Deal Puts SunAmerica Chief in New Light
American International Group’s proposed $16.5-billion acquisition of SunAmerica Inc., a deal announced Thursday that would create a global force in sales of retirement savings products, puts a spotlight on Eli Broad, one of Southern California’s most prominent civic and business leaders.
Broad, already one of the region’s wealthiest individuals through his ownership of 10% of SunAmerica stock, will become even richer. The proposed merger could swell his personal net worth to $3 billion or more--making the 65-year-old executive one of the nation’s 50 wealthiest individuals. And it will help Los Angeles-based SunAmerica--a company that Broad will remain with as chief executive after the merger--sell its retirement savings products around the globe.
But the deal could reduce Broad’s role as one of the region’s most vocal and persuasive civic leaders and philanthropists--a prospect that is of concern in a region lacking extensive community involvement from its top businesspeople. Broad, more than any other individual, was responsible for the successful fund-raising for the downtown Disney Hall project. His donations and his energy practically built the Museum of Contemporary Art.
Broad--who regularly hosts Bill Clinton when the president visits Los Angeles--also is a key figure in the effort to bring the next Democratic Convention to Los Angeles. He also is a prominent member of numerous public commissions in Los Angeles and Orange counties.
If Broad is going to need to spend more time on the road to develop SunAmerica’s products globally, would his civic involvement be reduced?
The deal also has other implications for the Southern California economy. With about $35 billion in insurance and investment assets, SunAmerica has emerged as the largest financial services company still headquartered in Los Angeles, following the acquisitions of the Security Pacific and First Interstate banking companies.
Little Impact Seen
With SunAmerica becoming a division of the New York-based, globe-girdling giant AIG, would this region lose jobs and commercial prominence?
Broad contends that the impact on his involvement and on the region’s economy will be minimal.
“There will be no loss of jobs,” he said, adding that AIG’s activities in this area probably will increase. AIG, a company with $28 billion in annual revenue from accident and life insurance and other activities, already owns International Lease Finance, based in Century City, and 50% of 20th Century Insurance of Woodland Hills.
By giving SunAmerica an instant position in Japan and countries throughout Asia, “AIG strengthens this city’s place in Pacific commerce,” Broad said.
“I have been thinking about expanding SunAmerica internationally, but it would have taken years and been very difficult. This is an opportunity,” Broad said Thursday in a phone interview from New York, where the deal was announced.
SunAmerica will operate as “a free-standing unit” of AIG with its headquarters remaining at the SunAmerica building in Century City, Broad said. And his activities on behalf of culture and civic life in Southern California won’t diminish, he pledged.
“I love Los Angeles and I intend to be as involved as ever,” Broad said. He has long said that he sees the city and the region as a world capital of the 21st century. And in frequent speeches, he strides across the platform outlining a vision of a renewed downtown Los Angeles “from Dodger Stadium to the new Cathedral of Our Lady of the Angels and Disney Hall all the way to Staples Arena.”
Broad--a workaholic who labors tirelessly at business, civic affairs and art collecting--said he is not going into retirement as a result of having sold SunAmerica to AIG. Besides becoming a member of the board of directors of AIG, Broad and his family will become AIG’s largest individual shareholders, with 2% to 3% of the outstanding shares once the deal is concluded months from now.
Seeing Into the Future
Broad will be involved in helping AIG’s chairman, Maurice “Hank” Greenberg, 73, gain customers among Japanese savers who are eager for U.S.-style investment returns. “I’ve known Hank Greenberg for years and our two companies have similar cultures,” Broad said.
But those very efforts are likely to take a lot of Broad’s time. “Hank Greenberg built AIG’s relationships in Asian countries through years of visits and investments that took years to pay off,” said a local company CEO. Broad can expect to spend a lot of time on airplanes in the next few years.
Broad, who is described by his friend Mayor Richard Riordan as “a maniac for getting things done,” brings the same traits to his civic and cultural activities as he does to business. “Broad sees a little into the future and then has the ability to implement the vision,” says a chief executive of a local company.
Broad, who was born in New York and raised in Detroit, founded the home building company Kaufman & Broad in Detroit in 1957 and soon brought it to Southern California to lead its housing boom.
In 1971, with Southern California in recession, he bought an insurance company as a hedge against bad times. Later he spun off the home-building business into what is now Kaufman & Broad Home Corp. and molded a retirement savings company, SunAmerica, from the insurance assets.
The effort begun in 1987 to build Disney Hall as a new home for the Los Angeles Philharmonic was flagging in 1996 when Riordan recruited Broad to help with fund-raising. Broad found new donors among such organizations as Wells Fargo Bank, the Skirball Foundation and Majestic Realty, and brought the project in. “We have created a new generation of leadership for the city,” Broad said in July when a date was set for groundbreaking on the hall.
Broad also stepped down from the Disney Hall committee in July, his fund-raising completed. But he has thrown himself into the campaign to bring the Democratic Convention to town.
A rarity among business people in this day and age, Broad speaks up for the city. “It is only a matter of time before the world recognizes the arrival of Los Angeles,” he says.
The change of ownership of his company, and his greater wealth, are not likely to diminish his devotion, he said.
As his company may now have more power globally as part of AIG, Broad’s influence could grow. And as to his wealth, Broad said: “It’s not the money. The money will go to several foundations, which I hope will use it to do good.”
Broad has been married to the former Edythe Lawson for almost 48 years, and they have two sons, neither of whom is involved in his companies. “They’re richer today because of SunAmerica stock, and maybe more balanced individuals. I’m a workaholic,” said Broad. His stock, which is being purchased for the equivalent of $81 a share, sold for the equivalent of 70 cents in 1990.
* SUNAMERICA BUYOUT: L.A. annuity marketer Sun-America agrees to be bought out by insurance giant AIG. D1
