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'Kill AIG Now' Is Starting to Catch On

"Kill AIG now," has been said before, but seldom as coherently as it's expressed by Eli Lehrer, director of the Center on Risk, Regulation and Markets.

Lehrer works for the Heartland Institute, a Conservative think tank, but don't hold that against him. While he has distinct libertarian views, he knows insurance and has followed the Florida flip-flops of Gov. Charlie Crist as he tries to finagle his way into a U.S. Senate seat while stopping State Farm from packing up and leaving.

Lehrer analyzed American International Group and concluded: Kick it to the curb. It's not worth keeping the insurer going and its continued presence is depressing the rest of the insurance industry. Other insurers such as Chubb Corp. would undoubtedly agree. They compete against AIG and resent the fact that it has the deep-pocket support of taxpayers.

Congresswould probably agree too. They resent being the lightning rod for populist outrage at the big salaries AIG executives garnered in 2009. Pay czar Ken Feinberg might have mumbled a few curses under his breath when he had to approve the paychecks of AIG executives who threatened to leave if they didn't escape from under the salary cap.

There's no evidence that either of AIG's two biggest businesses, property casualty and life insurance, are going to be profitable. As for its minor businesses like aircraft leasing, there's some interest in buying pieces of it by its own management, but probably not the whole thing.

The burst of investor enthusiasm that pushed its stock price to nearly $56 a share has now faded and the shares are treading water at about $29. Scuttlebutt about initial public offerings of some of its units hasn't been heard for a while, and, does anyone really want to own Alico?

Over the course of the year AIG has become its own daytime drama, but then so was the O.J. Simpson trial and now the Tiger Woods scandal. First came the public flaying of former CEO Ed Liddy; then the elusive chase after Joe Cassano, boss of the AIG unit that caused its downfall; and, in the last act, CEO Robert Benmosche's triumphal entrance, repeated threats to quit and now whining over how AIG executives are "struggling" with their current salaries. Perhaps Benmosche, with a villa in Croatia, is divorced from reality. Does he think that the 45 million Americans who don't have health insurance or the 10 percent who are unemployed really care that AIG executives don't feel that they're paid enough?

It may be time to take the soap opera off the air. Benmosche should either give investors, employees and the public a clear picture of what he intends to do to salvage AIG, or remove it from life support and dispose of the remains.

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