AIG Names Brian Duperreault as CEO -- 2nd Update

By Joann S. Lublin and Leslie Scism Features Dow Jones Newswires

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.

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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 $20 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.

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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.

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.

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.

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, had joined AIG's actuarial department in the early 1970s and 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.

Many potential outside candidates for leading AIG had ties to AIG and Mr. Greenberg, because the company's huge size before the postcrisis divestitures provided ample opportunities for managers to shine, executive recruiters and industry executives say.

After nearly four decades at the helm, Mr. Greenberg left as CEO of AIG in 2005, and his relationship with the company worsened over the next few years as he unsuccessfully sought its support in suing the government over allegedly unlawful terms of the 2008 bailout. But Mr. Greenberg and Mr. Benmosche ultimately made amends with a comprehensive settlement of litigation against Mr. Greenberg tied to accounting matters that had led to his 2005 resignation.

After winning an initial round in a federal court over the AIG bailout, a federal appellate court this week reversed that victory and said Mr. Greenberg's Starr International Co., which had been one of AIG's biggest shareholders, didn't have standing to sue.

--David Benoit contributed to this article.

Write to Joann S. Lublin at joann.lublin@wsj.com and Leslie Scism at leslie.scism@wsj.com

(END) Dow Jones Newswires

May 15, 2017 08:57 ET (12:57 GMT)