NU Online News Service

WASHINGTON--American International Group Inc., responding to Congressional criticism of a lavish resort event staged just days after being bailed out by the federal government, said the function was for top independent agents, not company executives.

In a letter sent to Treasury Secretary Henry Paulson, Edward Liddy, AIG chairman and chief executive officer, said the event had been mischaracterized as an "executive retreat" during a hearing yesterday by the House Oversight and Government Reform Committee.

At the hearing, Committee Chairman Henry Waxman, D-Calif., made note of the event as a "week-long retreat for company executives" at St. Regis Resort in Monarch Beach, Calif.

Rooms at the resort, he said, can cost over $1,000 per night, and invoices provided the committee showed that AIG paid nearly $200,000 for rooms, over $150,000 for meals and $23,000 in charges from the resort's spa. Pictures of the resort were also displayed during the hearing.

Average Americans are suffering economically," Rep. Waxman said. "They are losing their jobs, their homes and their health insurance. Yet less than one week after the taxpayers recued AIG, the company executives could be found wining and dining at one of the most expensive resorts in the nation."

Neither of the witnesses before the committee--former AIG CEOs Martin Sullivan and Robert Willumstad--claimed any knowledge of the event.

An earlier witness, New York Superintendent of Insurance Eric DiNallo, said that while such events can lead to "embarrassing headlines," they can also be valuable in ensuring key executives are retained and avoiding a "runoff" of employees that would only have weakened the company further.

In his letter, Mr. Liddy wrote that the event was planned months before the bailout and put on by an AIG subsidiary for top producing life agents. Only 10 of the over 100 attendees were AIG employees, he said, adding that none of those were from the company's headquarters.

Going forward, Mr. Liddy wrote, AIG understands that its situation has changed, and "that we owe our employees and the American public new standards and approaches."

He said the company is re-evaluating the costs of its operations in light of its new financial state as part of that process.

"AIG is focused on doing what is necessary to address our capital structure, repay the Fed credit facility and emerge as a healthy global insurer," he said. "In the meantime, our insurance businesses continue to operate normally and satisfy the needs of our policyholders."

Special Reports /

AIG Says Top Agents, Not Execs, Got the Spa Treatment

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