AIG Considers Making Deals, Cutting Buybacks -- WSJ
June 29 2017 - 3:02AM
Dow Jones News
By Leslie Scism
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the US print
edition of The Wall Street Journal (June 29, 2017).
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 Cos., 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
(END) Dow Jones Newswires
June 29, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
American (NYSE:AIG)
Historical Stock Chart
From Aug 2024 to Sep 2024
American (NYSE:AIG)
Historical Stock Chart
From Sep 2023 to Sep 2024