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Daily Insurance Industry News
Friday 17th of August 2018
January 29, 2009

AIG architects of destruction paid $450m bonuses

by David Masters

Story link: AIG architects of destruction paid $450m bonuses

American International Group (AIG) is to pay around $450 million (£316 million) in retention bonuses to staff in the unit most responsible for its $42.5 billion losses over the last year.

Citing its source as two people familiar with the situation, Bloomberg said the payments were offered to around 400 employees of AIG Financial Products (AIGFP).

AIGFP’s massive losses on toxic mortgage debt sent AIG to the verge of collapse.

AIG was forced to seek a taxpayer loan to ensure its survival. The loan has since expanded to $150 billion.

A spokesperson for AIG said the retention bonus scheme was set up before the federal bailout. Total retention bonuses across AIG’s businesses will exceed $1 billion.

Representative Elijah Cummings, a member of the House Committee on Oversight and Government Reform, said: “I was extremely disappointed – but not surprised – to learn that AIG will be awarding bonuses to the very division that drove the company into the ground.”

CEO Edward Liddy backed the retention bonuses, saying that they are needed to prevent the value of units from eroding as AIG seeks buyers.

 

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