The AIG life: emergency loans & an O.C. luxury resort, St. Regis Monarch Beach at Dana Point
Let’s say you’re an insurance executive whose parent company has wangled an $85-billion emergency loan from American taxpayers. Now you’re headed to a luxury hotel with spa services. But which hotel to choose?
This is the sort of trying question faced by business leaders today, and there are no easy answers. However, if your answer is the St. Regis Monarch Beach resort at Dana Point, congratulations. You may be qualified for an executive position at American International Group Inc., one of the world’s largest insurance companies.
The British newspaper the Guardian reported Tuesday that AIG subsidiary AIG American General spent about $440,000 on its big shots and their business associates in eight days at the St. Regis, beginning just five days after the company accepted an emergency loan from the U.S. government and averted bankruptcy.
That figure was among many that surfaced today at a congressional hearing over AIG. Among the other numbers cited by the Guardian of AIG spending:
-$139,375 on rooms
-$147,301 on banquets
-$23,380 on spa treatments
-$6,939 on golf
It was Sept. 17 that the Federal Reserve, desperate to prevent a corporate collapse over financial insurance policies gone bad, extended a highly unusual credit line to AIG. The AIG event, designed to reward independent insurance sales representatives of AIG American General, began Sept. 22.
A company spokesman said the event had been in the works for months. But as the details of the executive spending emerged, U.S. Rep. Henry A. Waxman (D-Beverly Hills), chairman of the House oversight committee, heaped scorn upon the company’s executives for “wining and dining” while average Americans suffered. U.S. Rep. Mark Souder (R-Indiana) used the term “unbridled greed.”
The St. Regis, laid out in Tuscan style, sits on 172 acres of blufftop Orange County coastline. Its 400 rooms are surrounded by six ocean-view restaurants, 18 championship golf holes, three pools and a beach club with “surf butlers” who give surfing lessons.
For the weekend of Oct. 24, the cheapest bed available is a garden-view room for $425, pre-tax. For an ocean view you’ll pay $565 nightly.
But don’t imagine that you can just run your business into the ground, tap taxpayers and show up without a reservation. For the next two weekends, the place is already booked solid.
— Christopher Reynolds, Los Angeles Times staff writer
[Photo: St. Regis Monarch Beach Resort, Starwood Hotels & Resorts]
14 Comments on “The AIG life: emergency loans & an O.C. luxury resort, St. Regis Monarch Beach at Dana Point”
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October 7th, 2008 at 6:01 pm
This sounds like an incentive trip… These independent sales reps probably made American General $40 milion! Just a part of the sales world.
If this is what the news media is reporting about the big wigs traveling right after the loan?? Then this page is so wrong. These type of trips are to reward top producers. Believe me, the company makes a fortune off these “Independent sales reps”.
Please stop scaring the world without finding out the truth first. Bad Research!!!!
October 7th, 2008 at 7:23 pm
This is an outrage and why every single tax payer in America should be emailing or calling thier elected officals. We all knew the bailouts would end up funding this kind of Executive waste but our elected Officials decided to give them our money anyway. Outrage and voter mobilizaton should help us clean house of Republicns & Democrats alike in 2010. Government is out of control and out fo touch we the people need to take it back with Officals who will listen to the responsible citizens of this great nation.
October 7th, 2008 at 8:12 pm
If there was ever a apt illustration of the concept of unconscionable this is it. Unconscionable is variously defined as “brash, unprincipled, and conscienceless”, “greatly exceeding bounds of reason or moderation” and “unscrupulous and lacking principles or conscience; excessive, imprudent or unreasonable”. It’s all those things and borders on criminal.
My tax dollars were used in that bailout, as were yours. Our money was used, improperly and without our consent, by unauthorized personnel for personal gain. They partied on our dime. They exhibited contempt for those of us who have lost money due in part to their incompetence.
At the very least every person who enjoyed this vacation funded by us ought to never be employed in any capacity that doesn’t require them to ask, “would you like fries with that?”
October 8th, 2008 at 8:11 am
This is the official explanation from AIG:
Clarification on AIG American General’s Event at the St. Regis Hotel 10.07.08
The hearing before the U.S. Oversight Committee brought attention to a conference at the St. Regis Hotel from September 24th through the 28th. The conference was held for leading independent distributors with AIG American General and was not an “executive retreat.”
Conferences like this provide an opportunity for top independent distributors to meet with selected members of insurance company management to learn about ongoing developments in the company and to provide them with product, marketing and operational updates. Given AIG’s current situation, this conference was even more essential to maintaining critical relationships with distributors and the policyholders they represent.
The vast majority of the attendees at the conference were independent business people and their guests, not AIG employees. In fact, out of over one hundred attendees, there were only 10 AIG American General employees who were there to represent the company and participate in the meetings and discussions. The contract for the conference was arranged in 2007 and the commitment to our distributors was made at that time.
AIG American General has built its business and reputation by keeping commitments – to customers, employees and distributors. It takes its commitments seriously. AIG American General made a commitment to some key distributors well in advance of the current crisis and despite the current situation and heightened media attention, believed it was important to honor that commitment.
October 8th, 2008 at 8:28 am
I don’t understand how these executives got to the money in the first place, I thought that the government was going to put heavey reins on this money. If they were in such financial distraught where did they come up with the $440+ to begin with? Every person on that trip should have to pay the money back and be held accountable for their actions, including their spouses or companions that attended, this is unexcusable for any business. Take away what they have taken away from us in our tax dollars. Spent the money? jail has a job for them I would imagine to work it off,our streets need cleaning up and this would be a good job for them. These CEOs that are taking these high paying exits should be penalized for the company failing and not rewarded for it happening, what has happened to our system. I understand that this is in their contracts but there should be something written in that they get nothing if it fails, noncompetes are written why not failure?
October 8th, 2008 at 9:35 am
There was a previous comment that this junket was a reward for the ‘producers’ of AIG, but can one imagine the more piss-poor timing of this event?
Just goes to show that the top dogs are really not thinking!
You don’t bring hot dogs to a house fire!
October 8th, 2008 at 8:32 pm
First off regarding Guy’s comment “This is part of the sales world” Are you kidding me? This is overindulgence at it’s worst. Yes these reps may have made AIG money, if so, then why are we having to bail them out. I am in sales and have gone on many incentive trips but it’s always served me better for a company to remain healthy and provide competitive products and services I can sell to my clients to keep the paychecks coming in.
As for the comments from Scarletknight 24, what a crock. How many product, marketing and operational updates are you getting on a massage table, 24K on spa treatments, please. Honoring commitments is very important but there are other ways to honor top producers and provide incentives that are not so over the top and still take care of these reps. Oh, and what about their commitment to us, the taxpayers, to be good stewards of the money we are giving them. As for, “this has been planned for months” AIG did not just get into this mess recently so they have no business spending that kind of money when they are in such financial distress. Shame on them!
October 8th, 2008 at 9:48 pm
“Guy” above (lst post) is correct. American General Life is solid, regulated and has oversight in all 50 states. This was an incentive trip for agents and NO taxpayer money was used. NONE. So, yes, we’re getting the run-around in this article and others and in the media.
American General Life had nothing at all to do with AIGs mess. In fact, American General Life will probably be the first company to be sold…lots of “regular people” who will lose jobs and healthcare.
And, no, again, NO taxpayer money went for this trip.
October 11th, 2008 at 5:02 am
I agree with most of you guys.
This is for sure an incentive trips.
It so usual for Insurance industry. So please, do not make any bad assumption or news for this issue.
October 12th, 2008 at 7:03 pm
To Mark from above; the media has you hypnotized!! A congressman wants to throw dirt at two EX executives that could care less about AIG. The congressman said, “AIG executives went on this trip”.
Sounded like a good story to the media, so they ran with it…You read it and CUZZAM, You know the truth now.
The sad truth is that this trip wasn’t for executives, it was a payoff trip for top reps. The sad truth it wasn’t really AIG, It was American General Life. Which, by the way, is one of those financially sound subsidiaries of AIG. The sad truth is there are a lot of loyal employees of all of AIG subsidiaries being kick while the AIG holding company is being torn- sadly -apart by the media. If it was you or if you had a family member that was going through this as an employee…You might have a little more reason to demand the truth from our Congressman, Presidential candidates and the media.
Blogwizard from above; your right, Couldn’t be any worse timing! But think about how crazy our world is; The Government gave AIG over 85 Billion. The Government, on national TV drove the price of the stock down probably 30% IN ONE DAY.. The Government owns 80%, but on false reporting by a congressman, drove the value down??
Crazy.
October 13th, 2008 at 11:09 am
Guy,
You are 100% correct. The media needs to be corrected on this issues, had been, I think, but ignores it because it makes good story and gets people angry and glued to their TVs.
Again, people on this thread, the event (American General Life) was prepaid…did NOT use taxpayer money. Plenty of folks (minimum wage folks) at the event made well-needed money of tips during the time—would you rather the trip have been cancelled, money wasted, not tips made, and independent agents made furious? And then American General Life (which is strong) could NOT help AIG get the loan paid back. It seems that no one has any conception of how many companies fall under the umbrella of AIG and which ones are to blame for the fall. The ones to blame for the fall are in the products division and American General Life is not related to them. Congress oversight committee (both parties) made a huge error in connecting American General to AIG’s production divisions corruption.
AG Life is trying to carry on its solid reputation to help (along with other companies) pay back the loan. But the event was prepaid, for gosh sakes, and the agents earned it and they were NOT American General or AIG employees. They are INDEPENDENT! Lots of people who needed money made tips off of the event also. Think of that. And NONE OF YOUR TAXPAYER MONEY WAS SPENT. NONE. So why are you flying off at the wrong company (within AIG?) for gosh sakes? The Congress made an error and the media got it incorrect also. Try to grasp that.
October 14th, 2008 at 4:07 am
I was duped by the media and political hubbub — thanks for clarifying. A sales incentive event is NOT an ‘executive retreat.’Top producers get rewarded. Top producers at top companies get rewarded in style. Thats how they become top companies. Take a group to the Marriott Courtyard in Fresno and they’ll be writing insurance for someone else pretty quickly.
And by the way, AIG has plenty of cash. State regulations prevent the company from lending among its labyrinth of divisions. As soon as they divest of a few divisions, the gov’t and the taxpayers will be repaid.
October 14th, 2008 at 3:37 pm
For anyone who wants to understand more of what happened with AIG…how the rogue company of AIG FINANCIAL PRODUCTS (London and Wall Street) along with Joe Cassano, etc….caused the mess they did, read this article. It’s superb..Just recall as she goes along in the article and writes “AIG” she means “AIG-FINANCIAL PRODUCTS” unit (only)
Behind Insurer’s Crisis, Blind Eye to a Web of Risk
By Gretchen Morgenson
The NY Times
September 28, 2008
October 15th, 2008 at 6:36 am
My husband and I have gone on various company trips with several companies in the life insurance and
annuities market and various other financial products. These trips are common with companies and are very effective in maintaining control and keeping in touch with a companies top sales force. The agents go on these trips because they learn a lot on them and it is their opportunity to meet the other very top producers in the company. Another thing that many people do not know that while agents earn these trips through the amount of production, most companies require that they put a certain number of cases with them (usually at least ten) and they equal a certain amount in premium, which can be several million dollars. Another very important fact is that the trip is expensed by the insurance company and a 1099 is sent to each agent for the value of the trip, so they have to pay taxes on the value. Our 1099 can be anywhere from 3,000 and up depending on the length and location of the trip, but it can be sustantial. We had one for 10,000 for a 7 day trip with one company to Europe. However, because of the nature of the trip we feel that it is worth the added expense to us. In April of ‘07 my husband and I placed a 6.5 million dollar case with AIF Life. Because it was one case we will not be invited on their trip. These are the producers that will carry this company and the very profitable side of AIG. This trip is important to the continued relationship with the agents and AIG Life.