AIG's Tucker Said to Tell AIA Staff He'll Triple Unit's Value
Mark Tucker, who was named head of American International Group Inc.’s main Asia division, told staff that he plans to triple the unit’s value to $100 billion, according to a person with knowledge of his remarks.
Tucker, 52, said during a town-hall style meeting yesterday in Hong Kong that being chief executive officer of AIA Group Ltd. will be his last job, according to the person, who declined to be identified because the meeting was private. AIG CEO Robert Benmosche introduced Tucker at the gathering, the person said.
Tucker has to quell employee anxiety and retain workers after replacing Mark Wilson, who held management positions at AIA since 2006 and was CEO of the division for more than a year. AIG, which is divesting subsidiaries to repay loans in its $182.3 billion U.S. bailout, plans to hold an initial public offering of AIA after a $35.5 billion deal to sell the unit to Prudential Plc fell apart in May.
“There’s a lot of uncertainty at the organization after Wilson was forced out,” said Clark Troy, an analyst for research firm Aite Group. Tucker is “trying to calm them down.”
Tucker declined to be interviewed, said Mark Herr, a spokesman for New York-based AIG. Tucker, named head of AIA yesterday, is former CEO of Prudential and had 15 years of experience building the London-based insurer’s Asia operations, Benmosche said yesterday in an employee memo. Benmosche had clashed with Wilson over how to divest the unit.
‘Ready to Go’
Benmosche, who started at AIG in August, said in the memo that the management change at AIA was needed to prepare for the division’s IPO. Benmosche had demanded more control over AIA last month at a board meeting, pushing for Wilson’s dismissal, said a person with knowledge of the event. Harvey Golub stepped down last week as AIG’s chairman after the board rejected a reduced bid from Prudential that Benmosche had supported.
The unit’s public offering would be “ready to go in the coming months when market conditions are optimal,” Benmosche said in the letter, adding that he couldn’t speculate about the precise timing. Wilson will assist Tucker through the end of this year, AIG said.
AIA has more than 23 million customers and offices in at least 15 countries including China, India and Australia. The unit had about $1.44 billion in operating profit in 2009, down from $1.59 billion in 2008, Prudential said in a March filing.
AIA’s value could have been boosted by 80 percent within three years of a takeover, Prudential CEO Tidjane Thiam told investors while trying to convince them to approve the deal. Shareholders balked at the $35.5 billion price, leading to the deal’s collapse. Thiam is Tucker’s successor at Prudential.
Tucker stepped down as CEO of Prudential in September after four years at the helm of the U.K.’s biggest insurer. During his tenure, Tucker pulled out of a separate bid to buy AIA, continued to expand sales in the company’s Asian unit and raised the share price 35 percent.
After completing the firm’s planned IPO, Tucker may bid for Prudential Asia Corp., the unit he ran from 1993 to 2003, according to Panmure Gordon & Co.’s Barrie Cornes.
Tucker’s appointment “raises the possibility that Pru might be able to sell its Asian operation to AIA at some later date,” said Cornes, who has a “buy” rating on Prudential. “AIA may well be able to finance such a deal via its Hong Kong listing.” Edward Brewster, a spokesman for Prudential, didn’t immediately return a phone call seeking comment.
The U.S. Treasury Department, which helped fund AIG’s bailout, was told by AIG’s bankers that the company may eventually garner $35.5 billion by taking the unit public. The company may first sell a portion of its AIA holding in an offering in Hong Kong and then divest its remaining stake at a pace determined by market conditions.
Tucker approached regulators and potential investors in Asia about the possibility of selling AIA stakes of more than $5 billion to hasten its independence from AIG, the Financial Times reported.