American International Group reorganized Chartis, its largest unit, and named Peter Hancock as head of the property and casualty division.

The move may be a sign that AIG CEO Robert Benmosche, who is battling cancer, is grooming Hancock as a successor. Hancock is currently executive vice president, finance, risk and investments.

Chartis has faced a rocky last few quarters. It unexpectedly boosted reserves by $4 billion last quarter to cover additional claims.

The previous CEO of Chartis, Kristian Moor, will become vice chairman of the division, reporting to Hancock.

Hancock has been instrumental in AIG's recapitalization efforts, structuring a plan for the company to repay its obligations to the U.S. Federal Reserve and Treasury Department.

A longtime executive at JPMorgan Chase & Co, Hancock set up his own boutique investment bank last decade with partners who included Nobel Prize winner Robert Merton. Hancock is often seen as one of the fathers of the credit derivatives market.

The reorganization also shifts the responsibilities of several lower-level executives within Chartis and puts the business into two operating silos.

Shares of AIG were down 2.5 percent at $35.15 in morning trading.

(Reporting by Lauren Tara LaCapra; Editing by Derek Caney and Lisa Von Ahn)

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