AMERICAN International Group said it would cancel most of its events after politicians castigated the insurer for hosting a $US440,000 ($637,000) function at a resort while benefiting from a $US85 billion government bail-out.
The cancellations include an event at the Ritz-Carlton in Half Moon Bay, California next week. The gathering that drew the rebukes was held last month at the St Regis Resort in Monarch Beach, California. About 100 independent insurance agents who sell coverage for AIG attended, spending $US23,000 on spa services, among other things.
"Earlier today I ordered the immediate cancellation of all outside meetings, conferences and recognition events across AIG, except those that are required by law or that are deemed absolutely critical to sustain our ongoing business needs," the chief executive, Edward Liddy, said in a statement.
"We recognise the need to be sensitive about all company expenditures."
AIG, once the world's largest insurer by market value, accepted the government takeover last month after being on the brink of collapse. The company ran short on cash after incurring more than $US18 billion in losses tied to the housing slump. On September 16 it agreed to hand the US Government a 79.9 per cent stake in exchange for an $US85 billion credit line.
Events such as those that were hosted by AIG to reward top salesmen are common at financial firms. Wachovia, the lender that has had $US9.5 billion in losses this year, had planned to send 75 top brokers and their spouses on a Greek cruise. The bank cancelled it on Thursday, citing sliding financial markets, said a bank spokesman, Jim Griffin.
"Incentives for sales departments have proven over time that they work, and that's true in every business that depends on the selling effort," said Dean Bare, of Stanton Chase International, an executive search firm.
"If these trips didn't work, they would have stopped doing them a long time ago."
AIG's decision followed rebukes from Congress and the White House. The chairman of the US Senate finance committee, Max Baucus, demanded more details from the Federal Reserve on the Ritz-Carlton event, saying he wanted to know "who we can fire".
AIG decided against next week's event a day after striking an agreement that will enable it to access an extra $US37.8 billion from the Federal Reserve Bank of New York. Mr Liddy told the Treasury Secretary, Henry Paulson, on Wednesday that the company will rethink expenses. AIG considered buying advertisements to explain its position, only to be told by its public relations consultant, George Sard, that it would be "a really bad idea".
