AIG to reduce 23% of top 1,400 senior management
American International Group (AIG) has announced it has taken a number steps to streamline its businesses, improve financial performance and return capital to shareholders.
The firm is reducing 23 percent of employees among the top 1,400 members of senior management.
“We believe these actions will also increase our speed of decision-making and agility,” said Peter Hancock, president and chief executive officer, AIG.
AIG says it will communicate these actions and provide an update on its continuous and proactive steps to drive shareholder value to the financial community in the near term and in advance of the fourth quarter earnings report.
The firm said in its third quarter earnings release that restructuring initiatives are expected to result in pre-tax restructuring and other costs of approximately $0.5 billion for organisational simplification, operational efficiency and business rationalisation, and expected to generate annualised savings of approximately $0.4 billion to $0.5 billion when fully implemented.
These pre-tax restructuring and other costs of approximately $0.5 billion include approximately $0.3 billion of employee severance and one-time termination benefits, concentrated initially among management’s senior levels, according to the firm. Further staff reductions are anticipated in 2016, according to AIG.
Hancock said in the statement: “Our strategy focuses on four major objectives: to narrow our focus on businesses where we can grow profitably, drive for efficiency, grow through innovation and optimising our data assets, and return excess capital.
“This quarter’s restructuring actions mark the latest significant, visible steps in our transformation toward becoming more efficient, less complex, and able to respond to our clients’ needs with greater agility. And they are consistent with our reorganisation of our business around clients rather than products, and our efforts to streamline our footprint to focus on attractive opportunities, including the aging populations in the US and Japan, International property, travel insurance in China, and Japan
The firm is maintaining an active dialogue with shareholders, including Carl Icahn.
Its management and the board have carefully reviewed a separation of AIG’s businesses on many occasions, according to the firm, and have concluded it did not make financial sense.
