Reuters reports that Eliot Spitzer, NY Attorney General, is close to a settlement with AIG in the civil lawsuit filed by his office. This would be good news for both AIG and the insurance industry, which has been waiting for the proverbial “other shoe” to drop since the suit was filed earlier this year.
The most visible impact of the issue has been the departure of long-time CEO Hank Greenberg as well as the decline in stock price, with AIG’s stock down 17% (compared to the S&P’s 2 point drop) since the Valentine’s Day announcement. An equally significant, but perhaps less visible result is the loss of management attention on key business issues affecting the company. These include –
—continued major problems with AIG’s new medical bill document management program, exemplified by long delays in payment, lost bills, frustrated health care providers, and regulatory actions
— uncertain strategic direction at recent acquisition American General. AG’s target market definition seems to wander like the needle on a compass in an iron mine. This lack of focus is NOT typical to AIG.
That said, AIG is a very strong company with competent management. If their leaders can once again begin to focus on their business, and correct a decades-long underinvestment in information technology, then it will continue to succeed.
What does this mean for you?
Get crises resolved as fast as possible, and do NOT lose your focus on the franchise. Trite, but true.
Jul
18
