NEW YORK (Bloomberg)—American International Group Inc., the insurer bailed out by the U.S. government, said the executive in charge of its property/casualty division won't get a full bonus because of “underachievement.”

Kristian Moor, head of AIG's Chartis Inc. insurance group, was awarded incentive pay equal to 90% of the $1.9 million target set for 2010, or $1.71 million, the New York-based insurer said Thursday in a regulatory filing. AIG cited “underachievement of certain financial metrics.” Mr. Moor received a salary of $5 million in stock and $700,000 in cash.

“Increasing Chartis' reserves back in February was something of a surprise,” said Clark Troy, a senior insurance analyst based in Chapel Hill, N.C., for Aite Group. “The reserve adjustment would suggest that things aren't going as perfectly as they had hoped.”

AIG, which got a $182.3 billion U.S. bailout, said in February it set aside about $4.2 billion to boost reserves at the Chartis property/casualty unit after claims costs were higher than projected. The insurer has slipped 26% this year, the second-worst performance in the Standard & Poor's 500 Index after Monster Worldwide Inc.

Mark Herr, an AIG spokesman, declined to comment and said Mr. Moor wasn't available for an interview.

AIG gained 11 cents to $35.70 in regular New York trading Thursday. The stock almost doubled last year as CEO Robert Benmosche sold non-U.S. insurance businesses for more than $30 billion as part of an effort to repay the U.S. government.

Benmosche, Hancock

Benmosche was awarded 100% of his incentive, or $3.5 million, and also earned $7 million in cash and stock for 2010, AIG said in the filing.

Peter Hancock, head of finance and risk, received 120% of his incentive pay, or $4.3 million, for less than 11 months of work, AIG said in its filing. He was paid $2.4 million in stock and $1.5 million in cash. AIG's compensation is still overseen by the Treasury Department's Office of the Special Master.

Mr. Moor, 51, fell short of the financial metrics set for him by the company, including maintaining grades from the four ratings companies, according to the filing. Mr. Moor met the strategic and operational metrics set for him, AIG said.

Standard & Poor's Corp. lowered Chartis' rating to A from A+ in February because of “deterioration in the group's operating performance,” according to a Feb. 28 statement. The property/casualty units were downgraded Feb. 10 by Fitch Ratings, which said the company was a “significant outlier” in the industry for reserve additions.

Chartis’ performance

“The operating performance of AIG’s Chartis companies has been lower than our expectations and will likely remain so,” Standard & Poor’s analysts led by Steven Ader wrote.

The operating loss for the Chartis division, which sells coverage for commercial property, corporate boards and airplanes, as well as workers compensation insurance, widened to $3.97 billion in the fourth quarter from $1.75 billion a year earlier. Chartis spent 160.5 cents per every premium dollar on claims and expenses in the period, up from 132.5 cents a year earlier.

AIG hired Mr. Hancock in February 2010 from KeyCorp, Ohio’s second-largest bank, where he was the vice chairman responsible for national banking. Mr. Hancock spent 20 years at a predecessor to JPMorgan Chase & Co., where he established the derivatives group, AIG said.

Chartis has more than 45 million clients in more than 160 countries and jurisdictions, AIG said. It wrote $31.6 billion in net premiums in 2010.

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