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?AIG is far more stable than it was a few months ago. ... Under the circumstances, the right decisions were made and the right decisions are being made,? said Liddy.
AIG was nearly driven into bankruptcy in September by bad bets on credit derivatives by its Financial Products unit, and has survived under a federal rescue program that has grown to $182.5 billion in loans and other assistance.
Liddy placed the blame for AIG?s condition squarely on poor risk management of Financial Products activities.
?AIG took on too much risk in its FP unit,? he said.
The company has been selling assets to repay the government as it restructures itself, and Liddy said AIG has completed or announced 25 transactions since he took over as head of the company in September.
Separately from the annual meeting, the company said it is selling AIG Credit Card Co. (Taiwan) Ltd. to Far Eastern International Bank. Terms of the transaction, expected to close in the third quarter of 2009, were not disclosed
?We believe there is an excellent chance that we can repay the government,? Liddy told the shareholders, depending on future ?market conditions.?
Highlighting the uncertainties of its position, AIG filed an amendment to its annual report with the U.S. Securities and Exchange Commission, noting that the risk of valuation declines on credit-default swaps sold to European banks could last ?significantly longer than anticipated? and could have a ?material adverse effect? on the company?s results.
At the meeting, shareholders also approved a reverse stock split, in which investors receive one new share for every 20 shares they owned, effective after the close of regular trading today. The company said the split would boost share price and investor interest and could prevent AIG from being delisted by the New York Stock Exchange. The NYSE temporarily suspended its $1 minimum price requirement earlier this year because of the plummeting prices of some major companies, including AIG (BestWire, March 6, 2009).
Liddy said the AIG?s problems ?had nothing to do? with its core insurance companies.
?Many of AIG?s businesses are rebranding themselves and getting a fresh start. ... They are separating themselves from AIG?s troubles,? he said.
The shareholders approved the election of 11 board members, including six new members, in a slate that was first approved the three-member AIG Credit Facility Trust, which oversees the U.S. Treasury's ownership of 77.9% of AIG?s voting shares as part of the federal rescue program.
Liddy was also reelected. He has announced his intention to resign as soon as the new board finds replaces him (BestWire, May 21, 2009).
Liddy, who retired as chief executive of Allstate Corp. before being solicited by former Treasury Secretary Henry Paulson, noted that AIG?s turnaround is ?likely to take several years.?
?That?s not how I plan to spend my retirement and I can assure you that it wasn?t in my wife?s plans, either,? he said.
One shareholder who spoke during the meeting chastised the exiting board members.
?I would say they?re like rats leaving a sinking ship. Good bye and good riddance, former directors,? he said.
The new members are: Harvey Golub, former chairman and chief executive of American Express Co.; Laurette T. Koellner, former senior vice president of the Boeing Co. and president of Boeing International; Christopher S. Lynch, an independent consultant and former KPMG national partner in charge of financial services; Arthur C. Martinez, former chairman, president and chief executive of Sears, Roebuck and Co.; Robert S. (Steve) Miller, executive chairman of Delphi Corp.; and Douglas M. Steenland, former president and chief executive of Northwest Airlines Corp.
They join four returning members: Suzanne Nora Johnson, former vice chairman of the Goldman Sachs Group; Dennis D. Dammerman, former vice chairman of General Electric Co. and former chairman of GE Capital Services; George L. Miles Jr., president and chief executive of WQED Multimedia; and Morris W. Offit, chairman of Offit Capital Advisors LLC.
Most AIG insurance companies currently have a Best's Financial Strength Rating of A (Excellent) with a negative outlook.
Shares of AIG were $1.19 in afternoon trading on June 30, down 11.3% from the previous close.
(By Alyn Ackermann, senior associate editor, BestWeek: Alyn.Ackermann@ambest.com)
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