American International Group Inc’s president for Southeast Asia, Leslie Mouat, said the “abuse” against the insurer’s employees amid furor over bonus payments was “unfair,” and he would give up his own payout if asked.
“I got a bonus last week; it’s the worst bonus I’ve had in several years,” Mouat said in an interview in Singapore today. “It’s not multimillion dollars like some; it’s less than $100,000. If people want it back I’ll come up with a check tomorrow. It’s no longer about money; this is about people.”
Mouat said he is seeking to convince commercial clients that the unit providing property and liability coverage that he oversees in Southeast Asia is separate from the problems at AIG. The firm’s business in the region is “still exceptionally profitable” after revenue of $1.3 billion in 2008, he said.
“I see as many customers as I possibly can everyday to explain that everything’s secure,” he said. “They have got no need to be concerned; they’ve got the power of $40 billion of capital and $26 billion of surplus behind every insurance policy we sell.”
New York-based AIG, which received a $173 billion federal bailout, sparked an outcry by paying $165 million in bonuses this month to employees of the financial products unit that almost bankrupted the company. AIG Chief Executive Officer Edward Liddy has asked employees paid bonuses exceeding $100,000 to repay half.
The US House responded to public outrage last week by voting to impose a 90 percent tax on employee bonuses at AIG and other companies that get at least $5 billion in taxpayer bailout funds. AIG said it lost a total of $61.7 billion in the fourth quarter, a record for any U.S. corporation.
Mouat, based in Singapore, said while he is “angry” with the bonus payments, those in the financial products unit represent just “400 of 120,000” people that AIG employs and that the “problem is isolated to one small place.”
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Still, the firm receives “15,000 e-mails a day of hate mail on the AIG Web site,” he said.
Senator Charles Grassley, an Iowa Republican, said he wants “contrition” from company executives after previously telling Cedar Rapids, Iowa, radio station WMT they should “resign or go commit suicide.”
“I was going down in an elevator with a lady who’s been with our company for 27 years,” Mouat said. “And she’s frightened to ride the subway or the bus home because of the abuse she receives in New York.”
Tour Buses
Tour buses that take photographs of the firm’s property- casualty offices at Water Street in downtown Manhattan “make me laugh,” Mouat said. “175 Water Street is the headquarters of the non-life company; there’s nobody from AIG Financial Products there at all.”
AIG, seeking to raise cash and repay the U.S., is evaluating a sale of its New York headquarters at 70 Pine St. and another tower at 72 Wall St.
“It is true it is being overdone, but if something goes wrong in an industry I’m afraid that’s what happens,” said Hugh Young, managing director at Aberdeen Asset Management Plc’s Asian unit, which oversees $37.3 billion. “The reality is everyone gets tarred with the same brush by association. Obviously these things are being politicized and of course politicians won’t accept any blame themselves.”
Revenue at Mouat’s unit fell 4 percent in the first quarter from the previous year and net earnings were “flat,” he said. More than 90 percent of clients stayed with the firm, he said.
Still, the economic slowdown in the region will “kill us,” he said.
“There’s about a 25 percent reduction in marine shipments on our book, there’s very limited government spending on infrastructure,” he said. “We insure everything from power stations to nuclear power plants to roads to bridges, all being constructed that’s dried up.”
Aviation Business
The unit will reduce expenses by about $10 million to $12 million, without laying off staff, he said.
“Because I’m scared to death of being photographed with my staff with a beer in my hand at Christmas or Chinese New Year, we canceled every party; I’ve canceled every agent event,” he said.
Mouat said his unit plans to start an aviation business in Southeast Asia in July and introduce other new products and services to help it survive the crisis.
“I wouldn’t wish this situation on my worst enemy,” Mouat said. “This is beyond character building, this is the hardest thing we’ve ever had to do. But I can assure we will come through.”
American International Assurance Co., which includes most of AIG’s life business in Asia, plans an initial public offering, part of Liddy’s plan to repay taxpayers.
AIG has informed bidders for AIA that the auction has been put on hold, a person with knowledge of the matter has said. Manulife Financial Corp., Prudential Plc and Temasek Holdings Pte made bids, according to another person familiar with the matter. The people declined to be identified because talks are private. Mark Wilson oversees AIA’s business.
The value of AIA is “way north, I would think, of $20 billion to $25 billion,” Mouat said. “I doubt these companies with the sort of cash available could be able to buy our assets for what they’re worth.”