American International Group Inc. (NYSE:AIG) has dismissed McKinsey & Co. as a restructuring adviser, sources tell
Bloomberg. CEO Robert Benmosche reportedly stopped using McKinsey's services in order to cut costs as AIG tries to repay its $182.5 billion bailout.
It's an interesting decision to let go of McKinsey since the consulting company was creating a multiyear roadmap for AIG called
Project Destiny that was expected to have laid out exactly how AIG would repay its bailout.
So, without Project Destiny, does AIG have a destiny? Many are saying
it's doubtful that AIG will ever be able to pay back its $121 billion bailout. But Benmosche is going to give it a go.
This decision to can Project Destiny really isn't that surprising since
it was essentially a plan that would have liquidated the company. Benmosche is pulling a 360 to former CEO Edward Liddy's strategy, and he has decided to
rebuild certain AIG business instead of divesting all of them immediately to repay bailout loans because their
valuations were too low.
The decision to cut costs by cutting down on advisers is a new one though. He reportedly intends to replace some advisers with talent from within the company. Is this a move that will yield the kind of money that could help AIG pay off its bailout? Here are the details we've scoped out from
The Deal Pipeline (available to subscribers only) and other sources:
- The New York Fed hired Ernst & Young LLP to advise AIG on
the dismantling at a rate of $775 an hour per person, according to Bloomberg.
- Debevoise & Plimpton LLP and UBS Investment Bank advised on the insurer's sale of pieces of its asset management division.
- Sidley Austin LLP and Blackstone Group LP (NYSE:BX) advised on the sale of AIG's life insurance premium financing businesses, AIG Credit Corp. and AI Credit Consumer Discount Co.
- Kramer Levin Naftalis & Frankel LLP and UBS advised on the sales of its Colombian consumer finance businesses, Inversora Pichincha SA and Interdinco SA, to Ecuador's Banco Pichincha CA.
- UBS and Dewey & LeBoeuf LLP advised on the sale of its Mexican consumer finance operations consisting of AIG Universal and Markcenter Services to Desarrollo de Negocios Integrados and Inversiones DNI.
- Sidley Austin LLP, Bank of America Corp. (NYSE:BAC) and Blackstone advised on Farmers Group Inc.s; acquisition of 21st Century Insurance Group.
- Linklaters LLP, Deutsche Bank AG (NYSE:DB) and Blackstone helped advise on the insurer's sale of its Bangkok-based banking and credit card businesses, AIG Retail Bank Co. Ltd. and AIG Card (Thailand) Co. Ltd.
- The sale of AIG's Financial Products Corp. commodities index business to the equities business of UBS Investment Bank was advised by Weil, Gotshal & Manges LLP.
- The insurer sold its Canadian life insurance division to Bank of Montreal with the help of Cravath, Swaine & Moore LLP, Debevoise & Plimpton LLP, Stikeman Elliott LLP, J.P. Morgan Chase & Co. Securities Inc. and Blackstone.
- AIG's sale of HSB Group Inc. to the Munich Re Group was aided by Simpson Thacher & Bartlett LLP, Sullivan & Cromwell LLP and Keefe, Bruyette & Woods Inc.
- The sale of its wealth management arm AIG Private Bank Ltd. to Aabar Investments PJSC of Abu Dhabi was advised by Weil Gotshal and UBS Investment Bank.
Current
auctions are being run mostly by financial advisers Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc. (NYSE:GS), J.P. Morgan and Blackstone. AIG has already
chosen Deutsche Bank and Morgan Stanley to take AIA, its Asian life insurance unit, public in 2010. Benmosche told the two banks he wants a
50% cut in their fees. The insurer is interviewing several banks about its IPO of Alico and will likely look to chop fee rates for this IPO as well. Meanwhile, Morgan Stanley is the designated lead underwriter for any IPOs AIG makes under Federal Reserve control.
Yeah, AIG could probably trim down the number of advisers it uses. But AIG does and has needed a lot of help selling its assets.
- Maria WoehrFollow me on Twitter @newsgirlmw
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