Are AIG's Enemies Becoming Frenemies?
What happens when you look at embattled insurer American International Group through rose-colored glasses? Your enemies become “frenemies.”
U.S. Rep. Edolphus Towns (NY) said through an aide that he may talk with the U.S. Treasury Department to modify the $182 billion bailout package that AIG received last year when the trillion-dollar company nearly fell apart after the collapse of its financial products unit.
As one of AIG’s biggest gadflies, Towns has been a source of much pain and bad publicity for the insurer. But since he is also head of the House Oversight and Government Reform Committee and therefore privy to the inner workings of AIG, his opinions (if he’s changed his mind) just might carry some weight. Will it amount to $182 billion worth of weight? That remains to be seen.
Towns told Bloomberg News he came to the decision after a September 17 meeting with former AIG CEO Hank Greenberg, who was ousted in 2005 but still holds 12 percent of AIG’s shares. Greenberg has been a longtime vocal opponent of the $182 billion deal that AIG made with the government, claiming it gave away too much and forced his former company to sell assets at fire sale prices.
The third leg of this stool is AIG CEO Robert Benmosche. Both Benmosche and Greenberg agree that no fire sale is warranted and that AIG can continue as an ongoing concern. Some pieces may need to be sold off, like foreign life unit ALICO, and some may need to be spun off, like Chartis, its commercial property casualty operation. But both agree that AIG should remain as a viable insurer.
That’s also the opinion of insurance broker Aon Corp. “As time has gone by, people are feeling more comfortable that AIG remains a solid insurance company,” Eric Andersen, the boss of Aon Risk Services, told BusinessInsurance.com in an interview. Others, including insurance rating agency A.M. Best Co., expressed similar feelings.
Time is the great healer. In January Congress was at then AIG CEO Ed Liddy’s throat when he suggested that it might take “three to five years” to sell off AIG. Now it looks like a Woodstock-style love-in. The company’s stock price has quadrupled and the market, AIG’s current and former management, and even Congress are all taking turns puffing on the peace pipe.
One can only hope they are not just blowing smoke.
Ed Leefeldt is an award-winning investigative and business journalist who has worked for Reuters, Bloomberg and Dow Jones, and is the author of The Woman Who Rode the Wind, a novel about early flight.
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