Former Allstate CEO Testifies on AIG Bonuses Despite Recession Fueled by Credit Default Swaps
Posted by Aaron DeShaw on Mar 19, 2009
We've all seen the name of AIG's CEO, Edward Liddy, far too often in the last few days. After all, AIG's involvement in credit default swaps (best described as a mix between insurance and gambling) based on subprime mortgages set off the present recession.
Yesterday, Liddy attended a hearing before a congressional committee, explaining why he thinks $165 million in federal bailout money from American taxpayers needs to go to AIG employees for bonuses despite the company's reckless actions being a cause of the recession.
During Liddy's introduction, Chairman Kanjorski raised the issue about Liddy's former role as CEO of Allstate, and that company's denial of insurance claims. Later, one of the representatives asked why we as taxpayers are being forced to pay $165 million in bonuses on the basis that these were contracts. Liddy had no problem denying insurance contract claims which the policyholders made against his former company, Allstate.
It might be surprising for the public to realize that Liddy made over $350 million in salary and stock options in his position at Allstate, in large part by implementing a plan to deny and otherwise underpay insurance contract claims to Allstate policyholders. They might also be interested to know that while running AIG, Liddy continues to be a major Allstate stockholder.
Want to learn more about Edward Liddy?
Liddy was the President and CEO of Allstate Insurance Corp. from 1995 to 1999, then the Chairman of the Board until 2007. While at Allstate, he orchestrated across-the-board claim denial and underpayment systems, which led to David J. Berardinelli's ground-breaking legal book From Good Hands to Boxing Gloves: How Allstate Changed Casualty Insurance in America. According to this book, by the time he left, Mr. Liddy had already amassed Allstate stock worth over $250 million, with an additional payment at retirement of $50 million, and a retirement package worth over $70 million.
You can learn much more about Edward Liddy and insurance claims denials by reading one of the following books:
For Lawyers: From Good Hands to Boxing Gloves: How Allstate Changed Casualty Insurance in America by David Berardinelli and Dr. Michael Freeman. Foreword by Eugene Anderson. Edited by Aaron DeShaw.
764 pages including detailed discussions on Insurance Bad Faith, the Minor Impact unit and The McKinsey Documents
For the Public: From Good Hands to Boxing Gloves: The Dark Side of Insurance
191 pages by David Berardinelli