New AIG Chief Liddy Has Finance in His Blood

Former CFO at Sears and G.D. Searle, his accomplishments include axing the Sears Catalog.
Stephen TaubSeptember 17, 2008

In choosing Edward Liddy as the new CEO of American International Group, federal regulators once again show a partiality in a crisis for leaders with strong finance backgrounds.

Liddy, most recently with private equity giant Clayton, Dubilier and Rice Inc., first established his reputation as finance chief at two major corporations: Sears, Roebuck & Co. and pharmaceutical company G.D. Searle & Co.

At AIG, he will succeed CEO Robert Willumstad, who, according to the Wall Street Journal, is going quite reluctantly. (The paper reported that, when told by Treasury Secretary Henry Paulson that Willumstad should step aside, he replied: “If that’s what you want, I’ll do it.”)

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Edward Liddy joined Clayton Dubilier earlier this year, after retiring as chairman of insurance powerhouse Allstate Corp. At Allstate, he was president and chief operating officer from 1994 to 1998, chairman and CEO from 1999 to 2006, and chairman from January 2007 to April 2008. He is credited with leading its initial public offering and 1995 spin-off of Allstate from Sears.

Liddy was the first outsider to lead Allstate. Before that, the insurer was known for recruiting former military officers, according to a 2005 article in Chicago Business.

In his first Allstate managerial meeting in late 1998, shortly before formally assuming the CEO job, Liddy reportedly told a gathering of 200 top managers: “A number of you in this room probably will not be with us next year.”

Before taking Allstate’s reins, Liddy served as senior vice president and CFO, and as senior vice president-operating of Sears, working under then CEO Edward Brennan. There, according to Chicago Business, Liddy was the one who jettisoned the legendary Sears Catalog.

Also as CFO, he was credited with helping to manage the breakup of Sears’ financial diversification, which included Allstate, brokerage Dean Witter, real estate broker Coldwell Banker and credit card issuer Discover Financial. Remember Sears’s early-1980s moniker: “Stocks and Sox”?

Before he joined Sears, Liddy’s role as CFO of G. D. Searle — starting in 1981 — put him under CEO Donald Rumsfeld, later to become President George W. Bush’s secretary of defense. Searle was sold to Monsanto in 1985.

Liddy is currently a director of three titans of U.S. industry: 3M Co., Goldman Sachs Group Inc. and Boeing Co. He is chairman of the audit committee at Goldman and a member of the Compensation Committee and the Governance, Organization, and Nominating Committee at Boeing.

Liddy holds a B.A. degree from Catholic University of America and an M.B.A. from George Washington University.