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Stock Analyst Update

AIG Makes Smart CEO Choice

Brian Duperreault will be the firm's next CEO, and here's why we like the choice.

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 AIG (AIG) has announced that Brian Duperreault will be its next CEO, replacing Peter Hancock. We like the choice. In our view, Hancock’s strategy was sound, but he struggled in executing a turnaround in the underwriting culture within commercial P&C lines. AIG’s biggest post-crisis issue has been persistent adverse reserve development in this area, suggesting a lack of underwriting discipline and acumen. Notably, Hancock does not have an underwriting background, joining AIG in 2010 following a banking career at JP Morgan and KeyCorp. His lack of experience in this area seems like the most likely reason he was unable to effectively change the underwriting culture at AIG. With this in mind, we see experience managing a successful commercial P&C underwriting operation as the dominant consideration for AIG’s next CEO, and Duperreault fits this mold quite well. We will maintain our $74 fair value estimate and no-moat rating.

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Brett Horn does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.