Robert Benmosche, AIG's CEO, chose Hancock, who spent 20 years at a JPMorgan Chase & Co. predecessor, to return AIG's largest unit to profit as the insurer works to replace government bailout funds with private capital. AIG and the Treasury Department plan to sell 300 million shares Tuesday.
AIG must restore investors' confidence in its Chartis property-casualty unit after insufficient reserves forced it to take a $4.2 billion fourth-quarter charge. Hancock joined AIG in 2010 to help repay the government and unwind the derivatives business that brought AIG to the brink of collapse in 2008. He got the largest bonus among top managers and is seen as a potential CEO successor.
"It's absolutely essential that Hancock reduce the number of surprises that come out of Chartis and make the business transparent enough so that investors trust it," said Clark Troy, an analyst at Aite Group.
Benmosche is relying on Chartis to lead a rebound after AIG's stock fell 36% this year through May 20, on claims from the Japan earthquake and a reserve-building charge that was disclosed in February. Chartis accounted for about half AIG's revenue last year.
Hancock lacks the experience of his predecessor for arranging deals with insurance buyers seeking protection against worker injuries.
"There's a lot of skepticism about whether or not someone from the outside can come in and run an insurance operation," said Paul Newsome, an analyst at Sandler O'Neill & Partners LP.
Hancock has a strong financial background and the intelligence to learn, said Ernest Patrikis, a former AIG general counsel and now partner at White & Case. Running Chartis involves managing both underwriting and investing risks. The unit has a $125.8 billion portfolio.
"This is good for him to get a great feel for one of the two major operations of AIG," Patrikis said. "It's a vote of confidence … and it also suggests that Chartis needs some sharpening up." Patrikis said Hancock is one of two frontrunners to be CEO along with Jay Wintrob, who leads SunAmerica, AIG's U.S. life insurance division.
Moor was named Chartis' vice chairman and will assist on "business-development strategies and client matters," AIG said March 31 when it said that Hancock would run the unit.
Benmosche, who is battling cancer, should be able to remain CEO for 12 to 18 months, AIG said in February. AIG said Steve Miller, its chairman, could fill in as interim CEO if Benmosche must step aside earlier. AIG spokesman Mark Herr did not comment; Hancock was unavailable for comment.
Hancock said May 6 that he will focus on the most attractive risks, even if it sacrifices revenue. "We're moving away from … top-line targeting," he said on a conference call. "We think that leads you to do business at the margin, which is unattractive."
While at the JPMorgan Chase predecessor, Hancock formed a derivatives group and was chief financial officer. He stepped down as CFO in 2000 and later co-founded Integrated Finance Ltd. He joined AIG from KeyCorp, where he was vice chairman responsible for national banking.
Hancock played "an overarching role in starting the credit-risk-transfer market," said Ed Grebeck, CEO of Tempus Advisors and an instructor at New York University, who has taught derivatives. "He was … an early proponent of credit-default swaps."
Hancock got $4.3 million in 2010 incentive pay, 20% more than his target, AIG said in a filing in March. Moor's payout was $1.71 million, or 10% below his target, after "underachievement of certain financial metrics," AIG said. Benmosche and Wintrob got their full bonuses of $3.5 million and $1.16 million, respectively.
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