AIG has tapped Wall Street derivatives veteran Peter Hancock to run the insurance giant’s biggest business — its battling property casualty unit — Chartis.
Hancock joined AIG in early 2010 from JP Morgan, and is credited with having helped to “invent credit derivatives two decades ago,” the FT says.
He joined the insurer as executive vice president of risk, finance and strategy. Now at Chartis, he’ll oversee its property and casualty insurance lines.
Watchers say this is one of the clearest signs yet that Hancock may be the man to succeed CEO Robert Benmosche, and not the company’s Chairman Steve Miller. Benmosche was diagnosed with cancer, is undergoing treatment, and says he’ll stay with AIG until 2012.
AIG restructured Chartis, which has a headcount of 40,000, into two global groups: commercial (to be run by John Doyle, the former head of Chartis US) and consumer (to be run by Jeffrey Hayman, who was Chartis’s chief administrative officer).
The “Father of Credit Derivatives”
Hancock has dual U.S. and U.K citizenship; “He grew up in Hong Kong, was educated in England and has worked in London, Tokyo and New York, where he has been a resident since 1986,” Dow Jones reports.
He’s been described as “father of credit derivatives,” a title earned through 20 years with JP Morgan.
[L]ed 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.
“Hancock has been instrumental in AIG’s recapitalization efforts, structuring a plan for the company to repay its obligations to the U.S. Federal Reserve and Treasury Department,” according Reuters. And repairing Chartis, which has been hammered by losses across several businesses and historically low insurance rates, is a huge priority for the insurer.
The former head of the unit, Kristian Moor, will now report to Hancock as vice chairman.
“I joined AIG to be helpful to Bob, and this is our next chapter,” Hancock told the FT.