NEW YORK, Jan 27 (Reuters) - Insurer American International Group Inc (AIG) offered about $450 million in retention bonuses to employees of a financial unit responsible for most of its $42.5 billion in losses in the last year, according to Bloomberg News, citing two people familiar with the situation.
The payments were offered to about 400 employees of AIG Financial Products (AIGFP), according to the report on Tuesday.
AIGFP's heavy losses on toxic mortgage debt left AIG on the verge of bankruptcy, forcing it to seek a taxpayer-funded rescue last September that has since swelled to $150 billion.
AIG spokeswoman Christina Pretto said the retention bonus scheme had been in place for nearly a year, pre-dating the federal rescue. It was instituted under then-chief executive Martin Sullivan, who left AIG last June.
Pretto declined to comment on how much AIG had agreed to pay to retain AIGFP employees.
A filing with the U.S. Securities and Exchange Commission last February said that to 'retain and motivate' AIGFP employees, some would be 'granted cash awards vesting over two years and payable in 2013.' AIG said it would recognize the expense over the period of the payments.
The payments are in addition to a retention scheme for employees of other units, put in place by AIG since its federal bailout. The two plans would total about $1 billion.
Pretto said that AIG, once the world's largest insurer by market value, felt it had to try to keep employees at the financial products unit, which held about $2.1 trillion in derivatives at the end of 2007.
'It was clear, given the market environment, that we would need to retain employees to manage the complex issues arising in our financial products business,' said Pretto.
AIG is winding down its financial products unit, which is based in Connecticut and has an operation in London.
(Reporting by Lilla Zuill) Keywords: AIG/RETENTIONPAY (lilla.zuill@thomsonreuters.com;+1 646 223 6281) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The payments were offered to about 400 employees of AIG Financial Products (AIGFP), according to the report on Tuesday.
AIGFP's heavy losses on toxic mortgage debt left AIG on the verge of bankruptcy, forcing it to seek a taxpayer-funded rescue last September that has since swelled to $150 billion.
AIG spokeswoman Christina Pretto said the retention bonus scheme had been in place for nearly a year, pre-dating the federal rescue. It was instituted under then-chief executive Martin Sullivan, who left AIG last June.
Pretto declined to comment on how much AIG had agreed to pay to retain AIGFP employees.
A filing with the U.S. Securities and Exchange Commission last February said that to 'retain and motivate' AIGFP employees, some would be 'granted cash awards vesting over two years and payable in 2013.' AIG said it would recognize the expense over the period of the payments.
The payments are in addition to a retention scheme for employees of other units, put in place by AIG since its federal bailout. The two plans would total about $1 billion.
Pretto said that AIG, once the world's largest insurer by market value, felt it had to try to keep employees at the financial products unit, which held about $2.1 trillion in derivatives at the end of 2007.
'It was clear, given the market environment, that we would need to retain employees to manage the complex issues arising in our financial products business,' said Pretto.
AIG is winding down its financial products unit, which is based in Connecticut and has an operation in London.
(Reporting by Lilla Zuill) Keywords: AIG/RETENTIONPAY (lilla.zuill@thomsonreuters.com;+1 646 223 6281) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.