AIG’s C-suite faced a reckoning at the end of 2015 when four top executives, including CFO David Herzog, were jettisoned in a management shakeup. The ousting highlights the brewing tensions between the firm and its investors, including activist Carl Icahn, and the company’s desire to make big changes to mollify shareholders. The struggles may not be ending anytime soon. AIG announced in May that it had missed profit estimates for a third consecutive quarter, with per-share earnings 35% off consensus estimates. Part of the battering came from continued exposure to hedge funds, which have been severely under-performing as of late. That’s led AIG to announce it’s pulling about 40% of the money it has allocated to hedge funds (about $4 billion). The question now is, what will be the firm’s end game as it stares down both activist investors like Icahn, who now owns about a 4% stake in the company and has called for AIG to split up into three entities, and the U.S. government, which has deemed it a “systematically important financial institution” (or “too big to fail”). AIG CEO Peter Hancock has taken solace in a recent federal court ruling that MetLife shouldn’t be labeled TBTF.
News about AIG
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