American International Group Inc.'s (AIG) new CEO, appointed in May amid pressure from activists including Carl Icahn, is getting rid of specific stock-buyback targets to focus on investment in the business's growth.
The strategy marks a shift from predecessor Peter Hancock, who had promised in early 2016 to return $25 billion to shareholders while resisting Icahn's pressure to break up AIG to escape stricter oversight after a $182 billion government bailout during the financial crisis.
Over the past 18 months, the insurer has returned $20 billion to investors through buybacks and dividends, including $2.7 billion in the three months through June. While it's authorized to repurchase another $2.5 billion, it will be "opportunistic" in deciding how much of that to spend, Brian Duperreault told investors in his first earnings call as CEO on Thursday, Aug. 3
A better use of capital would be "acquisitions that are strategically complementary," he said. "I have a track record of building value through acquisitions, and you can expect that I bring that capability to AIG."
Citing his experience in acquisitions, Duppereault pointed out opportunities internationally, in personal coverage, life insurance and the small to middle markets in the U.S.
"I know what this company is capable of doing, and my goal is to make AIG better than it's ever been," the CEO said.
The company's higher-than-expected profit in the second quarter illustrates the value of its existing array of businesses, Duperreault noted, reiterating statements when he took the job that he doesn't intend to break up the company.
