American International Group (AIG) said last night that chief executive Edward Liddy plans to step down, signalling the end to a short and tumultuous tenure running the government-rescued insurer.
Mr Liddy, (63) named chairman and chief executive of AIG within hours of the government bailout last September via a massive capital injection, had always planned for his stay at the company to be temporary.
The former Allstate executive's reign at AIG may end up being best remembered for the multiple public scoldings he received from lawmakers over bonuses paid to executives of the insurer's troubled financial product unit.
Mr Liddy said that while being a personal target of public anger had not been easy, he knew the assignment would be a tough one when he accepted it.
“I absolutely would do it again. I think I've done the job well,” he told Reuters. “I think we are in a much better position than we were, and I'm comfortable turning the reins over to the next person.”
Mr Liddy, who was being paid an annual salary of $1, will not receive a severance package. "One reason I did this for $1 a year was because it was not a permanent position," he added.
He expects his successor to be paid a much higher salary than he has taken. Even so, some say the job will be a tough one to fill.
“It all depends on how much you enjoy testifying in front of angry public officials,” said Donald Light, an analyst with Celent in San Francisco.
“It would easily be one of the most challenging jobs in the world of insurance, but add in the public scrutiny and it becomes difficult by a different order of magnitude,” Light added.
The US government rescued AIG after money-losing bets on derivatives threatened to drive the company into bankruptcy.
AIG, which now owes taxpayers more than $85 billion, could take several more years to repay its obligations, Mr Liddy said.
In total, taxpayers have put up to $180 billion at AIG's disposal, including billions of dollars to buy toxic assets that led to the company's losses and $30 billion in a credit facility that is as yet untapped.
In a separate proxy filing yesterday, AIG proposed a reverse 1-for-20 stock split, which would effectively increase the value of individual shares.
It will also seek shareholder approval to increase the number of authorized shares, enabling it to issue equity to raise capital, engage in debt for equity swaps, and other purposes. It also asked to give seniority to preferred shares held by the US Treasury.
Reuters