A “logical choice” and an expected “orderly transition” were terms analysts used to describe news that Peter Hancock would succeed Robert Benmosche as American International Group CEO in September.
Jim Auden, managing director at Fitch, notes Hancock had been under consideration before as AIG began contemplating who would succeed Benmosche, and he says Hancock seems to be a logical choice to assume the top spot at the company. “I don’t think it’s that surprising that [Hancock] is the next CEO,” he says.
Bruce Ballentine, vice president and senior credit officer at Moody’s, says Hancock currently runs AIG’s biggest operating unit—the global property and casualty business—and so yesterday’s announcement “seems like an orderly transition in leadership at AIG.”
Ballentine adds he does not foresee any major shakeups in the company’s strategy. “We think the business mix—the emphasis on risk-adjusted profitability—will continue,” Ballentine says. “AIG will continue to be focused on insurance operations.”
He says there are no material credit implications associated with the announcement.
For Fitch’s part, Auden says the ratings agency had upgraded its debt ratings on AIG earlier this year, and the company’s outlook remains stable. As far as what could change that, he says in general for AIG, the main considerations are still “if they can they continue to improve performance and maintain capital strength at where they’ve moved to in recent years—those are factors that will affect the rating more” than a change in CEO.
“I guess if there were some significant strategic changes that happen with the change in CEO, we’d look at that, but that probably would be longer term,” Auden adds. He also indicates the announcement of a new CEO did not come out of nowhere.
In fact, in March, Benmosche told Fox Business Network that AIG was focusing on evaluating current personnel for a successor, after he had stated earlier he planned to leave the company in early 2015.
Speaking to what Hancock will bring to the table as CEO, Auden points to what he has done with AIG’s P&C operations: “He’s made a lot of steps with the P&C operations,” Auden says. “They’ve done a lot to really adjust the portfolio and bring in more technology and infrastructure and more sophisticated pricing and underwriting methods that should help them get to a better underwriting footing in the future.”
A blog post on Barron’s, written by Ben Levisohn, quotes Bernstein’s Josh Stirling and Grant D’Avino as also mentioning Hancock’s ability to leverage technology. “Peter is the architect of the ambitious transformation in P&C, and his vision to leverage science and analytics on a global scale is central to our thesis that AIG will re-emerge as a great company with an unrivaled global franchise in insurance,” they say in the story.
Stirling and D’Avino add in the story that the “appointment is well deserved and bodes well for the strategic direction of the firm.”
As far as outgoing CEO Benmosche, Auden says he brought AIG through a lot of problems and helped put the company on a “much more normal footing.” He adds, “The issues they had to deal with were very unique in insurance history.”
Benmosche was named CEO in 2009, succeeding Edward Liddy, who had become CEO in 2008 as part of the changes the Federal Reserve Board ordered in its decision to loan AIG up to $85 billion for up to two years to resolve a liquidity crisis.
Liddy, who had retired as the head of Allstate before being asked to assume the AIG role, was battered by congressional critics and then-New York Attorney General Andrew Cuomo when the firm gave out bonuses to executives—including those with AIG’s Financial Products unit, which had nearly forced the company into bankruptcy—after taking billions in federal assistance.
When Benmosche was named as Liddy’s replacement, an executive who worked with Benmosche, and requested anonymity, said, “Don’t expect Benmosche to be a punching bag when he talks to Congress. He will speak his piece and will not take the abuse Liddy did when explaining his position [to members of Congress].”
And Benmosche indeed brought a direct, vocal style to the position where he aggressively defended AIG and its employees, repeatedly talking up the company’s accomplishments. He also did not shy away from drawing battle lines, whether clashing with the government over what AIG executives could be paid, responding directly to criticisms in the media; even having a standoff with the company’s former chairman, who resigned as a result.
Commenting on Benmosche’s style of leadership, Auden says in 2009 and 2010, the company needed to “take that stance” when attempting to solve its problems and pay off it obligations to the government.