American International Group Chairman and Chief Executive Officer Edward M. Liddy plans to step down from the troubled insurance giant, now largely owned by the US government, after less than nine months on the job.
Liddy told the board that he will step down once it finds a replacement. He recommended to the board that the roles of chairman and CEO be separated.
Once the world's largest insurer, AIG was bailed out last September when it could not meet cash calls from trading partners of derivatives written by its financial products unit. The government at the time viewed a possible collapse of the vast company as disastrous to the world financial system.
So far, the United States has agreed to extend up to $180 billion in aid for AIG. In exchange, the government has taken nearly 80 percent ownership of the company.
Liddy, who received an annual salary of $1, was recruited within hours of AIG's September 16 bailout, with a mandate to sell off assets to generate funds to repay taxpayers. He succeeded Robert Willumstad, who left after just three months on the job.
Liddy was formerly chief executive of U.S. home and auto insurer Allstate.
"Much work remains to be done at AIG, but much has already been accomplished," Liddy said in a statement. "With the financial assistance of the Federal Reserve Bank of New York and the U.S. Department of the Treasury we have made substantial progress in stabilizing AIG, reducing the systemic risk that led the government to rescue the company, protecting our policyholders and our businesses, and developing a plan to repay American taxpayers."
In December of 2008, Liddy went before a congressional panel to defend AIG's plans to pay retention bonuses to thousands of employees. He insisted retaining employees is necessary for AIG to sell assets and survive. "If we don't do that, we will not be able to pay back the federal government," he said.
Earlier this week, AIG announced the nomination of six new directors to stand for election at the company's annual shareholder meeting on June 30, 2009.
This slate will reconfigure the Board so that a majority of its members will be newly elected independent directors.