meanwhile, AIG still knows how to spend money


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meanwhile, AIG still knows how to spend money

Postby gh » Wed Oct 08, 2008 2:05 am

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Postby Marlow » Wed Oct 08, 2008 3:55 am

Lawmakers revealed Tuesday that just days after the Sept. 16 federal bailout of AIG, executives and salespeople at the firm met at the lavish St. Regis Monarch Beach resort in Dana Point (Orange County), where the rooms can cost $1,000 a night. According to the invoices, the company spent $200,000 on rooms, more than $150,000 on meals, $23,000 in spa charges and $7,000 on golf.


Ya gotta love the chutzpah! :D
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Postby tandfman » Wed Oct 08, 2008 4:21 am

I'm not going to get excited about those numbers unless I know how many people were involved. With a compnay as large as AIG, "Executives and salespeople" could mean a lot of people. Sales conventions are common in business like insurance, and things like that are often planned years in advance. If you tell me there were 50 people at this meeting, I would have one view of those costs. If you tell me there were 1,000 people there (which is entirely possible), I would see those numbers quite differently.

And if you suggest that they should have cancelled the meeting, you might just as well suggest that they shut down the business. If they're going to have any chance to keep going, they're going to need to honor their commitments to their sales force and to keep them loyal to the company. While a few days at a nice resort may sound like a lavish reward, you'll find that sort of thing is fairly common in American companies (and not just financial institutions) that have large sales forces.
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Postby guru » Wed Oct 08, 2008 4:27 am

To be fair, the retreat did not inclide anyone from the financial products division. It was for AIG's main US life insurance subsidiary.

And I've said this before - the US government is makiing a killing on the AIG "bailout" - 10% interest on the loan amount, fully repayable in 3 years. In no way, shape, or form are they receiving a gift. Should AIG fail, which is highly unlikely considering their diversification, the government will easily make a profit by breaking it up and selling off the high-performing divisions.
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Postby Marlow » Wed Oct 08, 2008 5:14 am

tandfman wrote:And if you suggest that they should have cancelled the meeting, you might just as well suggest that they shut down the business.


It's all in the timing. They gave themselves a big fat black eye - something they didn't need right now. Defer the spa trip; give them some other kind of carrot; do the spa thing later when you can 'afford' it. They'll be out of the public eye soon enough.
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Postby tandfman » Wed Oct 08, 2008 5:17 am

Easier said than done. The sales convention was undoubtedly booked a long time ago, with big deposits and big cancellation fees. You walk away from something like this and it costs you a lot of money, at a time when you can't afford to piss away a lot of money.

Stick to your trade, teach. :)
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Postby bad hammy » Wed Oct 08, 2008 6:11 am

tandfman wrote:Easier said than done. The sales convention was undoubtedly booked a long time ago, with big deposits and big cancellation fees. You walk away from something like this and it costs you a lot of money, at a time when you can't afford to piss away a lot of money.

Timing is sometimes everything. In this case their timing stunk. It would have been cheaper to bail. Stupid of them to OK this after the bailout. If nothing else, kill the $23,000 in cucumber baths . . .
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Postby lonewolf » Wed Oct 08, 2008 8:22 am

Yep, bad timing, bad priorities, PR.
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Postby Marlow » Wed Oct 08, 2008 8:26 am

tandfman wrote:Easier said than done. The sales convention was undoubtedly booked a long time ago, with big deposits and big cancellation fees. You walk away from something like this and it costs you a lot of money, at a time when you can't afford to piss away a lot of money.
Stick to your trade, teach. :)

As bad hammy said, it would have been far cheaper to cancel. The bad publicity this generated can reverberate farther into their infrastructure than is apparent just today. My 'trade' is rationality (Shut up, Mark and Stinkiham! :twisted: ) and they exhibited an alarming paucity of that.
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Postby tandfman » Wed Oct 08, 2008 10:01 am

So let me understand you guys. Here's the premise. You're running a life insurance company, and every year, like every other large life insurance company, you have a sales conference at a nice resort to reward your best producers--the sales people who bring you the revenue that keeps your business going.

This conference is planned more than a year in advance and significant financial commitments are made to the hotel. Moreover, it is announced more than a year in advance, in order to provide an added incentive for
sales people to qualify for attendance. And of course those who qualify
plan well in advance to attend, often bringing their spouses/partners with them. It's a big deal, much looked forward to.

This year's meeting happens to come at a time when all of these producers are concerned because of publicity arising from the financial condition of the life insurer's parent company and/or affiliates. It is critical that you retain the confidence and loyalty of your best sales people because it is they who control the relationship with your ultimate customers, the policy owners.

I can't imagine a time when it is more critical to go ahead with the conference and show your top producers that you appreciate their business and that their efforts will continue to be rewarded in the way it always has been if they continue to bring their business to the company. If you don't do that, you might as well fold up the shop because your business will soon dry up. That wouldn't benefit anyone. Is that really what you think they should have done?

By the way, if you're running the parent company, you encourage them to go ahead with the conference because if AIG does become insolvent, the life insurance subsidiary is one of the most valuable assets they have. If you're a shareholder of AIG, you don't want the company impairing the value of one of their good assets.

I seem to be outnumbered here, but that's the way I see it.
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Postby gh » Wed Oct 08, 2008 10:49 am

What can I say? You must work for a life insurance company and are thus in the "just don't get it" category.

Bottom line: the serfs are tired of the feudal system being forced on them by venal CEOs who seem to think that the general populace is just their for their self-aggrandizement.

(Christ; next thing you know I'll be espousing Communism!)
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Postby tandfman » Wed Oct 08, 2008 10:52 am

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Postby Marlow » Wed Oct 08, 2008 10:58 am

tandfman wrote:AIG responds.

Even their spin does nothing to diminish how bad this looks for them. Whom they spent it on is irrelevant. What is was spent on is relevant. Just look at the circumstances and common sense would scream, "Cancel!"
The 'appearance of evil' is something to be avoided at all costs. There's no denying this looks really bad (check out what a lot of the money was spent on).
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Postby malmo » Wed Oct 08, 2008 11:01 am

tandfman wrote:
I seem to be outnumbered here, but that's the way I see it.


It's you vs the 12 year olds here. Everything you said was Ton-80 to the grown-ups.
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Postby SQUACKEE » Wed Oct 08, 2008 11:03 am

I wonder what it feels like to have 90% of the country hate you, and the guilty deserve it. :x
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Postby tandfman » Wed Oct 08, 2008 11:10 am

A regulator weighs in on this:

But Eric Dinallo, superintendent of the New York State Insurance Department, said he could see the value of such a retreat under the circumstances.

"Having been at large global companies and knowing what condition AIG was in ... the absolute worst thing that could have happened" would have been for employees and underwriters in its life insurance subsidiary to flee the company.

(From one of many news accounts of the Congressional hearing.)
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Postby Marlow » Wed Oct 08, 2008 11:19 am

the absolute worst thing that could have happened" would have been for employees and underwriters in its life insurance subsidiary to flee the company.

Who said anything about fleeing the company? All the CEO had to do was send out a message to everyone saying that this retreat comes at a bad time for the public's perception (credibility being everything in business), so it will be postponed until such time as the company is on firmer ground. In the meantime he goes about an extensive internal Damage Control program. This is just common sense, and to say otherwise is to buy into their rationalizations. The very fact that AIG is being seen in such a poor light is proof that it was a bad idea - if ONLY for the perception generated! All the points tandfman made were valid . . . but not prudent at this time.
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Postby malmo » Wed Oct 08, 2008 11:26 am

Marlow wrote:
the absolute worst thing that could have happened" would have been for employees and underwriters in its life insurance subsidiary to flee the company.

Who said anything about fleeing the company? All the CEO had to do was send out a message to everyone saying that this retreat comes at a bad time for the public's perception (credibility being everything in business), so it will be postponed until such time as the company is on firmer ground. In the meantime he goes about an extensive internal Damage Control program. This is just common sense, and to say otherwise is to buy into their rationalizations. The very fact that AIG is being seen in such a poor light is proof that it was a bad idea - if ONLY for the perception generated! All the points tandfman made were valid . . . but not prudent at this time.


Obviously, you don't work in the private sector, nor are you displaying any common sense at all. Any CEO who would make a dumbass statement like that would be telegraphing to his most productive people the ship had suck and they'd better flee. The insurance business is a relationship business. top producers can and will take their clients elsewhere.
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Postby dukehjsteve » Wed Oct 08, 2008 11:52 am

In my Former Life I was an Employee Benefits Consultant for a significant number of medium and large corporations. I placed a large volume of Special Risk ( Accidental Death) coverages for many of these clients with AIG for the simple reason that they were the best as to pricing, underwriting flexibility, service, claims payments, etc. I am just SO GLAD that I am now RETIRED, and not fielding phone calls from CEO's, CFO's, and Human Resources VP's, saying, " Get rid of those guys for us or we'll hire a new Consultant to do it ! "
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Postby gh » Wed Oct 08, 2008 12:28 pm

The Oakland mayor is good at high-end junketeering too:

http://www.sfgate.com/cgi-bin/article.c ... 01&sc=1000
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Postby lonewolf » Wed Oct 08, 2008 12:37 pm

I don't care how AIG spins it or rationalizes this "retreat", it was dumb, dumb, dumb.
Apparently, some people are favorably impressed/influenced by ostentatious consumption and freebies.. but some of us are not.

I spent twenty years in corporate life, wining and dining and being wined and dined to no apparent benefit except to the winers and diners. I made my decisions based on price, product and service not prime rib and generous mulligans.

When times got tough we cut out the wining and when they got really tough we cut out the dining.

For the past thirty plus years, I have been in a position where people offer to entertain me, obviously seeking favors or business or financing. My standard reaction is: Why are you spending money you can't afford trying to get money out of me to replace it?

(On re-read, I suppose the answer is obvious.. but it ain't working)

Maybe it is just me. I have the same attitude about family buying me presents on my credit card.
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Postby malmo » Wed Oct 08, 2008 12:49 pm

gh wrote:The Oakland mayor is good at high-end junketeering too:

http://www.sfgate.com/cgi-bin/article.c ... 01&sc=1000


$3500 is low-level gangsta' junketeering. Had he stayed at one of Nancy Pelosi's union-busting resorts, now THAT would have been high-end!
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Postby malmo » Wed Oct 08, 2008 12:58 pm

lonewolf wrote:I don't care how AIG spins it or rationalizes this "retreat", it was dumb, dumb, dumb.
Apparently, some people are favorably impressed/influenced by ostentatious consumption and freebies.. but some of us are not. .


The holding company and the insurance company are not the same. The insurance company is one of the main assets the Fed will make money on if they have to sell the company. The insurance company has none of the counter-party risk that caused AIG's liquidity crunch.
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Postby gh » Wed Oct 08, 2008 1:43 pm

malmo wrote:
gh wrote:The Oakland mayor is good at high-end junketeering too:

http://www.sfgate.com/cgi-bin/article.c ... 01&sc=1000


$3500 is low-level gangsta' junketeering. Had he stayed at one of Nancy Pelosi's union-busting resorts, now THAT would have been high-end!


One more politically charged comment and you're gone for good. Got it?
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Postby 26mi235 » Wed Oct 08, 2008 2:16 pm

Marlow wrote:
tandfman wrote:AIG responds.

Even their spin does nothing to diminish how bad this looks for them. Whom they spent it on is irrelevant. What is was spent on is relevant. Just look at the circumstances and common sense would scream, "Cancel!"
The 'appearance of evil' is something to be avoided at all costs. There's no denying this looks really bad (check out what a lot of the money was spent on).


I am with tandfman on this one. The non-AIG salesmen and families have already paid to fly there and back, AIG foots the bill because the insurance business is the large piece and if their insurance business bites the dust you lose a lot of money - probably personally

Should they have paid twice as much [they would have to re-reimburse all those attending the event for their tickets and other considerations] to move it to a budget place that would not reward those that need rewarding (without them doing their jobs well, the bailout is bigger and more likely to actually cost something).

It does not look good if you only read the headline; you need to read the story.
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Postby malmo » Wed Oct 08, 2008 2:19 pm

gh wrote:One more politically charged comment and you're gone for good. Got it?


Wait a minute, you're the one who injected the Oakland mayors junket into a non-political thread. I just put the mayors trip in perspective, and in the same theme as your post. You are also the one who starts a lions share of the political threads. How could one possibly ascertain where the land-mines are here? The best way to avoid confusion is to ban political threads, including yours, altogether.

Banning those who are merely following your lead is confusing.
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Postby bad hammy » Wed Oct 08, 2008 2:37 pm

tandfman wrote:I seem to be outnumbered here, but that's the way I see it.

AIG is lucky to be in business. They are only still in business because the government made a fairly unprecedented move on the public dime. If you and the AIG folks cannot see why allowing a $400k boondoggle, including $23k of avocado scrubbs, weeks after the bailout, we are obviously inhabiting different universes. And the fact that malmo is backing you does not enhance your argument.
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Postby malmo » Wed Oct 08, 2008 2:51 pm

bad hammy wrote:. And the fact that malmo is backing you does not enhance your argument.


The children have spoken.

The holding company received the loan from the Feds, not the insurance company.
Last edited by malmo on Wed Oct 08, 2008 2:53 pm, edited 1 time in total.
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Postby bad hammy » Wed Oct 08, 2008 2:51 pm

Oh, and AIG now looking for an additional $37.8 billion. Nice!

(Assholes . . .)

http://money.cnn.com/2008/10/08/news/co ... tm?cnn=yes
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Postby guru » Wed Oct 08, 2008 2:58 pm

bad hammy wrote:(Assholes . . .)



How so? That's more for the Fed to collect 10% interest on.
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Postby bad hammy » Wed Oct 08, 2008 3:00 pm

guru wrote:
bad hammy wrote:(Assholes . . .)

How so? That's more for the Fed to collect 10% interest on.

For taking more of my money while hanging out at spas . . .
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Postby malmo » Wed Oct 08, 2008 3:02 pm

bad hammy wrote:
guru wrote:
bad hammy wrote:(Assholes . . .)

How so? That's more for the Fed to collect 10% interest on.

For taking more of my money while hanging out at spas . . .


They haven't taken any of your money. They are spending THEIR money on that retreat, actually they are spending the money that was made by those who were on that retreat. What is it you aren't understanding about that?
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Postby bad hammy » Wed Oct 08, 2008 3:08 pm

You're hopeless . . .
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Postby malmo » Wed Oct 08, 2008 3:25 pm

Wrong...
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Postby paulthefan » Wed Oct 08, 2008 5:05 pm

I always like Howie's take on things but this is priceless (no pun intended)


http://www.bostonherald.com/news/opinio ... id=1123480
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Postby gh » Thu Oct 16, 2008 8:33 am

Chapter 2, in which AIG goes on an English hunting trip:

http://www.sfgate.com/cgi-bin/article.c ... 01&sc=1000
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Postby malmo » Thu Oct 16, 2008 10:01 am

gh wrote:Chapter 2, in which AIG goes on an English hunting trip:

http://www.sfgate.com/cgi-bin/article.c ... 01&sc=1000


"Lawmakers investigating AIG's meltdown said they were enraged that executives of AIG's main U.S. life insurance subsidiary spent a lavish amount on the retreat, complete with spa treatments, banquets and golf outings."

BURN THE WITCHES. Would it be too much to ask of your favorite newspaper to report the facts? The Golf trip wasn't for executives it was for independent insurance agents, which happen to be the big rainmakers for the Insurance company, and none of their activities have anything to do with AIG's demise.

Lynch-mob mentality at its worst.
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Postby tandfman » Thu Oct 16, 2008 10:15 am

As I've indicated before, I agree with malmo's take on the US sales conference. I'm not quite as sure the UK hunting trip is in the same category.

"This was an annual event for customers of the AIG property casualty insurance companies in the U.K. and Europe, and planned months before the Federal Reserve Bank of New York's loan to AIG,"

I suppose if the AIG's big commercial customers have come to expect this kind of event, the company could have reasonably considered it essential for the retention of those customers. And their competitors probably sponsor similar events, so if it's the sort of thing that makes a difference to a given customer, it really is something AIG has to do if it's going to stay alive.

On the other hand, it's unfortunate when the business mores allow goodies like that to affect purchasing decisions. It's even more unfortunate when the tax laws encourage that kind of environment by allowing the cost of events like that to be deducted, which I suspect is the case in some places.
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Postby gh » Thu Oct 16, 2008 10:22 am

malmo wrote:....
BURN THE WITCHES. Would it be too much to ask of your favorite newspaper to report the facts? ...


That was an Associated Press story.
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Postby malmo » Thu Oct 16, 2008 10:28 am

tandfman wrote:As I've indicated before, I agree with malmo's take on the US sales conference. I'm not quite as sure the UK hunting trip is in the same category.
.


I believe it does: "This was an annual event for customers of the AIG property casualty insurance companies in the U.K. and Europe, and planned months before the Federal Reserve Bank of New York's loan to AIG"

Again, the Insurance company has nothing to do with AIG holding company's woes. If AIG fails, the insurance company will be spun off and they'll still have their hunting and golf trips next year, and the year after, and the year ..... as they should.
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