When U.S. Treasury Secretary Henry Paulson chose former Allstate Chairman Edward M. Liddy to head American International Group Inc. after the government’s bailout of the insurance giant, he was turning to an old buddy he knew he could trust.
Five years ago, when Paulson ran investment house Goldman Sachs Group Inc., he picked Liddy to join that board.
Then and now, Liddy impressed him as a detail-oriented finance guy, who could assess a company’s strengths and weaknesses with the detachment and precision of a surgeon.
Liddy, 62, oversaw Allstate Corp.’s spin-off from the Sears, Roebuck retailing empire in the 1990s, and went on to lead the insurer through earthquakes, hurricanes and the World Trade Center attack, successfully upholding its “You’re in good hands” slogan.
As a longtime Chicagoan, moreover, he is a nominal outsider to the overheated New York financial scene, yet well-connected where it counts.
Liddy grew up in New Jersey and worked at Ford Motor Co. before moving to Chicago in 1981 to become a financial executive at G.D. Searle & Co., where Donald Rumsfeld, later the secretary of defense, was CEO.
He moved to Sears in 1988 to work under then-CEO Edward Brennan.
After overseeing Allstate’s spinoff from Sears, he served as Allstate’s president and chief operating officer from 1994 to 1998, then was chairman and CEO from 1999 until he stepped down as chief executive in 2006. He resigned as chairman in April. Allstate is the largest publicly traded home and auto insurer in the U.S.
Currently, he is a director of 3M Co. and the Boeing Co, besides Goldman Sachs. Since April, he has also been a partner at private equity firm, Clayton, Dubilier & Rice. He contributed the maximum individual contribution to the 2008 John McCain presidential campaign.
Delivering his first remarks to AIG employees today, Liddy said the insurer will recover as he tries to sell assets, according to Bloomberg News.
“My intention is not to liquidate the company,” he told employees. “Insurance operations are solid, capitalized and well funded.”
He said he’ll decide which units will be sold “within weeks,” because the value of those businesses may diminish. “Every day we don’t do something, it will hurt us,” he said.
Liddy is “a brilliant financial strategist,” Robert Pike, a retired chief administrative officer told Bloomberg News. “He’s able to take an extraordinary amount of data and synthesize it, probably better than anybody I ever met.”
He is also single-minded about achieving his goals, said Pike, who reported to Liddy at Allstate.
Shortly before Liddy took over as CEO of Allstate, he told 200 managers that some of them would be gone in a year, according to a May 2005 Crain’s Chicago Business story which Pike confirmed to Bloomberg. Among those he axed were the finance chief and investment officers.
“Ed looked around and picked those people he felt would add value and complement their culture, and I think he did pretty damn well,” Pike said.
Liddy also has experience in mortgage insurance, a business that lost money for AIG for the last four quarters. He served as chairman of PMI Group Inc., the No. 2 U.S. mortgage insurer, in the 1990s. Mortgage insurers reimburse lenders when borrowers fail to pay their debts.
Liddy succeeds Robert Willumstad as the head of AIG. The Wall Street Journal, Financial Times and Bloomberg News all reported that the government had demanded the departure of Willumstad - who took over only in June - as a requirement of the unprecedented $85 billion bailout.
Click here to sign up for the Muckety Newsletter
3 Comments
#1. john darwish 11.03.2008
It amazes me that Ed Liddy, who headed up Allstate at the time it terminated its employee agents would be picked to help with the bailout of anything. Mr Liddy’s so called “preparing for the future” plan cost thousands of agents their jobs for what turned out to be a big flop for Allstate. That program got rid of many many excellant agents, including myself, for no good reason other than to pad the pockets of Liddy and other corporate crooks. Now Allstate has fewer agents and can not hire and keep new agents. Someday Mr Liddy will have to answer for his leadership at Allstate and with this new position I hate what brilliant ideas he will come up with.
#2. Carly 11.13.2008
I agree! Ed Liddy, is a thief and a liar. He cost jobs, and got a $26 million dollar severance from Allstate, and his buddy, Hank Paulson paid him $80,000,000, of tax-payer bailout money, to be the CEO of AIG…These people are criminals!!! Why is the media not reporting on this???? They are scared to tell the truth, that’s why the media is a joke!!!
#3. Bob C 12.26.2008
Being an ex Allstate agent from Calif,I agree with the first two
responders regarding the “Lid”. Liddy, Paulson and many others in
this den of thieves, crooks, liars has destroyed the financial lives
of many fine people and if I say so, myself included. Worked hard,
was honest but then, the likes of the Mafia heads above could care less.
As far as the media reporting on this, those folks in news media have
no backbone. Our ex Defense Secretary Rumsfeld was on the Allstate
Board so what does that tell you folks. In closing, I do believe in
a Heaven and Hell. All of these people that destroy lives for the
$$ will see the latter of punishment. Has anyone ever seen a Uhaul
being pulled behind a Hearse of a wealthy person?. I think not. Ya
can’t take it with ya Eddy, Henry, Donald etc.
Leave a Comment