Hank Greenberg sentences to ponder

“Basically, he’s just starting ‘A.I.G. Two’ and raiding people out of
‘A.I.G. One,’ ” said Douglas A. Love, an insurance executive who has
also hired A.I.G. talent for his company, Investors Guaranty Fund of
Pembroke, Bermuda.

Here is the full story.  His new company, of course, is free to pay whatever it wants.

Comments

Is there reason to think that this "talent" will do something worth while this time? I'm sure that _they_ think they just got hit with an unpredictable bit of bad luck, but is there any reason that others should think this, or see them as anything more than con men (even if the con was partly on themselves?)

Is there reason to think that this "talent" will do something worth while this time? I'm sure that _they_ think they just got hit with an unpredictable bit of bad luck, but is there any reason that others should think this, or see them as anything more than con men (even if the con was partly on themselves?)

What did they do wrong the first time? What was their con?

"This whole triablism thing whereby employees who were never involved with what brought down the company are some how responsible or should be held accountable for the sins of the company is just silly to me."

When I was a kid, we called this "capitalism."

The story is really about a year behind. The big exodus from AIG's commercial P&C subs happened immediately after the bailout (4Q of 08) and months before the exec comp issue was even on the political radar -- they went to Starr, to Zurich, to Ironshore, to Liberty Mutual, to W.R. Berkley. And they left because they didn't want to get stuck on a sinking ship, where so much of their compensation was tied to stock in a company that had already been effectively nationalized.

How many of the execs that Alex was making a big deal over them leaving AIG are at this one new firm?

I'm not a fan of limiting pay, but the issue, as I understand it, is under what conditions you receive money from the govt. When the govt gives/lends money to financial concerns, it should try and get the best deal for the taxpayers that it can. It might turn out to be foolish in the case of limiting pay, but, given the fact that all of these financial types plead stupidity when something goes wrong, it's clear to me that they've been making way too much money. In this case, it would be nice if shareholders of these businesses started paying more attention to pay, just as the govt is doing.

well this will be a good experiment. we'll see how quickly greenberg's company can reach AIG's (even now) $5 billion market cap, based on the fact that he can pay higher salaries to whomever he hires.

I imagine, knowing nothing about it, an insurance business could take market share with lightning speed.

"We hand-picked all their smartest guys" wouldn't even have to be true to make a pretty good sales pitch.

Or, how 'bout "sure, the government bailed them out, but you want to rely on that?"

Reputation, stability, and the client books a few key guys bring over, and what is left?

Maybe that is the government's brilliant strategy to wind it down.

Some P&C insurers grow quickly based on price -- it's common after a major catastrophe for new companies, that don't have bad exposures on their balance sheets, to swoop in and advantageously write business the existing players can't. But "reputation" is also important, especially for large commercial accounts, and that reputation requires solid ratings, which new entrants don't tend to have.

In any case, maybe this point is being missed but -- C.V. Starr really *ISN'T* competing with AIG. Though it has a small underwriting book, Starr is mostly a broker. AIG is an insurer. Starr's major competitors are companies like Marsh, Willis and Aon, not AIG.

Oopsie.

http://finance.yahoo.com/tech-ticker/article/361258/How-the-Fed-Bungled-AIG%27s-Rescue-Enriched-Bankers-and-Screwed-Taxpayers?tickers=AIG,GS,GLE,XLF,FAS,FAZ,DB

Just for perspective, will someone provide cases of bankruptcy judges approving bonuses in the billions based on the principle that a failed corporaton must honor old employmenr contracts in order to maximized the odds of repaying the post failure financing and the pre-failure creditors?

Surely no one is arguing that AIG shouldn't be in bankruptcy court run by a bankruptcy judge, are they?

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