AIG managers in Europe leave amid bonus spat

CHARLOTTE (NORTH CAROLINA): Some of American International Group Inc.'s top managers in Paris have resigned, just days after agreeing to return contentious retention bonuses.

Those resignations could spark defaults on $234 billion of derivative transactions unless replacements are found, according to The Wall Street Journal.

The news comes a day after Jake DeSantis, an executive in AIG's financial products division, publicly resigned in an Op-Ed column in The New York Times. DeSantis said he plans to donate his bonus _ $742,000 after taxes _ to charity.

New York-based AIG has been heavily criticized by government officials and the public after it awarded $165 million in bonuses earlier this month. The New York Attorney General's office has also been investigating the retention bonuses, or payments designed to keep valued employees from quitting.

The bonuses were given to employees of the financial products division, a global unit that issued derivatives called credit default swaps, which drove AIG almost to collapse last year.



In a statement responding to the Journal story, AIG said Mauro Gabriel, president and chief executive of Paris-based Banque AIG, and Jim Shephard, deputy CEO, resigned from their roles on March 20.

The men ``resigned from their roles given shared concerns regarding their ability to conduct business in the current hostile environment toward Banque AIG and AIG Financial Product employees generally,'' AIG spokeswoman Christina Pretto said in an e-mail.

AIG said Thursday both men have agreed to stay on for a transition, although for how long was not immediately known.

Once one of the world's largest insurers, AIG was strapped for cash as it was hit hard by deterioration in the credit markets and concerns that the complex, structured investments it insures would increasingly default.

AIG has received $182.5 billion in financial support from the government since September. It also received $30 billion in early March at the same time it reported a record $61.7 billion fourth-quarter loss.

Problems at AIG did not come from its traditional insurance subsidiaries, but from its financial-services operations, and primarily its writing of credit-default swaps _ essentially insurance on mortgage-backed securities and other risky debt against default.