Liddy to AIG Employees: Company Is Undergoing a 'Rebirth'

 

Friday, Aug 14,2009, 9:56:57 AM   Click:

Edward Liddy, former chief executive of American International Group Inc., told company employees he had no idea what he was in for when he accepted the $1-per-year job but "I am glad that I came," he wrote in a letter.

Aug. 7 was Liddy's last day as chief executive and chairman of AIG and he re-entered retirement. The former head of Allstate Corp. Came out of retirement to take over the insurance giant in September 2008 after the federal bailout. Robert H. Benmosche is the new president and CEO.

Liddy told employees he returned to retirement "with $ 1, a few bruises and a feeling of hard-earned accomplishment.

"Together, we have achieved some incredible accomplishments: AIG has been stabilized and has a plan to put its principal businesses on a path to rebuild value," Liddy wrote to AIG employees. "Without your strength and can-do attitude, we could not have been successful. "

Calling what is happening at AIG a "rebirth," Liddy said the company is shedding excessive risk from its financial products group and reached agreements to sell more than 20 business lines and other assets. Liddy recently said AIG expects "permanent reductions in the Federal Reserve Bank of New York credit facility related to the issuance of the preferred interests in the ALICO and AIA special purpose vehicles, which upon closing will substantially reduce our debt to the FRBNY, will result in accelerated amortization of a portion of the prepaid commitment asset approximating $ 5 billion before tax "(BestWire, Aug. 7, 2009).

For the first time since the third quarter of 2007, AIG posted a profit during the second quarter this year. AIG reported net income of $ 1.8 billion, compared with a loss of $ 5.4 billion for the same quarter a year ago. With the US government bailout ? now totaling up to $ 182.5 billion? the government owns 79.9% of the company through Series C Preferred Stock. With the company splitting the earnings between the government-owned shares versus the common shares, net income attributable to the common shares is $ 311 million, or $ 2.30 a share, up from a net loss of $ 5.4 billion, or a loss of $ 41.13 a share, for the same period last year.

"For this we can be very proud," Liddy said.

Adding perspective, Liddy said, "America has lost confidence in corporations. Restoring that confidence is the first step toward regaining our footing in the global economy." He said he would not "linger or second-guess new management or policy makers."

Liddy became the focus of intense political and media debate and criticism since he was recruited for the post by the Treasury Department. AIG nearly went bankrupt before being bailed out by the federal government (BestWire, May 13, 2009). Before Congress, the executive was bombarded with criticism and a public outcry was fueled over $ 165 million in bonuses owed to AIG employees.

Most AIG insurance companies currently have a Best's Financial Strength Rating of A (Excellent) with a negative outlook.

On the afternoon of Aug. 11, shares of AIG (NYSE: AIG | Quote | Chart | News | PowerRating) were selling for $ 25.20, down about 12% from the previous close