Federal Affairs Chief Merski Latest Executive to Join Zurich from AIG

Zurich Financial Services Group Inc., which has been on a recruitment spree, said Rich Merski, a former AIG executive, is joining the insurer as head of federal affairs in the United States.

Merski most recently managed Washington government affairs activities for American International Group Inc , the insurer saved from bankruptcy by a $150 billion U.S. rescue package.

AIG employees have grown skittish about the insurer’s prospects in the wake of massive losses from bad mortgage bets. The insurer has tried to limit staff departures by offering retention bonuses, but with limited success.

More than 100 AIG employees have joined Zurich since AIG’s government bailout and others have taken up positions with insurers such as Ace Ltd. and privately-held Ironshore.

AIG spokeswoman Christina Pretto said the “vast majority” of employees remained with the company. At the end of 2007, the latest figure available, AIG had about 116,000 employees throughout its global offices.

AIG, in an earlier regulatory filing, disclosed it was paying in excess of $469 million in retention bonuses to a fraction of those staff.

Merski will be based in Washington D.C., handling federal legislative and political affairs for Zurich and its U.S. Farmers business, the insurer said Thursday.

AIG was forced in October to curb its lobbying activities after questions from Capitol Hill over the use of taxpayer funds. The company has also had to cut costs elsewhere and repay a $60 billion federal loan with proceeds from asset sales.

Zurich, the fourth-largest European insurer, has a growing presence in the United States through Farmers Group Inc’s insurance units, which it manages but does not own. Other U.S. operations include Zurich North America Commercial and Zurich Global Corporate, North America.

(Reporting by Lilla Zuill; Editing by Tim Dobbyn and Andre Grenon)