Edward Liddy, former boss of AllState, come to firefighter take head of AIG last September, has just announced his departure. He will leave as soon as his replacement will be found, with a sense of accomplishment, even if the task is unfinished. "We have registered substantial progress in the stabilization of AIG, we reduced the systemic risk that has led the Government to rescue society, protect our policyholders and our business and develop a plan to repay the taxpayers," he noted in a press release last Thursday. Aware that much remains to be done, he warns that "the recovery of the company depend of economic conditions and financial markets." "This may take several years".
AIG recorded 100 billion in losses last year, an all-time record due to the activity of the London Financial Group, which was running the company after having issued billions of "credit default swaps" on risk products, requiring Treasury to inject $ 180 billion to avoid a collapse of the global financial system. For eight months, Edward Liddy has worked with the Government to implement a plan of disposal of assets, to repay the $ 180 billion dollars received from the State. Last, the assignment of 21st Century Insurance Group to a subsidiary of Zurich Financial Services for $ 1.9 billion.
Life after AIG
Most importantly, this pattern on a temporary mission organized the dismantling of the group. Vehicles have been created to accommodate the various AIG entities ("special purpose vehicle" or SPV). Each SPV will hold 100 of one of the operational divisions: AIU Holdings for damage insurance and AIA Group and Alico for life insurance. By the end of the year, they will be equipped with a new identity and cede a portion of their capital on the stock exchange. "We hope to give 20 of the titles of AIU Holdings on the market," said Ralph Mucerino, "chief operating officer" of AIU Holdings, the branch of insurance-damage of which he is leading the international part. "Our challenge is to understand that we separated our mother house and damage insurance is stronger than ever." People and strategies are in place.
Since a few days, the patterns of the different activities embarked on a public relations exercise whose aim is to prove that there is life after AIG. "We kept 90 of our key client accounts," provides Ralph Mucerino. The new cases are hard to win due to a now tainted reputation, but also because the economic environment is difficult. In the first quarter of 2009, 10 billion of contracts were signed, in 17.5 lower than a year earlier. For insurance companies, the retreat is 18.3, to $ 4.2 billion.
Out rush of his retirement, Edward Liddy had come to volunteer take at the request of Henry Paulson, the former Secretary of the Treasury, one of the most difficult posts that is. Eight months later, the ex-patron of AllState prefers to make weapons. He was particularly experienced by the difficulty of the task and the scandal of 165 million dollars in bonuses to the leaders of the London-based subsidiary. A hearing in Congress on this subject was "one of the worst days of my life", he commented later.
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