AIG shares slide; report speculates on brain drain

Shares of American International Group Inc. fell Tuesday as the company continues to face challenges in repaying government funds.
The insurer’s recent loss of executives to the company of former CEO Maurice “Hank” Greenberg may further complicate its efforts to pay back more than $180 billion, a report published in The New York Times said Tuesday.
Shares of AIG fell $1.65, or 4.6 percent, to $34.60 in afternoon trading.
Pay restrictions imposed last week by the Treasury Department could hasten defections to Greenberg’s company, C.V.. Starr & Co., a potential competitor operating under no such restrictions, the Times report said.
Treasury “pay czar” Kenneth Feinberg announced he had ordered seven companies that have received billions of dollars in taxpayer money, to slash the base salaries of their top executives by an average of 90 percent and cut total compensation — cash, stock and perks — in half.
That applies to the five top executives and the next 20 highest-paid employees at AIG, which is based in New York.
Analysts have questioned if the companies facing such pay restrictions could lose the top talent needed to help them regain solid footing.
Treasury spokesman Andrew Williams said in a statement: “We’re acutely aware of this possibility and that’s why Ken Feinberg spent hours and hours at AIG trying to understand that specific dynamic and strike the right balance with his determination.”
A representative from AIG declined to comment on the matter. A spokeswoman from C.V. Starr was not immediately available.
Greenberg served as AIG’s chief executive from 1967 until he retired in March 2005 amid an accounting scandal. He is chairman and CEO of C.V. Starr & Co., an independently owned holding company with insurance agencies and a portfolio of global investments.
AIG was rescued nearly a year ago by the government with an initial package worth $85 billion. It then steadily increased the aid available to AIG to more than $180 billion as market conditions continued to worsen.
AIG was devastated not by its traditional insurance operations, but by its financial products business, which underwrote risky insurance contracts on investments tied to mortgages and other souring debt.
The insurance giant is 80 percent owned by the government and trying to shed assets and spin off divisions in an effort to pay back the massive government bailout. AIG has been slow to sell assets as it tries to get the best return for its still-performing insurance subsidiaries around the world.

Related Topics: American International Group (AIG)