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Report: AIG Anticipates Long Restructuring Process

Source: WSJ

Posted on 11 May 2009

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The Wall Street Journal reported on Sunday that a new internal email dated April 23 shows that American International Group Inc. (AIG) and its government owners expect a multi-year roadmap to restructure AIG. The email describes an initiative code-named Project Destiny and involves a 45-day review of AIG's far-flung businesses that is supposed to lead to the multiyear plan.

AIG Chief Executive Edward Liddy sent the message to employees with the subject line "Seize the Future." The bulk of the message consists of an update on Project Destiny by Paula Reynolds, AIG's vice chairwoman and the head of its restructuring effort.

"Simply put, we are going to get our groove back," wrote Ms. Reynolds.

Project Destiny may be discussed at a congressional hearing about AIG scheduled for Wednesday. "It is essential that AIG have in place a solid plan for the future," Rep. Edolphus Towns (D-NY), chairman of the House Committee on Oversight and Government Reform, wrote in a letter to Mr. Liddy, who took over the job upon a federal rescue of the company in September.

In the letter, Rep. Towns asked Mr. Liddy to provide copies of Project Destiny teams' business plans by Monday afternoon.

Rep. Towns also requested the current multiyear roadmap, according to a copy of his letter that was reviewed by The Wall Street Journal.

The government rescued AIG from potential bankruptcy in September and has committed as much as $173.3 billion in aid to the firm.

Taxpayers got a nearly 80% stake in AIG in exchange for the bailout.

AIG initially set out to sell off its big-ticket assets quickly last fall to pay back the federal loan, but the plan foundered.

Now, AIG is working on a new, long-term plan, after a March 2 revision of the bailout eased the financial pressure on the company.

The Project Destiny reviews began the same day, according to the internal message, reviewed by The Wall Street Journal.

The message defined the project as an "effort to redefine the future of most of the major businesses within AIG."

AIG's main insurance businesses remain under pressure, as evidenced by the first-quarter results released by the company last week.