American International Group, Inc. (AIG) announced today that Chairman and Chief Executive Officer Edward M. Liddy intends to step down once the board finds replacements for him.
Liddy has recommended that the chairman and CEO roles be separated and, according to the company, the board of directors agrees with that strategy.
Earlier this week, the company that has been bailed out by the federal government announced the nomination of six new directors to stand for election at the company’s annual shareholder meeting on June 30, 2009. This slate will reconfigure the board so that a majority of its members will be newly-elected independent directors.
According to the statement issued by AIG, Liddy believes that the company should install a more permanent leadership team and structure along with the new board.
The searches for two replacements — a CEO and a chairman– will be handled by both the reconstituted board and the trustees of the AIG Credit Facility Trust, which represents the government’s 80 percent stake in the company.
“Much work remains to be done at AIG, but much has already been accomplished,” Liddy said. “With the financial assistance of the Federal Reserve Bank of New York and the U.S. Department of the Treasury, we have made substantial progress in stabilizing AIG, reducing the systemic risk that led the government to rescue the company, protecting our policyholders and our businesses, and developing a plan to repay American taxpayers. I am proud that we are now implementing this repayment plan.”
Under his leadership, the company has also begun the process of rebranding its insurance businesses as AIU Holdings to protect them from further negative fallout from the troubles caused by the AIG financial products unit.
Last September, Liddy, who formerly ran Allstate, came out of retirement to take over AIG amid turmoil at the giant firm and one of the nation’s worst financial crises. His salary has been $1 a year.
Liddy “answered the call of his country and the needs of AIG without reservation amid one of the darkest periods of the current financial crisis,” said Stephen A. Bollenbach, AIG’s lead director, in honoring Liddy.
In a recent interview with Reuters, Liddy said he understood the anger because there is fear about the economy and many people are losing their jobs. But he also said he found it difficult to take personally.
“It is difficult to be the recipient of that kind of abuse when I am on the side of the taxpayer, brought in to help,” he told Reuters.
Liddy, 63, joined the private equity firm of Clayton, Dubilier & Rice Inc. last year after serving as chairman of The Allstate Corp. since January 2007. Prior to that, he was Allstate chairman and CEO from 1999 until 2006 and president and chief operating officer from 1994 until 1998. He led the initial public offering and 1995 spin-off of Allstate from Sears, Roebuck and Co. At Sears, Liddy served as senior vice president and chief financial officer and as senior vice president-operating. Prior to that, Liddy was chief financial officer of G. D. Searle & Co.
At AIG, which was once the world’s largest insurer, Liddy succeeded Robert B. Willumstad, who left after three months on the job, and after AIG — once the world’s largest insurer — agreed to an $85 billion rescue plan from the U.S. Federal Reserve.
AIG has lost more than $100 billion over the last year and one-half, largely due to losses in its financial products unit. In the fourth quarter of 2008, AIG reported a loss of $61.7 billion, the largest quarterly loss in corporate history.
The federal government has propped up AIG three times, committing a total of about $180 billion.
AIG has been selling assets to try to repay the loans and has raised more than $4 billion.
The most recent first quarter loss was $4.35 billion, compared to a loss of $7.81 billion in the same quarter in 2008.
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