The announcement today of the largest ever quarterly loss in US history hit the market hard, and will result in massive changes at AIG. These changes will include continued efforts to sell off assets, transfer of more control to the Federal government, and the spin off of domestic insurance operations.
A town hall meeting for all employees hosted by CEO Edward Liddy is in process even as I type this, and there are several key takeaways so far. First, the company will combine the American International Underwriters and Commercial operations units into one entity to be called AIU Holding; it will include 44,000 employees and operate in130 countries; this latter is somewhat surprising, but sources confirm AIU Holdings will retain foriegn P&C operations. The new entity’s CEO will be Christian Moore. This is a bit of a surprise as many employees expected Nicholas Walsh (the current AIU leader) to head up the new business. Moore is currently President and CEO of AIG P&C group; Walsh will be vice chairman and the chair will be named later.
At this point AIG has not publicly announced how they will handle employee stock, but the company is looking to implement increases in compensation and pay bonuses in March as previously announced. These comp changes are pending approval of the Feds, who will be consulted before any plans are finalized. Sources did indicate there appears to be some effort to establish a mechanism to provide stock and/or options to employees of AIU Holdings, but no details were available.
Liddy did not announce extensive staff reductions. However, earlier internal communications asked managers to take a look at their budgets and see where they can cut. No goals were provided; management was just asked to reduce wherever possible.
Beyond that, no other new news came out during the call, but Liddy did say that ‘the goal is to keep as many people as possible’.
Given the company’s desire to demonstrate it is doing all it can to raise capital, do not be surprised if there is movement on this fairly quickly. As I noted last week, these operations are profitable and solid, and as soon as the credit markets return to something approaching normalcy, there will be plenty of folks willing to buy into what is a strong business.
What does this mean for you?
That would be a good move. Operations could continue, policyholders would be protected, and a big chunk of money given back to the taxpayers.
Mar
2
Joe, I couldn’t disagree with you more. Why would any WC policyholder elect to renew a policy with AIG and why would a new policy elect to be isured by AIG. Our gov’t continues to throw our hard earned tax dollars away at expense of trying to fix that which cannot be fixed. Rather, they should be investing the funds into helping more financially sound carriers assume the remainder of the existing policies with the goal of eventually elminating AIG altogether. Our current ecomony has no place for the likes of AIG as they don’t know the first thing about how to operate as a fiscally sound carrier.