AIG decision a boost for its reps

Averting second black eye, insurer won't join suit against U.S.

Jan 13, 2013 @ 12:01 am

By Bruce Kelly

+ Zoom
Maurice " Hank" Greenberg, the former chairman and chief executive officer of American International Group Inc., listens during a television interview in New York on April 3. (Bloomberg)

A decision by American International Group Inc.'s board not to sue the U.S. government for allegedly giving short shrift to the giant insurer in its 2008 bailout is good news for its network of independent broker-dealers.

AIG said last Wednesday that it won't join a $25 billion investor suit led by Starr International Group Inc. and former AIG chief executive Maurice “Hank” Greenberg. According to the lawsuit, the federal government de-prived investors of tens of billions of dollars by concocting an allegedly sweet deal for the Federal Reserve to purchase an 80% stake in the company for $182 billion.

“In considering and ultimately refusing the demand before us, the board of directors properly and fully executed our fiduciary and legal obligations,” Robert S. “Steve” Miller, AIG's chairman, said in a statement. “America invested in 62,000 AIG employees, and we kept our promise to rebuild this great company, repay every dollar America invested in us and deliver a profit to those who put their trust in us.”

By turning around and suing the government, the company would have dramatically undermined the hard work and diligence by AIG's independent-broker-dealer network of 7,000 registered representatives and investment advisers to stabilize and rebuild since the painfully embarrassing and costly bailout.

Now simply called Advisor Group, this is the same network of broker-dealers that used to operate under the umbrella of AIG Advisor Group. Public anger over the bailout led to the decision to lop off AIG from the name.

That name change coincided with the wholesale re-branding in 2009 of one of its broker-dealers, AIG Financial Advisors Inc., as SagePoint Financial Inc.


The massive meltdown left broker-dealers despondent and shattered, particularly at SagePoint. About a quarter of that firm's brokers left in 2009, with at least another 5% leaving in 2010.

The firm now has about 1,800 reps and advisers.

“The AIG broker-dealers have done a very good job to improve their brands since 2008, all the while distancing themselves” from the parent company, said Larry Papike, president of third-party recruiting firm Cross-Search.

An AIG lawsuit against the federal government would have been “the last thing anybody at the AIG broker-dealers wanted,” he said.

“For AIG to insert itself into this discussion, just at a time when the company finally started to emerge from being the most vilified company in the world, was simply inexplicable,” said Larry Taunt, who left SagePoint in 2010 to join another broker-dealer. Twitter: @bdnewsguy


What do you think?

View comments

Recommended for you

Latest news & opinion

Phyllis Borzi says opponents of DOL fiduciary rule face uphill climb to further delay or dilute it

Former assistant Labor secretary who crafted the rule says President Trump won't be able to get rid of it simply because he doesn't like it.

Shrinking talent pool puts strain on advisory firms

Attrition, cuts in training programs and new competition make it difficult to fill job openings

Trump miscues, more cash becoming available will drive summer muni bond rally

As Trump agenda derails, municipal bonds are benefitting from flight to safety as well as a mismatch between bonds maturing and new issues.

Indexed, variable annuity sales slump as DOL fiduciary rule looms

Uncertainty around the rule may be contributing to tentativeness from advisers and distributors.

President Trump signs resolution killing state auto-IRA rule

Five states have vowed to forge ahead with plans to create retirement programs, but the president's actions may slow development in other states.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print