Liddy Resigning From AIG; Two Replacements To Be Recruited

NU Online News Service, May 21, 4:43 p.m. EDT

American International Group Chairman and Chief Executive Officer Edward M. Liddy will leave the posts he took for $1 per year just nine months ago as soon as the embattled firm can bring on board a pair of replacements.

The announcement was released today just after the stock market closed that Mr. Liddy–who has encountered tough criticism from Congress of late–had told AIG's board of his intention to step down once the company successfully concludes a search for two replacements, one for his CEO post and another to serve as chairman.

Mr. Liddy took the posts for $1 a year at the behest of the Treasury Department after an agreement was reached with AIG for the government to provide billions in government bailout monies in exchange for a 79.9 percent interest in the company and a change in management. He replaced Robert Willumstad.

"Much work remains to be done at AIG, but much has already been accomplished," Mr. Liddy said in as statement.

"With the financial assistance of the Federal Reserve Bank of New York and the U.S. Department of the Treasury, we have made substantial progress in stabilizing AIG, reducing the systemic risk that led the government to rescue the company, protecting our policyholders and our businesses, and developing a plan to repay American taxpayers, " he said.

"I am proud that we are now implementing this repayment plan. As we have noted repeatedly, our pace of success will depend on global economic conditions and financial markets. It is likely to take several years. AIG should have a leadership team committed to a similar time horizon and prepared to carry the plan to completion," Mr. Liddy concluded.

Earlier this week, the company announced the nomination of six new independent directors to stand for election at the company's annual shareholder meeting on June 30, 2009.

AIG said Mr. Liddy has determined that, coincident with the reconfiguration of the board, the company should also initiate the necessary actions to install "a more permanent leadership team and structure."

AIG said Mr. Liddy had board agreement that the roles of chairman and CEO be separated, and the company intends to conduct a search to fill each position. The search will include participation by both the reconstituted board and the Trustees of the AIG Credit Facility Trust–the three-member group monitoring the government's interest in the company.

"In mid-September 2008, Ed Liddy answered the call of his country and the needs of AIG without reservation amid one of the darkest periods of the current financial crisis," said Stephen A. Bollenbach, AIG's lead director.

"Coming out of retirement, he has led AIG effectively and courageously–and without compensation," he added. "Today, AIG has a durable capital structure, manageable liquidity, and is executing on a credible plan to repay the American taxpayer. We are deeply grateful for Ed's accomplishments and his leadership, and we wish him well in his return to retirement. He deserves it."

Mr. Liddy took a buffeting in Congress when it was revealed that the company had approved bonuses for executives at AIG's Financial Products unit, which caused the conglomerate's financial problems.

Mr. Liddy said that legally he had no choice and that he needed to retain talent to wrap up the operation