Shawn Moynihan: When you first accepted the AIGposition, I imagine it had to run through your mind, "All right,then. Here's where we'll start." So, where does that journeybegin?

Brian Duperreault: Well, if you can put theright talent in play, things tend to take care of themselves. Italways starts with the people.

I was able to bring a couple of good people in right away in Peter [Zaffino,COO] and Seraina [Macia, executive vice president and CEO of a new,planned AIG subsidiary], but I've also seen that the company itselfalready has a great deal of excellent people.

AIG today is pretty close to getting back to the position whereit was before, which was the place to work. I'm getting alot of phone calls now from people who have worked with me beforeor just see the excitement around what's happening here — becausethe company has such great potential.

How does it feel to be back and leading AIG now,versus more than the 20 years you spent with the companypreviously? What's changed, and how is it even similar in someways?

The essence of the company is still one that is a great sourceof solutions for problems that surround risk. Ourclients still look to us as the company that helps when they've gota critical problem on their hands that they need to solve.

AIG has always been that company. It's still that company intheir minds and it's still that company in our mind, so that hasn'tchanged. Technology has evolved, so how one makes those[underwriting] decisions likewise continues to evolve.

How do you see AIG today from the brokerage sidenow, versus when you were with the company?

It's made me a better executive in understanding the way abroker works, the way they think, the stresses they're under indelivering their services to the client, what they're trying toaccomplish and why — so we can help them do their job better. Ithink it helps everyone to get a meeting of the minds faster. It'sa process of negotiation, but also a partnership.

It's made me a more balanced executive because I have a betterfeeling for what's happening on both sides of the negotiatingtable, and that's helpful because if you do, you get to the answerquicker, you cut through the inefficiencies, the misdirection andthe mistrust that can occur.

"There are two ways to grow: organically or inorganically,"says AIG CEO Brian Duperreault. (Photo: APImages)

Part of your strategy for taking AIG forwardinvolves strengthening reserves and growing thebusiness. What's involved in those processes?

The reserves are a consequence of your risk-taking actions andthe profitability that results from it; they're a naturalconsequence of the business we do. That starts with doing the rightthing from an underwriting point of view. Beingprofessional, selecting the risks you want to write, pricing themat a price that makes sense so you're paid for the exchange ofrisk.

There are two ways to grow: organically or inorganically. We arelooking for ways to grow organically, so there are things that areexciting for us out there that we're pursuing. But there are alsoareas where, frankly, the market is not allowing us to make aprofit. Terms, conditions, pricing and competition are such that wecan look at it and say, "We love the business, but we can't do itat this price or these terms, so we have to say no." It requiresprofessionalism in the business of risk selection and pricing. Ifsometimes you say no, you'll actually improve your bottom line,because if you said yes, you'd lose money. If you want to grow your bottom line, that'sone way.

So when I say "profitable growth," I'm talking about growing theprofit, which in some ways is saying no, and then when we findthings we like that's where we're saying yes. You've got to do bothand you balance that out, but in our commercial space we also haveto look at other spaces: the middle market, small corporationswhere we have not really provided service in the past, and otheropportunities. That's where Seraina comes in, to leveragetechnology and an approach that we think could revolutionize theway business is done.

When I broached the subject of acquisitions, or inorganicgrowth, we [still] look for those. We have capital that we candeploy, and I want to deploy it intelligently to build out thefranchise.

Every experience you've had in this business — andyou've made every second count while you've been in it…

That's kind of you to say.

All of those collective experiences, obviously, haveinformed your perspective. What lessons in particular can you pointto throughout your career that have enabled you to be the rightperson to take AIG forward now?

My experiences cumulatively do put me in a position to run thiscompany. Whether it's my early days here or running one of our biggest competitors or one of ourbiggest trading partners, it's given me a perspective and a setof skills I think that work perfectly here.

Perhaps on a more personal level, is where I'm goingwith this.

Well, you know, I've learned that if you've got a team that iscohesive, of good quality, you can do almost anything. If you setyour sights and there's no blinking, no negatives in that group,you can aspire to do things through the collective strength ofwill. That's one interesting thing. I don't worry about problems;we can fix them.

Markets are always difficult; either you embrace that, or youdon't. If you embrace the fact that the markets tend to bedifficult, you can attend to the challenges of your business. Thatincludes being disciplined and knowing when to say no. Our businessis not always about saying yes; it is saying no. Knowing when tosay those two words, really, is the essence of it.

You know, I've learned over the years — and Hank [Greenberg] was a great teacher of this —you're always going to have problems, but you must address them. Soyou have to be almost ruthless about your self-criticisms. In otherwords, don't turn a blind eye to a problem. Face it head on,recognize it's a problem, admit it if it is, and then attack it. Tome, it's not the problem that's the issue: It's your failure to fixit.

Challenges are going to come. Don't pretend they don't exist.Don't be embarrassed because it happened on your watch. If youdon't fix it, then I've got a problem with you. So, to me, theoffense is not the problem — the offense is not fixing it. I thinkthat is so essential to running a company like AIG. It's got to bepart of the DNA, and I've learned that.

I think there's a certain pride one needs to have to walk in thedoor and lead an organization like this — not hubris. Hubris willkill you, and I've seen several companies where that manifests innot admitting problems. You're too prideful, you're notself-inspecting.

To me, the greatest underwriters that I've run intoare the ones who will look at a risk and say, 'You know? I'm notsure,' and they'll go ask for advice. They'll find another personwhose opinion they respect and they'll ask. If you'reself-confident enough about your skill set that you're able toadmit you don't know, great things can happen.

"The whole (insurance) industry is a work in progress" withregards to AI and machine learning, Duperreault says.(Photo: iStock)

Establishing Hamilton Insurance Group would seem tohave paved the way for much of the AI and machine learning that is still beingadopted elsewhere as underwriting and risk selection becomes moreimportant. Would you say that's accurate, and how do you see thosetypes of innovation driving the process at AIG?

Well, I think the whole industry is a work in progress inthat regard. We have, as an industry, not moved as rapidly inmachine learning and AI as a lot of other industries have,including the investment side, so we're catching up.

Why do you suppose that is?

On one hand, I think it's probably a bit harder to apply it toour business. We have always been information-driven and fact-basedin the way we make decisions as an industry. You don't just take arisk without asking questions, doing analysis, but we'vestayed in a pattern that hasn't evolved very much, whereas theworld has evolved dramatically in the amount of informationavailable to make decisions. There are sources of information wejust haven't used.

We're both risk-averse and not risk-averse at the same time.We're out there taking risks all day long, but because of that wedon't necessarily want to change the process of making thosedecisions because the consequences could be disastrous. We wouldnaturally stick to things that work, so I think that's anotherreason why we probably haven't been as adaptive.

Another reason is that there's such a capital base required.There's a body of assets you need to have in order to take therisk. And when you see innovation in other areas, those innovatorstend to shy away from capital-intensive activities. So I think wehaven't had the interest by innovators that other industries enjoybecause we have this capital need that is an inhibitor because ofits size, and you've got to feed the beast.

But it's coming, because it's logical that if we have moreinformation, we have better insight about that risk and whether weshould take it. I think everybody has woken up to this idea, andnow the question is, how do we do it? Can we execute it? Who isdoing it better than the other guy, and how do you incorporate itinto the processes that already exist? You don't throw them out.How do you put this other view of the truth into the equation tomake that decision? So it's a work in progress for everybody.

And how much you want to spend on it…

And how much you want to spend on it. You look to get thereward, right? So to say, "This is working, so why would I changeit?" Some [insurers] do that very incrementally — and the greatthing about Hamilton was, anything I did was not incrementalbecause I started from nothing. I didn't have to worry about easingmy way in, because I was already in it with both feet right fromthe start.

You related to me years ago that the acquisition ofCIGNA P&C while you were with Ace was a transformativeexperience for you, and that you had to visit some cities at thattime and tell them what was working, what wasn't working, and thechanges that had to be made and the people really appreciated somefresh perspective and direct communication with them on a humanlevel. Would it be appropriate to draw comparisons to thatexperience with what you're doing at AIG rightnow?

Well, to me, it's applicable just generally in anything youmanage, so certainly here, it would be applicable. What I've found— maybe I should've known this, but it was profound for me — wasthat people want to know the truth. They just want to knowthe truth, even the hard truth. Even the difficult truth. Not onlydo they want to hear it, they probably already know it — they justwant to hear their leadership talk about it and what they're goingto do about it. They want leadership to step forward, see the sameproblem they do and do something about it. They want it fixed.

That's what they want to hear: What direction are we going in asa company? They want to be led, and they want to be led by peoplewho accept the truth and will do something about it, regardless ofthe difficulties around that — and they want to hear it from theboss. They want to hear what you think, they want to believe inwhat you do. They want to believe. They're there to go.Take a direction and let's just go.

I get the sense that the path to AIG achievinggreater results is becoming clearer, although there is certainlystill work to do. What would you say to that?

Well, a lot of work had already been done before I arrived, so Ididn't just come in and say, "Stop the presses" or anything. I'mbuilding on what they've already done. We recognize there arecertain issues in the portfolio that they had to address and they'dbeen addressing them. What I'm telling them is, "OK, that'snecessary but not sufficient to getting this company into greatnessagain." You have to complete that task. Recognizing it and startingit is not the same as finishing it, so we've got to finish whatwe've started.

Then it's, "OK, where do we go next?" You've recognized and areaddressing the problems; where are the opportunities? You put those inbalance, and that's where we're going.

What keeps you motivated now at this point in yourcareer, after everything that you've achieved?

I graduated from the School of AIG, this is my alma mater and Iwant it to be the company that I was so proud of. Even when I wascompeting against them I was so proud of them, and that motivatesme.

My motivation now is much more around helping others — to getthem to be as great as they possibly can, to succeed, to set goalsand achieve them. I'm much more the mentor now. I've done it, and Idon't need to do it again. I love seeing others do it — that's whatreally motivates me.

See also: 

5 artificial intelligence tools defining the futureof P&C insurance

How carriers can leverage the power of bigdata

How data analytics will change the risk andinsurance industry—and your career