In a stunning turnaround, American International Group has decided to hang onto its beleaguered group of broker-dealers.
AIG's 6,000 advisers were first informed in a letter Monday night that AIG's new CEO, Bob Benmosche, was eager to keep the business.
Mr. Benmosche took over the reins of New York-based AIG last Monday, August 10, and quickly came to the conclusion he would keep the three broker-dealers in the AIG Advisor Group network, as well as AIG Retirement Services, according to the letter.
The move to keep the three broker-dealers, Royal Alliance of New York, FSC Securities of Atlanta and SagePoint Advisors of Phoenix, flies in the face of months of painstaking negotiations with a variety of broker-dealers and private equity firms.
Those discussions were the result of former AIG chief Ed Liddy's vow to dump the broker-dealers as part of a widespread sale of AIG assets that was necessary to pay back the federal government for more than $80 billion of dollars of bailout money AIG was given after it essentially collapsed as a result of the credit crisis.
Mr. Benmosche is a former head of MetLife, and the letter to advisers stated that his experience there helped him make the decision to keep the AIG Advisor Group.
“Bob, who is credited with the revitalization and restructuring of MetLife in the latter part of the 90s, not only has a deep understanding and experience in our business, he sees it as core to the future of AIG Retirement Services,” said the letter, which was signed by Larry Roth, president and CEO of the Advisor Group, and each broker-dealer's CEO.
“He understands, appreciates, and is enthusiastic about our desire to build a world class financial advisory business." Mr. Roth continued in the letter.
Mr. Roth is to remain the president and CEO of the Advisor Group, and the three current CEOs of each broker-dealer will also to remain in place, according to the letter.
The firms are also keeping their respective headquarters and branch structures, the letter stated.
In recent weeks, two private equity firms, Lightyear Capital LLC and Lovell Minnick Partners LLC, emerged as final bidders for the AIG Advisor Group. Reps and advisers expressed tremendous relief that the process of selling the firms, which began last October in the depths of the market collapse, was almost at a close. Now, with this latest twist, reps and advisers have to reassess their futures yet again.