AIG Gets a CEO Who Can Stand Up to Icahn -- Heard on the Street

By Aaron Back 

American International Group is poised to choose a strong hand to restore confidence in the insurance giant.

AIG plans to name industry veteran Brian Duperreault as chief executive, The Wall Street Journal has reported. Mr. Duperreault spent more than two decades at the company, leaving in 1994, but that was a different AIG in a different era. His experience running three other companies since then is what makes him a good choice to lead the firm now.

Most notably, as chief executive of ACE Ltd., which eventually acquired Chubb, Mr. Duperreault gained a reputation in the industry as a prudent underwriter who priced plans and set reserve levels conservatively.

This is precisely what AIG needs now, having taken surprisingly large increases in reserves in its property and casualty book twice in two years. The most recent, $5.6 billion reserve boost spooked investors and prompted the resignation of Chief Executive Peter Hancock. AIG's reinsurance deal with Berkshire Hathaway should cap its losses on policies written through 2015, but questions still hang over AIG's underwriting practices since then.

Mr. Duperreault should have the credibility to reassure investors and rating agencies like A.M. Best, which is considering an AIG downgrade. Importantly, he also has the stature and track record necessary to stare down challenges from activist investors like Carl Icahn, who was a thorn in Mr. Hancock's side.

Mr. Duperreault's main shortcoming may be his age. At 70, he is unlikely to have a very long tenure at the head of AIG. That is a pity, since he will be the insurer's sixth chief executive in 12 years.

At the moment, however, stabilizing the situation at AIG is the priority. Mr. Duperreault looks to be the right man for the job.

Write to Aaron Back at [e-mail]

(END) Dow Jones Newswires

May 11, 2017 11:12 ET (15:12 GMT)

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