Management Turnover as Change Agent

Friday, February 29, 2008

Sub-prime Credit Crisis Takes Another Executive

American International Group, inc. AIG (NYSE), the insurance behemoth, has found itself added to the list of financial related firms who due to the impact of the sub-prime credit crisis was forced to announced a major tunorver of one its finance related executives. Yesterday AIG disclosed according to Crain's New York,
a fourth-quarter loss of $5.29 billion, or $2.08 per share, compared with earnings of $3.44 billion during the same period in 2006. The loss was due primarily to $11.12 billion worth of pre-tax losses in the Manhattan’s based company’s credit default swap portfolio.
Today as a direct consequence of AIG's loss, the company announced that Joseph Cassano, the head of the firm's financial products unit will be stepping down. According to a story by Hugh Son on Bloomberg,
Cassano co-founded the business in 1987 and built it into a unit providing financial guarantees on more than $500 billion of assets at year-end, including $61.4 billion in securities with ties to U.S. subprime mortgages. He will be replaced on an interim basis by William Dooley, 54, a senior vice president of the New York-based insurer's financial services businesses.
The real question is whether there are more management changes to come from AIG and if so, where? Stay tuned.

For more:

Financial Week

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