The sale of AIG's profitable insurance assets
By Andrew Barile
Andrew Barile Consulting Corporation
Very recently, I was interviewed on Fox Business News regarding the process of the sale of the insurance assets of American International Group. My conclusion, based upon this experience, is that the insurance industry needs its own television station, much like Major League Baseball has done --CNBC, Fox and Bloomberg need experienced insurance industry reporters.
Having spent 40 years in the insurance industry (HarborStrategies.com), serving on the board of insurance companies, insurance litigation of the World Trade Center, Hurricane Katrina, and doing mergers and acquisitions of insurance companies and insurance agencies, I can recognize a need for said station.
The strategy I was trying to convey to the TV audience was that there is a significant process that AIG can use to sell its assets in an orderly fashion, especially now when reinsurance rates are rising which will force primary insurance rates to rise, as well.
Disagreeing with the Fox Business News reporter was the first issue. As taxpayers and new owners of AIG, the board should be providing a status report on which investment bankers have been retained, (i.e., Merrill Lynch, Goldman Sachs, Friedman Billings and Warburg), and which insurance assets are they selling. Who is responsible for AIU Holdings and moving this insurance company out from the AIG Holding Corporation?
The next step is that each of the investment bankers that are retained will explain their marketing plan and determine which private equity firm they are going to approach to sell the specific assets (i.e., Odyssey Partners, J.W, Flowers, Highridge Capital, Parthenon Capital, Stone Ridge Capital, Spectrum Equity, etc.).
Who, specifically, is overseeing Ed Liddy and the speed at which he is selling the assets? He does not come across as a salesperson, and surely with three "banker" trustees as the oversight committee, we have "amateur night at the bazaar."
My guess was that the sale of Hartford Steam Boiler to Munich Re happened quickly because Munich Re wanted it to happen. Without any transparency coming from AIG, and Congress struggling to understand the insurance industry, all that was created is a comedy of errors.
The only real way to explain what is occurring to the taxpayer is for the insurance industry to have its own TV station explaining the details on how AIG can be broken up to the benefit of the owners, and not leave it to CNBC, Fox Business News and Bloomberg Business to properly articulate why it's a comedy of errors.
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