March 31, 2011 9:00 pm

AIG taps Wall Street pro to run Chartis

AIG has appointed Peter Hancock to run Chartis, its largest business, strengthening the Wall Street veteran’s case to succeed the group’s chief executive.

Mr Hancock, a former JPMorgan finance chief credited with helping to invent credit derivatives two decades ago, joined AIG in February 2010 to oversee risk, finance and strategy.

Robert Benmosche, AIG’s chief executive, has pledged to step down next year after the company regains its independence from government ownership.

“I joined AIG to be helpful to Bob, and this is our next chapter,” Mr Hancock told the Financial Times. At Chartis he will be in charge of managing its property and casualty insurance lines.

Mr Hancock’s post also marks the latest twist to one of the more fascinating careers in recent Wall Street history.

At JPMorgan, he led the team of young executives who formed the bank’s derivatives unit in 1991. The group would go on to create a new kind of financial product that was marketed as spreading out the risks associated with loans by slicing them up and offering them to investors.

Backed by cash flows from loans, instruments such as collateralised debt obligations and collateralised loan obligations would become immensely popular, multibillion-dollar businesses for many of the world’s leading banks.

As the credit markets descended into chaos in 2008, these products would be attacked by regulators and politicians as a cause of the crisis – and AIG’s own collapse.

AIG has appointed Mr Hancock to direct the latest restructuring at Chartis, an entity formed in 2009 to house the company’s domestic and international property and casualty insurance operations.

On Thursday, AIG reorganised Chartis into two global groups, commercial and consumer, and replaced Kristian Moor, its chief executive. John Doyle, former chief executive of Chartis US, will run the commercial division while Jeffrey Hayman, the unit’s chief administrative officer, will head the consumer arm. Mr Moor will remain at Chartis as vice chairman.

The shake-up comes as the US Treasury draws closer to its May sale of as much as $20bn in AIG stock. The government’s $180bn bail-out of AIG during the financial crisis had left Treasury officials with preferred stock that they converted to common shares earlier this year, equivalent to a 92 per cent equity stake.

AIG unveiled details of its succession in October, days after Mr Benmosche disclosed he was seeking treatment for cancer.

The insurer said its chairman, Steve Miller, would step in as chief executive if Mr Benmosche left before his stated goal of stepping down in 2012.

The revelation had stunned AIG’s board, which was still in the early stages of succession planning, people familiar with the matter said at the time. Even then, Mr Hancock was still seen as a potential candidate.

“Peter would be one of several very talented we have in house,” a spokesman said. “It’s premature to talk about that.”

Mr Benmosche told employees in January that he had received an “encouraging prognosis” and would remain at the company until next year.

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