Back to top

Image: Bigstock

AIG's Peter Hancock Resigns Amid Dwindling Support

Read MoreHide Full Article

Citing dwindling shareholder support, American International Group, Inc. (AIG - Free Report) chief CEO, Peter Hancock has announced his intention to step down from his position. Peter Hancock tried hard to revive the company after facing immense pressure from investors Carl Icahn and John Paulson to perform.

The company became a victim of its own mammoth size with immensely diversified operations that did not generate enough synergy. The stock has been suffering as evident by the 3.22% decline in its share price year till date compared with the Zacks categorized Insurance – Insurance – Multi Line’s gain of 1.52%. Also, in 2016 the company gained 5.39%, underperforming the industry’s growth of 11.19%.

Facing immense pressure to drive results, Hancock took not one but a number of turnaround measures. These included numerous divestitures, selling parts of business, asset sales, increase in share buyback, dividend hike, personnel changes, cost control, reinsurance deals, and lowering of hedge fund investments to check earnings volatility.

AIG, however, failed to perform as the most recent fourth-quarter incurred an operating loss due to an underperforming commercial lines business. The company took a reserve charge of $5.6 billion in the segment which raised questions about its historical underwriting practices. Its two-year plan of improving the segment’s profitability seems impossible now with the significant loss incurred. The company also failed to reach one of its major goals of improving the performance of its commercial lines of business.

Hancock came under review after the recent quarter’s earnings underperformance. The CEO was already threatened to be removed from his position in 2015 by Icahn.

It would be, however, an overstatement to mention that Hancock failed totally to perform since the company’s capital return program and expense reduction program are tracking ahead of schedule.  It was under his leadership that the company could repay its bailout dues to the government.

It goes without saying that turning around a company like AIG is no mean task. So we prefer to keep a close watch on the future developments of this troubled insurer.

AIG carries a Zacks Rank #3 (Hold). Some better-ranked stocks from finance sector include American Financial Group, Inc. (AFG - Free Report) , Everest Re Group, Ltd. and Selective Insurance Group, Inc. (SIGI - Free Report) . While American Financial sports a Zacks Rank #1 (Strong Buy), the other two hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.

Selective Insurance provides insurance products and services in the United States. The company delivered a positive surprise in one of the last four quarters but with an average negative surprise of 4.53%.

Everest Re offers reinsurance and insurance products. The company delivered positive surprises in three of the last four quarters with an average beat of 43.49%.

More Stock News: 8 Companies Verge on Apple-Like Run

Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.

A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>

Published in