I visited Peter Hancock, the newish (1 year) CEO of AIG yesterday, and was reminded of how much has changed since I last visited the CEO of that company a decade ago. Hancock occupies a pleasant but functional office (albeit with a panoramic view of Brooklyn.) Hank Greenberg occupied an entire suite, with a private elevator, a butler who served him tea, and a living room decorated with Chinese antiques that was reminiscent of the diplomatic reception rooms at the U.S. State Department.
It’s a smaller, simpler company today – roughly half the revenues, half the employees and a fraction of the debt that the old AIG had (still number 46 on the Fortune 500.) The change came about as a result of the government’s massive bailout of the company, which was paid back, with interest, in 2012. But it also reflects a more general change in the business environment. The imperial CEO, of which Greenberg was the epitome, is no more.
I asked Hancock what the company’s greatest challenge was. He said it was modernizing its technology. The old AIG was based on a network of personal relationships. The new one is based on data and science. He has not only elevated his chief information officer, but also hired a chief science officer, with a staff of 150 people, to learn how the lessons of physics, medicine, economics and statistics can be applied to reducing risk and writing insurance. His goal: “evidence-based decision making.” One example of their work: using video feeds from busy intersections to predict those that will produce more accidents.
The dramatic shift in the company’s culture, which he generously credits to his predecessor, Bob Benmosche, is evident everywhere. Only the letters – AIG – remain the same, but framed in an “empathetic” light blue instead of the old dark blue.
More news below.
• Uber suit granted class action status
A lawsuit that centers on whether ride-hailing app Uber has misclassified its drivers as contract workers instead of company employees has been grated class action status by a federal judge. That decision could mean Uber may have to pay out a much larger sum to drivers in a two-year-old lawsuit that was originally filed on just four drivers but now opens up to a larger pool of potential plaintiffs. Uber has said it will most likely appeal the decision. Fortune
• Lagarde warns of volatility risks
Christine Lagarde, managing director of the International Monetary Fund, warned the recent volatility in global financial markets highlighted just how rapidly risks can spill over from one economy to the next. Since China’s decision last month to devalue its currency, world stock markets and some currencies have experienced wild swings. Lagarde added the world economy is facing several headwinds, including the woes in China, falling commodity prices and potentially higher U.S. interest rates. Reuters
• Fiorina likely to make main GOP debate
Former Hewlett-Packard CEO Carly Fiorina looks poised to earn a spot onto the main stage at the second Republican presidential debate after a strong breakout performance in the “undercard” Fox News debate last month. Fiorina — one of two CEOs in the field and the only woman running for the GOP nomination — has earned stronger poll numbers but looked likely to miss out on joining CNN’s main debate if the old rules were to stay in place. But the network changed the qualifying rules, saying there was a deficit of national polls since the first debate. Fortune
• U.S. auto sales fueled by large vehicles
U.S. drivers continued to scoop up more crossovers, sports-utility vehicles and pickup trucks, good news for the auto industry as those vehicles generate higher prices than cars. The demand the industry saw in August was the strongest in a decade, bolstered by low gas prices and high consumer confidence. The industry was also reaping higher prices for the vehicles it sold last month, up by $1,107, or 3.4%, on average from a year ago. USA Today
• Honeywell continues to hum along
In a world when investors have sent corporations the message that leaner is better and a narrower focus can be more profitable, conglomerate Honeywell remains a standout. In fact, WSJ reports that investors want the company to do bigger deals, even after CEO Dave Cote has already put together 84 acquisitions in 13 years, adding about $12 billion in annual sales. Shareholders are being rewarded with a stock performance that easily bests the Standard & Poor’s 500, but the question remains, can Honeywell keep it up? WSJ (subscription required)
Around the Water Cooler
• McDonald’s to offer all-day breakfast
McDonald’s, which had been testing an all-day breakfast option in some local markets, has said that franchisees have voted to expand the offering starting on October 6. The move will result in the restaurant chain converting menus at all of its more than 14,000 locations, though the breakfast menu will be limited past 10:30 AM. McDonald’s, facing pressure to improve sales as more consumers defect to fast-casual chains like Chipotle and Panera, has been busy besting limited-time menu items and making moves to improve its brand image to lure diners back to the company’s restaurants. Fortune
• Could Target soon serve alcohol?
Here’s a trend that many likely didn’t see coming: major retail chains like Whole Foods, Starbuck, and now possibly Target are tinkering with the idea of serving alcohol at their locations. For Starbucks, the move makes sense: people drink less caffeine at night, so why not turn your stores into a bar? But for Target or Whole Foods, the plan would likely involve converting part of the store into a lounge of sorts. Target has applied for liquor licenses to sell and serve alcohol at a planned store near Chicago’s Navy Pier and if approved, it would be the first time Target has served alcohol. Fortune
• Drone startup gets FAA approval
The Federal Aviation Administration has given a startup called Measure permission to fly 324 drones, though the company’s devices won’t be zipping across the sky to deliver goods like Amazon and others have hoped to do. Measure, which counts Boeing, IBM and the American Red Cross as users, will instead be flying the drones to gather data. The startup operates a drone consultancy and services business that works with clients to figure out how drones could help their operations. Fortune