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AIG Hires Peter Hancock to Oversee Risk, Financial Products

American International Group Inc. named Peter Hancock, described by former employer JPMorgan as an “architect” of the derivatives business, to oversee finance and risk, including the insurer’s money-losing credit-default swap unit on Monday, February 11th 2010. Mr. Hancock spent 20 years at one of the predecessor banks that now make up JPMorgan Chase & Co and eventually rose to be CFO and head of risk management before stepping down in 2000.

Hancock “is one of the people that basically developed the credit-default swaps market at JPMorgan in the mid-1990s,” said Ed Grebeck, CEO of Stamford, Connecticut-based debt-consulting firm Tempus Advisors and an instructor at New York University on derivatives. “Given that he was one of the pioneers, it’s probably the first good appointment that any one of these bailed-out firms has made.”

“Peter was a great leader and mentor to me, and is one of the best risk managers I know,” Blythe Masters, global head of commodities at JPMorgan, said in an e-mailed statement. Masters worked for Hancock at the group that developed what are now known as credit-default swaps, contracts that pay a fixed-income investor face value on bonds or loans in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Toomre Capital Markets LLC ("TCM") applauds this hire and wishes Mr. Hancock success in winding down the activities of the AIG Financial Products unit. He succeeds Gerry Pasiucco, a former Morgan Stanley executive, who was hired in 2008 to lead that business unit after its former leader Joseph Cassano was pushed out. Apparently about 230 employees remain at the Financial Products unit, down from approximately 430 back in 2008 before the government bailout of AIG.