AIG Headcount Falls by 10,000 in Year as Hancock Shrinks InsurerBy
Restructuring costs were $700 million, insurer says in filing
AIG employee count is 51% lower than during financial crisis
American International Group Inc.’s headcount fell by 10,000 last year as Chief Executive Officer Peter Hancock sold units and cut jobs.
The number of employees fell by 15 percent to 56,400 as of Dec. 31, New York-based AIG said Thursday in a regulatory filing. That compares with 116,000 at the end of 2008.
Hancock follows predecessors Robert Benmosche and Edward Liddy in shrinking the company that longtime CEO Maurice “Hank” Greenberg had built into the world’s largest insurer. The company sold some of its largest units from 2009 through 2012 to repay a U.S. bailout. While Hancock made some small acquisitions after becoming CEO in late 2014, activist investors led by Carl Icahn then pushed for more asset sales. Last year the CEO announced agreements to sell a mortgage guarantor, a broker-dealer network, a Lloyd’s of London insurer and assets in Chile, Japan and Argentina.
“We expect to see the results from our improved underwriting platform, reduced expense base and the strong improvement in our business mix,” Hancock said last week in a statement announcing a fourth-quarter loss of $3.04 billion that was driven by swelling claims costs.
AIG has also been moving jobs to lower-cost locations and cutting positions, including hundreds of posts in New York and the U.K. He told staff in a town-hall meeting in late 2015 not to count on lifetime employment with the company, according to people familiar with his remarks.
The insurer said early last year that it would seek to cut $1.6 billion in costs by the end of 2017. Restructuring expenses, which include severance packages, were about $700 million last year, according to the filing.
The approach contrasts with the growth of Prudential Financial Inc., which has been expanding through acquisitions. The Newark, New Jersey-based company ended 2016 with about 49,700 employees, with more than half of them outside the U.S., according to a regulatory filing last week. That compares with less than 40,000 a decade earlier.
Hancock also has been striking reinsurance deals to simplify the company. He announced an agreement in January to pay Warren Buffett’s Berkshire Hathaway Inc. about $10 billion to take on risks from policies that AIG initiated in prior years. The CEO reached a separate reinsurance contract with Swiss Re AG last year.
And on July 1, AIG entered a transaction with Hannover Re, according to the regulatory filing on Thursday. That deal freed up about $1 billion of capital, AIG said.
AIG shares have slipped about 2 percent this year, compared with the 5.6 percent climb in the S&P 500 Index.