Liddy of AIG: The insurer reduced its systemic impact

 

Thursday, May 14,2009, 9:09:09 AM   Click:

WASHINGTON (MarketWatch) - American International Group Inc. CEO Edward Liddy, on Wednesday plans to defend the insurer Embattled describing the measures taken to reduce its size and the risk to the global financial system .

"The parent company will be smaller. The financial products unit does not exist. We have reduced but not eliminated the systemic risk that AIG for this global financial system, "said Liddy in a testimony that it plans to deliver to the House oversight and reform committee of the Government of the hearing Wednesday focusing on the collapse and federal rescue of the mega-insurance company.

AIG (AIG) has received over $ 180 billion funded by the taxpayer in the rescue of dollars to stay afloat in part because of concern by officials of the Treasury that the super size of the insurance company collapse would have caused too much collateral damage to financial markets. In exchange, the administration has received an 80% stake in the company.

AIG has also been criticized for paying $ 163 billion in bonuses for traders in credit default swaps, seen as central to the financial crisis.

Liddy, who assumed leadership of the company in September, critics have argued that the company received, in part, to the granting of bonuses to the company night and billions of taxpayers' money invested in the company.

"Rampant, unwarranted criticism of the AIG serves only to diminish the value of our companies in the world to the detriment of our shareholders, including taxpayers, who own about 80% of AIG," said Liddy.

In his testimony, said he expects to complete its Liddy AIG transfer of two divisions, American Life Insurance Company, or Alico and Co. American International Assurance, or AIA, a special purpose entity "in the near future . Under an agreement with the bank regulators, AIG is in motion, the two units of this division in exchange for substantial debt reduction.


AIG is also the transfer of its Global Property & Casualty Insurance unit in a special purpose entity to prepare for the potential sale of a minority stake in the company.

He stressed that AIG has also reduced its exposure to "complex derivatives" from its peak of $ 2.7 trillion to $ 1.5 billion. "We continue to explore multiple options to break the negotiation of these books so that we can reduce the risks that remain, the sale of portions of the company ..." Liddy said in his testimony.

Look for new trustees AIG directors

Liddy said that the company works closely with the trustees appointed by the New York Federal Reserve Bank. The three directors are also required to testify about their control of AIG, at the hearing on Wednesday. According to a letter to Liddy on 7 May, the Trustees are seeking a broad review of the insurer compensation practices with an emphasis on "performance-based compensation" by the end of the year.

The three trustees also plan to seek new members of the board of directors of AIG and will make a decision shortly, according to testimony prepared for delivery Wednesday. "We are actively seeking new board members who could add important skills and perspectives," the foundation said in testimony.

The Fed has appointed Jill Considine, a member of the Council on Foreign Relations and the Economic Club of New York, Chester Feldberg, former chairman of Barclays Americas and Douglas Foshee, owner of El Paso Corp, a system of natural gas pipeline to oversee the insurer.

The New York Fed said it created the trust agreement to avoid conflict with the New York Fed and monitoring of monetary policy functions.

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