's "tremendous commitment" to share buybacks but said
capital also will be deployed to expand the company.
He said, too, that AIG's claims reserves appear reasonable,
which alleviates concerns of some analysts that he might take a
large charge against earnings to bolster them. Mr. Duperreault said
he wants continued investments in data science to better assess
insurance risks, with AIG to be "at the forefront of the
industry."
While not involved in the just-completed CEO search, Mr. Icahn
previously contacted Mr. Duperreault about running AIG, people
familiar said. The outreach occurred around the time of Mr. Icahn's
initial AIG investment, disclosed in fall 2015. After AIG's
announcement, Mr. Icahn wrote on Twitter, "Very pleased the $AIG
board is finally making some of the much-needed changes we've been
advocating the last 18 months."
Mr. Duperreault was at AIG in the years when Mr. Greenberg was
transforming it from a mediocre property-casualty insurer into a
powerhouse with financial-services operations that spanned the
globe. In an interview Monday, Mr. Greenberg said of Mr.
Duperreault's 21 years at AIG, "obviously, that was a great
foundation." He has the experience needed "to make changes to
improve [AIG's] results. I wish him the best of luck." said Mr.
Greenberg, 92, who now runs insurance and investments conglomerate
Starr Cos.
The hiring of Mr. Duperreault will mark the second time AIG has
recruited a chief executive past normal retirement age. Robert
Benmosche was 65 when he left retirement to run the insurer in
2009.
AIG said Mr. Duperreault will receive an annual base salary of
$1.6 million, a short-term annual incentive target of $3.2 million
and an annual long-term incentive award of $11.2 million.
In addition, Mr. Duperreault will receive a one-time, make-whole
cash award of $12 million for unvested Hamilton equity awards
forfeited with his appointment as chief executive and a one-time,
sign-on award of options to purchase 1.5 million AIG shares.
The Bermuda-born Mr. Duperreault, a mathematics major at St.
Joseph's University in Philadelphia, joined the insurance industry
in 1973 "almost by accident," according to a speech on Hamilton's
website. "I was looking for a job and saw an ad for actuaries at
AIG." Just out of the U.S. Army, "I didn't know what an actuary was
and didn't know anything about insurance, but I needed a job." He
took one of the actuarial positions and "was hooked." He rose
through the ranks to become one of its most senior executives.
As Mr. Duperreault gained authority in running operations, many
industry colleagues and Wall Street analysts said he was a
potential successor to his boss -- though at the time Mr. Greenberg
had no intention of stepping aside. Instead, Mr. Duperreault became
one of many AIG executives to depart for leadership roles
elsewhere.
He left in 1994 to run ACE Ltd., a then-Bermuda-based specialty
insurer with large corporate clients.
Mr. Duperreault expanded the niche company into a diversified
insurer with the 1999 acquisition of Cigna Corp.'s U.S. and
international property-casualty operations. The company since has
acquired Chubb and is known as Chubb Ltd.
Mr. Duperreault retired from ACE in 2004 but then was recruited
in 2008 to become CEO of Marsh & McLennan. The New York firm
was under pressure to consider a breakup by shareholders who were
frustrated with its performance. Mr. Duperreault cut costs,
strengthened the management team and acquired smaller firms to
bolster growth, including to better serve smaller U.S. companies,
among other moves.
He left Marsh in 2012, and the following year, back in Bermuda,
he established Hamilton with principals of hedge fund Two Sigma
Investments. Last year, Hamilton teamed with AIG and Two Sigma on a
joint venture to sell insurance online to small businesses, using
advanced data analytics. Monday, the three firms announced an
expansion of that partnership.
AIG also announced a plan to negotiate a contract with Two Sigma
for "a next generation insurance platform for AIG's use," with the
ultimate cost estimated to be about $250 million over five years.
AIG already is using algorithms to issue policies to midsize and
some large policyholders. That move will deepen the role of Two
Sigma, one of the more successful quantitative hedge funds using
computers to trawl data in the investment process, in the insurance
industry as it seeks to branch out.
After both the ACE and Marsh & McLennan jobs, Mr.
Duperreault retired but joked last year at an industry conference:
"I'm just not very good at staying retired." In particular, in
leaving his post-Marsh retirement to start Hamilton, he said he was
motivated by enthusiasm for applying cutting-edge data-science
techniques to the property-casualty insurance industry. "I really
do believe this is one of the most exciting times to be working in
this industry in the 40 years since I joined it," he said on
another occasion.
--David Benoit contributed to this article.
Write to Leslie Scism at leslie.scism@wsj.com and Joann S.
Lublin at joann.lublin@wsj.com
(END) Dow Jones Newswires
May 15, 2017 12:47 ET (16:47 GMT)
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