American International Group Inc. is expected to hire Peter Hancock, a KeyCorp vice chairman and financial services veteran, in a newly created role, overseeing finance, risk and investments, according to two sources close to the insurer.
AIG, which was propped up by a $182.3 billion U.S. taxpayer-funded aid package, could announce Hancock’s appointment as executive vice president as soon as Monday, one of the sources said.
Hancock, 51, a former JPMorgan Chase & Co. chief financial officer, brings risk management, finance and investment expertise to AIG and will play mentor and coach to other managers, the second source who is a senior AIG executive said.
“The biggest issue we have right now at AIG is risk management and how that translates to our ability to handle our investments, simultaneously with how we manage the derisking of our Financial Products group,” the official said.
Once the world’s largest insurer, AIG nearly collapsed in September 2008 due to obligations from credit default swaps, a type of derivative that had been sold by the Financial Products unit. The insurer has since been winding down the unit.
Hancock, who was pursued by AIG for about two months, will get a 2010 cash and stock salary of $7.5 million, which includes $3.9 million in fixed compensation and $3.6 million in variable pay linked to performance, the sources said.
In 2011, his compensation will total $7 million, including $1.8 million in base pay, $4.4 million in stock salary and $800,000 in TARP long-term restricted stock, the first source said.
AIG worked closely with U.S. pay czar Kenneth Feinberg on the matter and he has cleared Hancock’s compensation, the sources said.
AIG declined to comment. KeyCorp did not have an immediate comment. The U.S. Treasury Department could not be reached immediately. The sources are anonymous because the move is not yet public.
Hancock will be the latest senior hire by Chief Executive Robert Benmosche who has been trying to steady AIG and retain executives in the face of restrictions on compensation imposed by Feinberg.
In recent comments to an internal publication, Benmosche said he envisions a smaller AIG in the future, with global property-casualty and U.S. life operations at its core.
Last week, AIG named Thomas Russo, a former top Lehman Brothers Holdings Inc. lawyer, as its general counsel filling the position that became vacant on Dec. 30, when Anastasia Kelly resigned in protest over pay curbs imposed at the insurer by Feinberg.
AIG last week also announced the hiring of Michael Cowan, a former Merrill Lynch executive, as senior vice president and chief administrative officer. It moved Jeffrey Hurd, who was chief administrative officer, to a new role as senior vice president, human resources and communications.
The insurer continues to look for opportunities to “strengthen the bench,” the AIG executive said.
“We have a strong team now,” the executive said. “But if other people come along we will find ways to make some adjustments potentially where we can further enhance our executive ranks.”
COACH AND MENTOR
Hancock, who oversaw national banking at KeyCorp and has expertise in risk management and derivatives markets, will also oversee audit, strategic planning and the insurer’s Financial Products unit, the first source close to the insurer said.
At AIG Financial Products, which was behind AIG’s near-collapse in September 2008, Chief Operating Officer Gerry Pasciucco will report to Hancock, the source said.
Hancock, who joined KeyCorp in December 2008, began his career in 1980 at JPMorgan, where over 20 years he founded the global derivatives group, managed fixed income and credit businesses and finally served as CFO and chief risk officer.
In 2002, he founded Integrated Finance Ltd, which provided asset management, strategic advice and pension solutions to institutions. IFL merged with Marakon Associates to become Trinsum.
“What we don’t have are enough senior executives who can help us deal with strategy and with coaching and mentoring people to go to the next level,” the senior AIG executive said. “Peter represents one of those people.”
(Reporting by Paritosh Bansal; Editing by Bernard Orr)
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