AIG: The Market Leader in Chutzpah
Who's responsible for damaging AIG's brand? No, it's not a trick question. I ask because the insurance company's latest SEC filings (h/t Footnoted) suggest that the press, along with government officials and members of the public at large, is sullying the firm's good name, which is in turn impacting AIG's business prospects. Like me, you probably thought that AIG wrecked its own rep, by, you know, engaging in the irresponsible transactions that ultimately led to its near collapse and subsequent taxpayer funded rescue. Wrong. As the company explains in its latest 10-Q:
Adverse publicity and public reaction to events concerning AIG has had and may continue to have a material adverse effect on AIG. Since September 2008, AIG has been the subject of intense scrutiny and extensive comment by global news media, officials of governments and regulatory authorities around the world and segments of the public at large in the communities that AIG serves. At times, there has been strong criticism of actions taken by AIG, its management and its employees and of transactions in which AIG has engaged. In a few instances, such as the public reaction in March 2009 over the payment of retention awards to AIGFP employees, this criticism has included harassment of individual AIG employees or public protest affecting AIG facilities.
To date, this scrutiny and extensive commentary has adversely affected AIG by damaging AIG’s business, reputation and brand among current and potential customers, agents and other distributors of AIG products and services, thereby reducing sales of AIG products and services, and resulting in an increase in AIG policyholder surrenders and non-renewals of AIG policies. This scrutiny and commentary has also undermined employee morale and AIG’s ability to motivate and retain its employees. If this level of scrutiny and criticism continues or increases, AIG’s business may be further adversely affected and its ability to retain and motivate employees further harmed.