American International Group
named former Prudential plc chief executive and experienced Asia hand Mark Tucker as the head of its Asian life insurance business, AIA, ahead of an expected $15 billion AIA IPO.
The abrupt removal of AIA CEO Mark Wilson shows AIG chief executive Robert Benmosche is stamping his authority on the bailed-out U.S. insurer and follows a boardroom battle at AIG that culminated in its chairman Harvey Golub quitting last week.
Benmosche and Golub were at loggerheads over the future of AIA and that acrimony intensified after British insurer Prudential's $35.5 billion bid for AIA collapsed last month.
AIG will now push ahead with an AIA initial public offering (IPO), which bankers have said could raise about $15 billion.
The insurer is looking to sell down a stake in its crown jewel to repay American taxpayers after receiving a $182.3 billion bailout package.
Tucker, 52, was the chief executive of Prudential Corporation Asia for a decade up until 2003. In this role, he propelled Prudential's growth across Asia and established a strong regional presence. He was the group CEO of Prudential plc from May 2005 to September 2009.
He (Tucker) is certainly a very experienced professional in the industry. But it's too early to say how this will affect the company, said Sally Yim, vice president at Moody's in Hong Kong and senior analyst who covers Asia-Pacific's insurance industry.
The appointment of Tucker, who as head of Prudential explored a takeover of AIA a full year before the British insurer mounted its abortive bid under current CEO Tidjane Thiam, could stir talk that he may now look into bidding for Pru, or its Asian operations.
People familiar with the matter told Reuters at the time that Tucker had been prepared to pay up to $20 billion for AIA.
This may support speculation that ultimately AIA will either bid for Prudential Corporation Asia, or for Prudential in its entirety, and sell off the non-Asian parts, Oriel Securities analyst Marcus Barnard wrote in a note.
While this would be seen as positive for Prudential, we would expect any such move to be at least two years away.
Tucker's new role also quashes speculation that he may be brought in to replace Prudential chairman Harvey McGrath, who has faced calls to quit from some shareholders in the wake of the failed AIA bid, which cost Pru 450 million pounds ($688 million) in fees.
AIG gave no explanation for ousting Wilson, who was well regarded within AIA and was instrumental in holding AIA together when AIG was on the brink of collapse. Wilson had threatened to resign if the Pru deal had proceeded, which put him at odds with Benmosche.
A source had told Reuters on Sunday that AIG, which is nearly 80 percent-owned by the U.S. government, was set to name Tucker as the CEO of AIA.
AIA is already functioning without a chief financial officer and a chief legal counsel, and the company has installed a new CEO just months before a massive IPO. But analysts do not expect Wilson's exit to trigger large scale defections out of AIA.
I guess it's natural to have a few but I doubt there would be significant defections, Yim of Moody's added.
AIG also said it would seek to list American International Assurance Co Ltd (AIA) on the Hong Kong stock exchange, subject to regulatory approvals and market conditions. The IPO is expected before the end of 2010 and is set to be Hong Kong's biggest.
(Additional reporting by Kei Okamura in Tokyo, Myles Neligan in London)
(Editing by Jonathan Hopfner and Muralikumar Anantharaman)