Monday, April 04, 2005

Helpful Hints From Merrill Lynch

Well now he tells us!

Merrill Lynch insurance ace Jay Cohen today lowers his AIG estimates and also cuts his price target...from $80 to $65.

But he retains his "BUY" rating.

Apparently Jay finally got around to reading Friday's A+ Wall Street Journal story describing the downfall of AIG Strong Man Hank Greenberg...the most pertinent detail being the description of Greenberg yelling, King Lear-like, at his restive, scared directors as they contemplate his ouster: "You couldn't even spell the word insurance."

One wonders, given his low opinion of his own board, why Mr. Greenberg chose them in the first place. On the other hand, it explains how AIG finds itself in its very fine mess.

Today's installment of the unraveling of yet another Wall Street fave finds that Greenberg's own closely held company (Starr International) has forced off its board AIG executives not a part of Mr. Greenberg's palace guards. Starrr International not only owns 12% of AIG stock, it controls AIG's deferred-pay and investment plans for AIG executives. How'd you like to be an AIG veteran trying to sort out the Greenberg mess, knowing King Lear controls your pension!

The plot thickens, but don't look to Merrill Lynch for guidance. They’re busy shutting the barn door, not realizing the horse is gone.

Jeff Matthews
I Am Not Making This Up


SiamTwin said...

I liked the part where Greenberg is served Chinese tea in the board room by a Chinese butler, while the other directors aren't offered anything.

Also how only Greenberg, his wife and dog (not the same) could use the fancy bathroom on the corporate jet, while guests, including other board members, had to use the smaller pilot's facility.

What a guy!

Jeff Matthews said...

"siamtwin" has it right: there was just so much material about Hank Greenberg in that story it was hard to know where to begin.

Makes you wonder, who exactly in the AIG organization would have been willing to give Hank Greenberg bad news, during all those 30 years he ran the thing?

And how did they disguise it?