The Circus: And so it goes...

The stock market is responding positively to AIG's most recent asset sales. The stock price inched up seven tenths of a point today, to $1.14 at the close. Yesterday, AIG Life of Canada was sold to BMO Financial Group for $263 million, and on Tuesday, its Hartford Steam Boiler unit was bought by Munich Re for $739 million plus the assumption of $76 million of HSB capital securities.

These sales bring to 10 the total number of AIG units sold to pay back the government's bailout. It would seem that the capital markets are taking care of moving AIG out of its current financial hole, helping it to disassemble, as it should, in proper and orderly steps. 

The disassembling is not stopping former AIG CEO Maurice "Hank" Greenberg, however, from continuing to pursue his thinly veiled bid to regain control of his former company. Not only is he painting his successors as both the creators of AIG's current financial mess and incompetent to cope with it, he's also made friends with "Not Me."

"Not Me," you might remember, was a little character in Bil Keane's old cartoon "The Family Circus." Shaped like a ghostly Weeble, the cute little transparent feller, sporting the words "Not Me" on his belly, generally turned out to be to blame for any household transgression, be it spilt milk, a broken vase, or mud tracked into the house. 

Unfortunately for Greenberg, his "Not Me" defense is dead on arrival. Credit default swaps were enriching AIG's investment portfolio since at least 2001, four years before Greenberg's ouster, which came due to finite reinsurance, another scandal on his watch. He'll most likely continue his maneuverings, but he's left a trail of bad blood throughout the insurance and financial industries, even stretching to his own sons, who he forced from the company when they threatened to become powerful enough to succeed him. 

Even if he does get AIG back, he may not get back much: the two most recent asset sales totaled just $1 billion, and AIG received $170 billion in government bailout money. A lot of the payments have gone to counterparties, fattening bank bottom lines. But maybe, if enough money eventually changes hands among counterparties, AIG might come through this crisis with some assets left to its name. Stay tuned ... 

An insurer by any other name ...

AIG announced last Monday that it's rebranding itself as AIU Holdings, Ltd. The AIG sign on its Water Street headquarters is gone, the Web site already features AIU as its identifier, and most likely, new stationery and business cards are being rushed into print.

The AIU acronym, standing for American International Underwriters is not totally unknown--it's been used for several of AIG's non-US subsidiaries over the years, most prominently for the Shanghai branch office, which was AIG's 1919 birthplace. 

Still, with a stock price languishing in penny stock territory ($1.02 as of Friday's close), is rebranding the wisest move? Current chairman Ed Liddy seems to think so: in a recent interview, he said AIG's brand was "thoroughly wounded and disgraced." Bringing underwriting into a prominent spot in its name could shift its image from a highflying financial player back to that of an insurance company, and mute some of the notoriety from the investing activities that got it into trouble in the first place. 

Liddy's midtream rebranding, audacious as it is, is just one more such move in AIG's (pardon me, AIU's) chutzpah-laden history. It seems unlikely, though, that it's going to scrub any of the mud off its reputation. For the past two decades, the insurance industry has pushed hard to shed its stodgy, low ROI rep and join the Wall Street party. AIG, not surprisingly, was one of the more aggressive of the bunch. So its current move to reassume the insurance industry's mantle of safety, soundness, and traditional conservative financial husbandry rings more than a bit hollow.

Also, how much is this costing anyway? And who's paying for it?

AIU might be better off retaining the AIG name, and sticking with its knitting. For a rebranding to truly work, AIU would have to put its money where its mouth is: clean house, shed its high-flying financial arms, and focus on organic growth in its core businesses.

Otherwise, this rebranding will be nothing more than a new shade of lipstick on the same old ... lips.