AIG execs’ actions were “stupid,” but not illegal, chairman says

Regarding ongoing speculation over the AIG bailout, Chairman Steve Miller admits exec fault—but not criminal actions.

Insurance News

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The $182.3 billion bailout of American International Group in 2008 continues to reverberate in the insurance industry. As the only high-profile bailout of an insurance company during the nation’s financial crisis, the action sparked a criminal investigation two years later and fuels ongoing speculation on just what happened at AIG headquarters in the mid- to late 2000s.

Steve Miller, AIG chairman since 2010, admitted “stupidity” certainly played a part in the situation during an interview this week with Bloomberg Television, but emphasized that AIG executives did not do anything illegal.
“The first question, broadly speaking, going back to the crash of ’08: Is stupidity a crime?” Miller said. “A lot of executives did things that, in retrospect, look stupid. Not sure that they violated the law.”

Former head of AIG Financial Product Joseph Cassano was particularly targeted during investigations by the US Justice Department. Cassano stepped down from the company in 2008 after overseeing record losses on mortgage-related derivative contracts, and was recently revealed to have invoked the Fifth Amendment more than 200 times while being investigated by the Securities and Exchange Commission (SEC).

That accounts to one invocation of the constitutional right every 38 seconds.

Cassano even avoided simple questions during the investigation, such as a request to confirm the signature above his name on one letter.

Miller successfully worked with former Chief Executive Officer Robert Benmosche to help repay the government-funded bailout and emphasized that AIG’s current insurance operations are running smoothly despite claims costs that reached amounts higher than expected.

“It’s a great business if you have the internal strength to analyze your risks and price them property,” Miller told Bloomberg.

AIG recently announced its third quarter profits for the year had beaten analyst expectations, with revenue of $8.63 billion and an after-tax operating income of $1.7 billion—up 23% from the same period last year.
The company plans to move forward with share repurchases of $1.5 billion.
 
 
 
 
 

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