Troubled insurer American International Group Inc. will freeze payments to a former CEO and officers of the unit that was the main source of its financial problems, New York Attorney General Andrew Cuomo said.
“This is to confirm that AIG has agreed to freeze any payments pursuant to the employment package of its former Chief Executive Officer Martin Sullivan in light of the attorney general’s ongoing review,” according to the letter from Cuomo to CEO Edward Liddy, which was reviewed by Reuters.
Claw Back Attempts
The agreement affects $19 million that was due to Sullivan. In July, AIG said Sullivan’s severance package totaled $47 million. Cuomo said it was possible the company could recoup some funds already paid Sullivan.
AIG has said it will try to claw back some executive payments, including to Sullivan, and cut spending by icing plans for several events.
The company will also freeze any distribution of funds from a $600 million deferred compensation and bonus pool for its AIG Financial Products subsidiary, which underwrote credit default swaps that triggered more than $25 billion in write-downs. The former head of that unit, Joseph Cassano, had a share totaling about $69 million of those funds, according to the letter.
The insurer will also not pay roughly $10 million to former Chief Financial Officer Steven Bensinger, it was earlier reported.
Cuomo said compensation to Sullivan, who was CEO from 2005 until June 15, was under scrutiny because his tenure coincided with the period when the losses occurred.
“If the company is required to take the bailout, it is ipso facto that management failed,” he said.
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