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AIG morale could spook talent, curb turnaround plan - UBS report

Published 03/04/2017, 21:25
Updated 03/04/2017, 21:30
© Reuters. The AIG logo is seen at its building in New York's financial district
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By Suzanne Barlyn

(Reuters) - A morale crisis at American International Group Inc (N:AIG) could prevent the U.S. insurance company from keeping and hiring the talent it needs to propel it through its financial turnaround, UBS said in an analysis on Monday.

AIG ranked last through March 21 among 10 insurers rated by their own employees in categories ranging from career opportunities to business outlook, according to a UBS analysis of data from Glassdoor Inc, which runs a careers website and database of millions of company reviews.

An AIG spokesman declined to comment.

Last year, AIG ranked last in seven of 10 categories rated by Glassdoor users, including employees and agents. Factors also include compensation, senior management and cultural values.

AIG, which announced on March 9 that its chief executive, Peter Hancock, would be stepping down, has ranked at or near the bottom of the group in all categories since 2012, wrote UBS analyst Brian Meredith in a report to UBS customers.

The morale slump could threaten a two-year turnaround plan put in place at AIG after billionaire activist investor Carl Icahn became AIG's fourth-largest investor in 2015, Meredith said.

AIG is midway through the plan, which involves divesting businesses, cutting costs and ultimately returning $25 billion (£20.04 billion) to shareholders.

A $5.6 billion addition to reserves to cover future claims led AIG to report an unexpectedly large fourth-quarter loss on Feb. 14, jolting investors and leading to Hancock’s planned departure.

Hancock's successor has not yet been announced, though several names have been cited by analysts and in media reports. The board has pledged to find a new CEO quickly.

The data is an indication of AIG's challenges in "retaining and hiring underwriting talent" in its commercial property and casualty businesses during the last several years, wrote Meredith.

Dim views of AIG among employees and agents signal "the challenges that AIG continues to face in retaining and hiring talent it needs" to boost and maintain its commercial property and casualty insurance businesses, said Meredith.

The UBS analysis involved about 6,300 reviews posted on Glassdoor that UBS identified as being from employees of large property and casualty insurers, including Travelers Cos Inc (N:TRV) and The Hartford. More than 1,400 of the 6,300 reviews were from AIG employees.

© Reuters. The AIG logo is seen at its building in New York's financial district

CNA Insurance (N:CNA) has scored the highest ratings so far in 2017, while Travelers ranked the highest last year, according to UBS.

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