AIG CEO Taps Peter Zaffino As Key Lieutenant -- 3rd Update

New American International Group Inc. Chief Executive Brian Duperreault hired former Marsh & McLennan Cos. colleague Peter Zaffino to be one of his top lieutenants, his first high-profile recruit since joining the insurance giant in May.

Mr. Zaffino will start as executive vice president and global chief operating officer on Aug. 1. Current chief operating officer Jeffrey Hurd will leave AIG at the end of July, according to an employee memo from Mr. Duperreault that was reviewed by The Wall Street Journal.

Mr. Zaffino comes to AIG after six years as CEO of Marsh & McLennan's Marsh brokerage unit. He was also chairman of Marsh & McLennan's risk and insurance-services operation. Current Marsh President John Doyle will take Mr. Zaffino's spot as CEO.

Mr. Duperreault was CEO of Marsh & McLennan from 2008 to 2012.

Mr. Zaffino's selection was first reported by trade publication Insurance Insider.

Mr. Zaffino is expected to become a key part of a team tasked with improving AIG's profit margins after years in which the company has trailed many peers. He will "work closely with me" and other executives to "develop AIG's long-term strategy and operating plan," Mr. Duperreault said in his memo to employees.

Some of AIG's 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.

Mr. Duperreault was named to the top job after a profit-improvement plan championed by the previous AIG chief executive, Peter Hancock, fell behind schedule.

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 investors have given AIG some leeway to improve returns using other methods.

Mr. Hancock's strategy was to eliminate, or shrink, lines of business that didn't meet profit-margin targets, cut costs and return $25 billion to shareholders through buybacks and dividends.

Thus far Mr. Duperreault has said he is open to slowing down the firm's share buybacks and instead using the capital for acquisitions. He also has said he won't split up AIG and instead pledged to "grow it."

He has said he doesn't have specific acquisitions in mind but was "open for business" and believes there are "lots of growth opportunities," internationally in particular.

The CEO said in his memo to employees that there would be changes to the company's operating structure but didn't elaborate on what those would be. His goal, he said in the memo, is to "retain, attract and motivate a diverse group of top-quality talent at all levels."

Write to Leslie Scism at leslie.scism@wsj.com

(END) Dow Jones Newswires

July 05, 2017 18:23 ET (22:23 GMT)