US Government Appoints Two Retired Execs to AIG Board

The U.S. Treasury Department appointed two retired executives, Donald H. Layton and Ronald A. Rittenmeyer, to American International Group Inc.'s board after AIG skipped paying dividends on government-owned preferred stock.

The Treasury won the right to make the appointments as part of the conditions of its $182 billion rescue of AIG. Under the bailout, AIG issued preferred stock to the Treasury that included the provision that if AIG failed to issue dividends on the preferred stock for four quarters in a row, the Treasury could appoint two new board members to AIG's board.

Layton is the former vice chairman of J.P. Morgan Chase & Co., where he worked for 29 years before retiring in 2004. He came out of retirement to become chairman and chief executive officer of E-Trade Financial Corp., retiring from that position in December 2009, after serving as chairman since 2007 and CEO since 2008.

Rittenmeyer is the retired chairman, president and CEO of EDS, an information technology provider. Before joining EDS in 2005, he was managing director of the Cypress Group, a private equity firm where he was responsible for the company's investment portfolio.

Harvey Golub, AIG chairman, said the board had worked closely with the Treasury Department to help identify Layton and Rittenmeyer as new directors. "We are delighted to have Don and Ron join the AIG Board," Golub said in a statement.

AIG's board includes Robert H. Benmosche, president and CEO of AIG; Laurette T. Koellner, former senior vice president of Boeing Co.; Christopher S. Lynch, former partner of KPMG; Arthur C. Martinez, former chairman, president and CEO of Sears, Roebuck and Co.; and George L. Miles Jr., president and CEO of WQED Multimedia.

Last week, the Federal Reserve Bank of New York released information on the value of Maiden Lane II and III, the two investment vehicles created to take on AIG's toxic assets as another part of the AIG bailout.

Maiden Lane II, which took on AIG's mortgage-backed securities, was valued at $34.8 billion at the end of January, down from the $39.3 billion it was estimated to have in October 2008. Maiden Lane III, which was formed hold the collateralized debt obligations of AIG Financial Products Corp., was valued at $56 billion at the end of January, down from the estimated $62.1 billion in October 2008 (BestWire, April 1, 2010).

On the afternoon of April 5, AIG's stock (NYSE: AIG) was trading at $34.97 a share, up 2.55% from the previous close.

Most AIG insurance companies have current Best's Financial Strength Ratings of A (Excellent).

(By Meg Green, senior associate editor, BestWeek: [email protected])