AIG responds

Normally, I’d add this response as an update to my earlier post on AIG’s Squaw Peak conference, but I received several e-mails objecting to it from AIG employees before AIG’s media relations group sent me the official statement below:

Today, Edward M. Liddy, Chairman and Chief Executive Officer of American International Group, issued the following statement.

“Recent news reports have grossly mischaracterized an American International Group seminar for 150 independent financial planners held in Phoenix last week.

The financial planners are not AIG employees. In addition, the cost to AIG for this event was minimal. More than 90 percent of the costs were paid either by sponsors or by the independent financial planners themselves.

It is essential for AIG to conduct seminars of this kind to keep independent financial planners abreast of investment products and services including those offered by AIG. The financial planners are responsible for generating almost $200 million in revenue this year for AIG as of September 30th.

On October 10, I issued a directive to all AIG employees and subsidiaries to reduce expenses and conserve cash, including cancelling all nonessential conferences or meetings, unnecessary travel and excessive overhead. Since then, we have canceled more than 160 events. We conducted a top-to-bottom review of all expenses of the Phoenix meeting in advance and found that it was consistent with my October 10th directive. This conference was approved because it provides the kind of communication we must conduct with the people who sell our products if we are to be successful and repay the U.S. taxpayer.”

Before I offer my rebuttal, let me first state that the AIG Media Relations people and the various employees who e-mailed me were very polite and friendly.  They all said they understand the scrutiny under which AIG must now operate, but felt that this story unfairly characterized the event, and to some extent, they’re right.  After all, sitting at poolside doesn’t cost any more money than already spent, and neither does coffee-drinking, both of which got a strange level of focus in the article.

However, I think the rebuttals miss the point.  AIG essentially cast itself as bankrupt and in need of receivership by American taxpayers.  If they want to hold conferences — and I agree that sales organizations have to do so — then they can hold them at corporate headquarters and not resort hotels.  When times got lean for corporations in which I worked, all of which had major sales organizations within them, they didn’t travel to resorts but had people come back to HQ to get their training.  Had they gone into Chapter 11, I doubt that any judge would have approved the outlay in any case, and this is a similar position.

Getting billions of dollars from taxpayers as a rescue plan should bring a substantial change in behavior.  It’s good to see that AIG recognizes this, but I think they still have some culture shifting left to go.

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