In AIG CEO Peter Hancock’s bid to reshape the struggling insurance giant and restore its fortunes, he exceeded (admittedly low) expectations, at least for the 2016 second quarter. But he also made an effort to downplay those initial gains.
“We still have a long way to go and I think we’ve got to stay very, very focused on execution,” Hancock said during the company’s Aug. 3 investor webcast.
Analysts predicted American International Group would see its 2016 Q2 profit plunge. Instead, net income grew to $1.9 billion, from $1.8 billion a year ago, largely helped by asset sales. Investors responded on Aug. 3 by driving up AIG’s stock by more than 7.3 percent; it closed at $58.10.
Hancock noted the progress made since a massive top-to-bottom revamp plan announced in January. At the same time, he also continued his efforts to ground expectations for the work that remains.
“I’m very proud of the hard work of all the employees that have made such a great job of the improvements that we have evidenced in this quarter and shown progress in achieving our longer-term goals,” Hancock said. “But I want to remind everybody, both our employees, our shareholders [and] our customers, that we’re very much on a journey here.”
Hancock pointed out that AIG is only in the second quarter “of an eight-quarter journey to return the company to a level of profitability, which we feel is compelling.”
He added that AIG is trying to revamp operations but also invest in talent and technology at the same time, “for the long term, so that we remain relevant to our clients as the world around us changes rapidly. And so this is measured progress.”
Hancock announced in January plans to decentralize, divest assets and return $25 billion to shareholders over two years. So far, AIG has streamlined its executive leadership team, reduced its investments in unprofitable hedge funds, and announced plans to leave 47 countries for its personal insurance business in order to focus on key markets.
Activist investors Carl Icahn and John Paulson have pressured Hancock and AIG for more dramatic change. In February, AIG added Paulson and a representative for Icahn to its board, expanding it from 14 seats to 16 seats.