AIG's Liddy Secures Three Bailouts, Seeks Successor: Timeline
By Andrew Frye and Peter Eichenbaum
May 22, 2009
May 22 (Bloomberg) -- Edward Liddy, the U.S. choice to turn around American International Group Inc., is looking for a successor as chief executive officer after eight months working to halt losses at what was once the world's largest insurer.
His tenure, punctuated by client defections, congressional outrage and a credit crisis that thwarted his efforts to free the insurer from government control, will end once a replacement for the 63-year-old executive is found.
Following is a timeline detailing the insurer's near collapse, AIG's statements about its financial health and Liddy's efforts to shore up the New York-based company with government funds.
Sept. 16, 2008: The U.S. agrees to loan AIG as much as $85 billion in exchange for an 80 percent stake after credit downgrades force the insurer to post collateral to banks that purchased credit-default swaps from the company.
Sept. 18: Liddy, who ran Allstate Corp. from 1999 to 2006, is approved by AIG's board as CEO. Liddy tells employees he intends to repay the two-year Federal Reserve loan early. The credit line is "enough" for AIG, Liddy says.
Oct. 3: Liddy says AIG will raise "more than enough" to repay the government by selling life insurance operations in the U.S. Europe, Asia and Latin America. The company has "numerous" potential bidders.
Oct. 8: Liddy gets an expanded bailout from the government with authorization for an additional $37.8 billion in liquidity as AIG struggles to meet the demands of clients pulling out of its securities-lending program.
Oct. 22: Liddy tells PBS that the $122.8 billion already offered by the government "may not be enough" to stabilize AIG.
Nov. 10: Liddy wins a lower interest rate from the government and three extra years to pay back the loan after AIG posts a $24.5 billion third-quarter loss. The rescue package grows to about $150 billion and puts AIG "on the road to recovery," Liddy tells investors.
Nov. 25: Liddy accepts a $1 salary and freezes pay for seven top company leaders, saying, AIG is "extremely grateful" for the bailout and will "use that assistance to help AIG recover."
Dec. 11: Liddy pledges to repay taxpayers "every single penny we owe them," while saying the timetable of asset sales may be longer.
March 2, 2009: Liddy reports a record $61.7 billion fourth- quarter loss, bringing AIG's total deficit for 2008 to $99.3 billion, and secures an additional Treasury injection of as much as $30 billion, raising the total to $182.5 billion. "Liquidity is not an issue for us now," Liddy says.
March 11: Liddy gets a telephone call from Treasury Secretary Timothy Geithner, who demands changes to AIG bonuses that are about to be paid to employees of the company's unprofitable Financial Products unit.
March 14: Liddy calls $165 million in bonuses "distasteful" and tells Geithner in a letter that 2009 retention awards will be slashed.
Liddy says "my only stake is my reputation."
March 15: AIG, under pressure to reveal how it spent taxpayer funds since the September bailout, says $105 billion flowed to U.S. states and banks led by Goldman Sachs Group Inc., Societe Generale SA and Deutsche Bank AG.
March 25: Lawmakers call for a federal probe into whether banks including Goldman Sachs received more funds than necessary from the bailout of AIG.
April 16: Liddy's $3.3 million holding of Goldman Sachs shares, acquired when he served on the board of the firm, creates the appearance of a conflict of interest, Representative Elijah Cummings says.
May 7: Liddy reports AIG's smallest loss in six quarters as the U.S. rescue shielded the company against investment declines. AIG says sales at the property-casualty and life units dropped on customer defections.
May 21: Liddy says there are "very strong internal candidates" to succeed him after he steps down.
"Life provides you inflection points," said Liddy "The game plan that we have will take three-plus years to unfold. At 63, I don't want to be doing this when I'm 67. So I think we've reached a very natural inflection point."
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