American International Insurance is moving forward with its plan to eliminate a large number of senior management, dismissing four executives with its real estate unit last week, including the group’s chief executive.
According to sources within the company, top management dismissed
AIG Global Real Estate CEO Robert Gifford, a veteran property investor who has been with the company since 2009. It is also dismissing the unit’s chief counsel, its head of Americas and the group head of Mexico investments.
Douglas Tymins, who heads AIG’s affordable housing investment unit, will take over as head of the real estate group. Meanwhile, the company’s commercial mortgage lending business is being separated from the real estate unit and will report directly to AIG’s deputy chief investment officer.
The dismissals are part of AIG’s long-term plan to scale back its operations in Mexico and review other international investments, focusing on US operations going forward.
The insurer plans to cut up to 23% of its senior management – as many as 320 positions – as it seeks to improve returns in the face of investor pressure to downsize, led by billionaire investor Carl Icahn.
“We just need fewer generals on the field,” said AIG Chief Executive Peter Hancock during an earnings call last month.
Hancock said the company is planning to take further actions to streamline businesses and narrow its focus in order to improve results for shareholders. He plans to provide an update of these actions in advance of its fourth-quarter earnings report.
AIG has been in the real estate business since 1987 and is one of the largest industry investors in the world, with more than $35 billion in assets, including the International Finance Centre in Seoul and a 36-story Embassy Suites hotel in midtown Manhattan, and a team of 200 professionals.
It previously considered selling the unit following its bailout by the US government in 2008. However, after it repaid a large loan from the Federal Reserve Bank of New York, AIG began re-growing the team and making further property investments.
The unit proved to be instrumental in helping AIG recover from the financial collapse.
