Bull Bear Report Feb 25 2011

AIG Workforce One Third Smaller in 2010

By kyle stock

American International Group Inc., once considered too big to fail, got a lot smaller in 2010.

Headcount at the insurance giant dropped to 63,000 from 96,000, a 34% plummet, as the company sold off 33 business units and continued to wind down its troubled financial products division, according to an annual statement filed with the SEC late yesterday.

AIG spokesman Mark Herr said the company did not have any major layoffs in 2010. The company announced its results after the market closed yesterday. Shares dropped 2.6% in early trading this morning.

Some 12,500 workers came off the AIG payroll in November when the New York-based firm sold its American Life Insurance Co. to MetLife for $16.2 billion.

At the same time, the insurer sold 80% of its American General Finance Inc. to Fortress Investment Group LLC for about $200 million. The Indiana-based lending unit had about 6,600 workers at about 1,100 branches across the U.S.

AIG also sold the majority of its pan-Asian life insurer AIA Group for nearly $37 billion, though it retained a one-third stake in the enterprise.

Since the government pulled AIG from the brink of insolvency, the firm's compensation and other incentives have been a controversial issue. Of the 25 top employees whose contracts were to be analyzed by federal "pay czar" Kenneth Feinberg, 12 left before the review and the remaining 13 had their pay slashed by almost two-thirds.

However, CEO Robert Benmosche noted in a presentation this morning that employee morale has improved substantially.

Meanwhile, the company's performance remained mixed. It booked a fourth-quarter profit of $11.18 billion, but that number was boosted substantially by business-unit sales. Some of AIG's core insurance units reported operating losses for the period.

Write to Kyle Stock

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