continued from page 14
where there is potential for growth, but it’s
in its very early days. There’s not a huge
volume in that area, but we think cyber security is an important issue that companies
have to get their minds around—and we’re
well positioned to help them with it.
QIn the six months since you’ve taken the helm as CEO, what is
the biggest challenge that you’ve per-
sonally faced?
AI’m trying to infuse a sense of clarity as to our core performance objective. And in particular if there is one
thing I would emphasize, it’s value over
volume. We’re more than large enough
as a company, and our mission is to be
the most valuable insurance company
in the world, not the largest. So how do
we get there?
It’s by being the most valuable in
the eyes of our customers, in the eyes of
our employees, our regulators and our
host governments. And it means we have
to measure what they value. We have to
really get to the heart of which products
and services that we provide add the most
value—and do more of them and less of
the ones that don’t. That may mean we
trim back on some areas and grow in others, and that to me is a big challenge.
QThe shift away from volume to val- ue: Is that a tough cultural change?
And if so, how are you achieving inter-
nal buy in?
AThe first thing is that we align peo- ple’s incentives to doing the right
thing, and we’ve instituted rigorous per-
formance metrics in the last couple of
years where we do relative rankings of
individuals. But while the change process
is aided by incentives, most importantly
people just like to be part of a winning
team. And there’s no better incentive than
having customers tell you that they want
to come back and renew their policy with
you; or if they left you during the crisis,
that they want to come back to you.
QSpeaking of the crisis, and the bailout which gave ownership of the com-
pany to the American people, what has it
been like working with the government?
AWe’ve obviously had a very close relationship with the government
through the assistance that we’ve received
from both the U.S. Treasury and the New
York Federal Reserve. We’ve been very
Chartis conducts a comprehensive review
of its net-loss reserves at the end of every year,
which is a complex undertaking given the long-term nature of our business…As of June 30, 2011,
Chartis maintained reserves of $71 billion.”
Digital subcribers click here: Hancock talks
about Chartis’ $4 billion-plus reserve charges and the
state of the company’s technology since the bailout.
Hancock On Reserves
pleased with the people we’ve dealt with in
both. And I was very pleasantly surprised
with the constructive and pragmatic way
that we’ve operated with those who have
worked with us. And they’ve allowed us
to get on and do our jobs in a commercial
way to meet our customers’ needs.
QWhile we’re on the subject of the government, what are some of your
top concerns on the federal-legislation
front—FIO, FSOC, et cetera?
AWashington is obviously concerned about the regulatory framework for
the industry and looking to work to-
gether with international regulators to
come up with something that responds
to the increasing interconnectedness of
large financial institutions. The changes
that may come from the regulatory front
are still somewhat opaque, but it’s quite
likely that we will be regulated at some
point by the Federal Reserve and prob-
ably as a “sifi”—a systemically important
financial institution.
2008
has written credit-default
swap contracts. Greenberg
(pictured), who felt the prior
government-arrangement’s
terms were “strangling the
company,” says the renegoti-
ated bailout should help AIG’s
efforts to sell off assets.
Outside the company, com-
petitors begin criticizing AIG’s
conduct in the marketplace as
it pursues
commercial-
insurance
business.
Then-Liber-
ty Mutual
Chairman,
CEO and President Edmund
Kelly says AIG is “doing some
very stupid things in the
market” to retain business.
Moor, still president and
CEO of AIG’s P&C business,
responds, “Commercial
insurance is not sacrificing
underwriting integrity to retain
market share. I believe that
allegations of excessive
price-cutting are coming from
certain carriers frustrated by
their inability to win significant
market share from us.”
2009
JANUARY 2009
A Public outrage ensues
over AIG retention
bonuses after
it is revealed
the company
paid more than
$450 million in
bonuses in early
2008 to keep employ-
ees at its troubled Financial
Products unit. Rep. Paul
Kanjorski, D-Pa., says, “I
have already personally told
