AIG American International Group Inc

By Leslie Scism 

Thomas Russo, American International Group Inc.'s general counsel who earlier had been the top in-house lawyer at Lehman Brothers Holdings Inc., is retiring from the global insurer, according to an internal memo to employees.

Mr. Russo's departure is the latest in a string of exits by seasoned veterans as AIG continues to narrow its focus in the face of pressure from shareholder activists. In December, AIG said that four of its 15 most-senior executives were departing, as Chief Executive Peter Hancock realigned duties and cut costs to streamline operations and improve profitability.

Those departures were part of a broader plan to cut up to nearly one-quarter of AIG's senior management, or more than 300 positions. Since late October, billionaire investors Carl Icahn and John Paulson made public separate proposals to break up the insurer into three parts, and AIG added Mr. Paulson and a representative of Mr. Icahn to its board earlier this month, as part of a pact to avert a proxy fight.

Mr. Russo, 72 years old, will remain with AIG until the company finds a successor and through a period of transition, according to Mr. Hancock in the memo. A search for a successor will begin immediately, he said.

Mr. Russo also worked for major law firms over his long career, but is best known as the attorney who had a front-row seat at two of the companies most central to the 2008-09 global financial crisis.

He joined AIG in early 2010 when it was still owned by U.S. taxpayers and just beginning to dig out from one of the government's biggest single bailouts, which reached nearly $185 billion in aid. He oversaw the legal side of a divestiture program that saw the global financial-services' giant cut its assets by roughly half, from $1 trillion to about $500 billion to focus once again on insurance. Taxpayers were fully repaid by the end of 2012.

Mr. Hancock wrote that Mr. Russo's accomplishments during his six years at AIG included "having led the company through negotiations with the U.S. Treasury and Federal Reserve Bank of New York to repay the government and U.S. taxpayers with a profit. The in-house team negotiated more than 90 strategic transactions to sell AIG's noncore assets, guided six sales of AIG common stock by the U.S. Treasury, and fended off unprecedented litigation challenges."

Mr. Russo joined AIG from the New York office of Patton Boggs LLP, which he joined after Lehman's bankruptcy in 2008. He was chief legal officer at the Wall Street investment-banking firm for over 15 years through its bankruptcy, He was a close aide of former Lehman CEO Richard Fuld Jr.

Mr. Russo said he initially intended to retire a decade ago, while still at Lehman, but Mr. Fuld had pressed him to stay. Two years later, the financial crisis hit and Lehman went into bankruptcy. Mr. Russo said he didn't want to retire "on that note," so had gone into corporate law and was comfortable there when, barely a year later, he was courted by AIG's then-CEO Robert Benmosche and government officials to join AIG.

"I took a month to make that decision," he said. "I wasn't sure I was able to get back on the horse" and endure another potential fall, as AIG's ability to stay in business long term "wasn't anything close to a sure thing.... It was so traumatic what had happened at Lehman."

In deciding to take the chance, he said he initially aimed to stay only through Mr. Benmosche's tenure, but he became a good friend to Mr. Hancock, and stayed on at the new CEO's urging. Once AIG presented a strategic update to investors on Jan. 26, Mr. Russo said he concluded "now was almost the most perfect time" to depart. "We're on the right course and we have a lot of really good people working on it," he said.

Having passed his 72nd birthday, he feels urgency to do "other things" outside law, which may include taking college courses to study subjects purely for fun, working on a movie about the New York Yankees, and writing a book about "what I learned" at Lehman and AIG and "other business experiences over the years."

(END) Dow Jones Newswires

May 18, 2016 02:47 ET (06:47 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.