AIG's Bench Force Tested As execs Departure

 

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9 February 2009 Monday 09:21 AM EST

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AIG's Bench Force Tested As execs Departure

Alyn Ackermann

NEW YORK



American International Group Inc s depth of talent allowed him to weather the departure of a number of senior management, since its last financial crisis began in September, but an increase of defections in recent weeks is a clouding its future , stated in the insurance industry working with AIG and industry observers.

The loss of senior management in May to raise enough questions from customers that could threaten the health of its commercial operations, around which the President and CEO Edward Liddy intends to reorganize the company, says Stewart Johnson, insurance, mergers and acquisitions firm PhiloSmith.

"Usually, with businesses of this kind, there is a key type," said Johnson. "The key is not only knowledge, but relations. Without the key guys, it is much more difficult. Yeah, other people worked with him, and others are still in AIG, but when you take the first chain of the watch, it is not easier to win. "

AIG's Commercial Group has seen the leaders of the main active leaders beheaded as suddenly depart in some cases behind other key executives.

In December, Kevin Kelley, long-time president and CEO of AIG Central Lexington Insurance Co., suddenly left to become CEO of Ironshore Inc., taking with him Shaun Kelly, Lexington President and Chief Operating Officer at the head of Ironshore the United States. In a few weeks, they were joined by six other senior commercial enterprises AIG (BestWire, Jan. 22, 2009).

"There is no doubt that there is a starting level, and this level has been increasingly ... Yes, they are bleeding, but the level of blood flow is difficult to assess," said AM Best analyst Joyce Sharaf.

AIG May Sharaf told not cripple businesses suffer a loss, even if it continues to lose key executives.

"It'sa little too early to be able to make a link between a loss of the company and the hotel employees," she says.

However, the corporate culture of AIG could enable it to emerge from the wave of defections, said Ernst Csiszar, former head of the Property Casualty Insurers Association of America in South Carolina and former commissioner of insurance that is director of the insurance consultant Bridge Strategy Group and University of South Carolina faculty member.

"I think they have a good bench," Csiszar said. "I saw people with AIG customers. When they make a team, yes, of course, there is a star, there is the relationship to buy, if you want, but they are very deep in terms of understanding of the population. "

AIG (NYSE: AIG) was saved from bankruptcy in September by a federal rescue plan which has since grown to over $ 150 billion, and seeks to sell assets to repay federal loans. It uses the "retention payment" to organize programs on senior leaders during its reorganization, and for which the company has been severely criticized (BestWire, Dec. 17, 2008).

John Doyle, President and CEO of AIG Insurance, AIG said that the depth of talent - and insurance know-how - has prevented the loss of direction badly its business. He said he had not heard negative comments from customers on departure.

"Even though we lost some good items, as we do normally, the turnover is not a problem," he said. "Our customers are well known throughout our organization. Client relations are not managed by one or a few individuals. "

At AIG, he said, relations with customers are more than personal contacts.

"Some of these relationships is directly related to the ability that we offer our customers the products we offer our clients and the services we offer to our customers," he says. "When we lose people others, in most cases, these people do not have the capacity we have, they do not have the products we have, they do not have the depth of services we have. "

Most of the AIG insurance companies currently have a Best's financial strength rating of A (Excellent) with a negative outlook.

(By Alyn Ackermann, senior editor, BestWeek: Alyn.Ackermann @ ambest.com)

10 February 2009

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