Robert Benmosche, the combative former chief executive officer of American International Group Inc. who led the insurer, once the world’s largest, to repay a $182.3 billion taxpayer bailout, has died. He was 70.
He died on Friday at NYU Langone Medical Center in New York following treatment for lung cancer, AIG said in a statement. The insurer announced in October 2010 that Benmosche had cancer, and the CEO said last August that he’d moved up his departure after his prognosis worsened. Benmosche was replaced by Peter Hancock on Sept. 1.
Benmosche came out of retirement in August 2009 to take over a company reeling from losses on failed housing-market bets, and led the insurer for half a decade. He put New York- based AIG on the road to repaying taxpayers and along the way, the always-tan, silver-haired Benmosche became the most outspoken AIG chief since Maurice “Hank” Greenberg, who was forced out in 2005 as the insurer was investigated for accounting irregularities.
“I create so much trouble, don’t I?,” Benmosche told employees at a meeting shortly after he started. “That’s my job.”
Benmosche sold major divisions and focused on U.S. life insurance and global property/casualty coverage. He also sparred with government overseers, rebelled against U.S.-applied pay caps that he said limited the firm’s ability to retain staff, threatened to quit at least twice and succeeded in ousting then- Chairman Harvey Golub with a “him-or-me” showdown.
“Nobody gave AIG a chance back in 2009,” Steve Miller, AIG’s non-executive chairman, said in a September 2014 interview on Bloomberg Television. From Benmosche, “I have learned, one more time, the power of greater leadership, even in the most disastrous of circumstances,” Miller said.
Benmosche was AIG’s fifth chief in five years, finally bringing stability to the top job after a succession of leaders felled by market losses and the bailout. The CEO revolving door after Greenberg included Martin Sullivan, Robert Willumstad and Edward Liddy.
“He’s the best they’ve had since I left the company,” Greenberg said of Benmosche in a 2010 interview with Fox Business Network. Greenberg, who ran AIG for about 38 years, had succeeded Cornelius Vander Starr and took the company public in 1969.
Liddy, the former chief executive of Allstate Corp., was installed on Sept. 18, 2008, as chairman and CEO by the U.S. Treasury Department and voluntarily took an annual salary of $1. He held both jobs until August 2009 when he resigned, saying in a farewell letter to employees that he “had no idea what I was in for” when he joined AIG. “It hasn’t been easy, and goodness knows, it hasn’t been pretty,” Liddy wrote.
Benmosche, whose salary was $7 million in 2010, his first full year, had his own tribulations as CEO, chafing at government oversight of the insurer.
Investors benefited from Benmosche’s turnaround tactics, after the stock plunged 97 percent in 2008, the year housing- market related losses pushed the firm to the brink of collapse. The shares closed at $56.06 on Benmosche’s last day as CEO, compared with $11.39 on the day his hiring was announced.
Robert Herman Benmosche was born in Brooklyn, New York, on May 29, 1944. He received a bachelor’s degree in mathematics from Alfred University in Alfred, New York, in 1966, where he played on the football team. After college, he served as a lieutenant in the U.S. Army Signal Corps from 1966 to 1968.
Benmosche worked in technology at Arthur D. Little Inc., a Cambridge, Massachusetts-based management consulting firm, before joining Chase Manhattan Bank in 1979. From 1982 to 1995, he was at securities broker PaineWebber Inc., where he rose to executive vice president and helped guide its acquisition of Kidder Peabody & Co.
He moved to MetLife Inc. in 1995 as executive vice president, becoming president and CEO about two years later. Benmosche transformed the New York-based company into the largest publicly traded U.S. life insurer from a mutual owned by customers.
After retiring in 2006 from MetLife, Benmosche moved to Croatia, where he owned a villa with a 12.5-acre vineyard and had a collection of thousands of bottles of wine. Benmosche wanted to bring Zinfandel wine-making back to Croatia, where the variety may have originated, he told Wine Spectator magazine in December 2009.
“People say, why would you want to live in Croatia?” said Benmosche, who said he spent half the year there during his retirement. “Because it’s a beautiful place and it’s safe.”
He said he initially turned down the AIG job because of the lambasting that his predecessor, Liddy, had received during congressional hearings in March and May 2009 regarding employee bonuses.
“I wasn’t interested in this job, I’ve got to tell you, I said ‘no’ three times,” Benmosche told staff at an August 2009 meeting. “I said to all the key people in Washington I met over the last two weeks, ‘Why in God’s name would you want me to be your CEO? I’m angry about everything you did. There isn’t anything you did right.'”
One reason he took the AIG post was to help restore confidence in the insurance industry, Benmosche told staff.
“It affects me personally because, quite frankly, I still got a lot of MetLife stock,” he said. “And if I can improve everything here, I can make some money here, and I can make a lot of money there, too. And then I can add more vineyards.”
In 2008, AIG reported the biggest quarterly loss in U.S. corporate history and posted almost $100 billion in net losses that year, fueled by bets on subprime mortgage securities. AIG was deemed by the Treasury Department a “systemically significant failing institution” and was the only company to receive bailout funds through a facility created for such firms.
Federal Reserve Chairman Ben S. Bernanke said AIG’s bailout, a day after the failure of Lehman Brothers Holdings Inc., had made him “more angry” than any other episode in the financial crisis. The business was akin to a hedge fund “attached to a large and stable insurance company,” Bernanke said.
In his first month at AIG, Benmosche drew criticism for vacationing in Croatia. In a town hall meeting with AIG staff that month, Benmosche spoke of ridding AIG of government oversight.
Bailed-out firms have to “start rebuilding themselves, without government regulation, government control, government decisions on how you pay people,” Benmosche said. “If we do it the right way, I’m convinced we can restore credibility in our industry, as well as for our country.”
Liddy’s relations with Congress and federal regulators was testy. He was twice grilled by lawmakers over bonuses paid during his tenure. Benmosche said he would leave working with Congress to Golub, the former CEO of American Express Inc., while he focused on operations and decided which units to keep.
Golub “is going to run interference for me in Washington because, I’ve got to tell you, I can’t be running the business here and dealing with all those crazies down in Washington,” Benmosche said on Aug. 11, 2009, adding, “actually, they’re not. They’re very nice, sophisticated people. Vote for them. Please. And give them your money.”
Benmosche also criticized then-New York Attorney General Andrew Cuomo on Aug. 11, 2009, over Cuomo’s handling of a bonus probe of the company, saying he “doesn’t deserve to be in government.” AIG issued an apology on Benmosche’s behalf and said that the executive was responding to workers’ concern about harassment amid the bonus furor.
Over time, Benmosche shifted his stance toward federal regulators. In 2012, Benmosche said AIG wouldn’t contest a designation as a systemically important financial institution, subjecting it to extra oversight.
“In fact, we welcome supervision by the Federal Reserve,” he said in a letter to regulators.
Golub, who joined AIG in 2009, weeks before Benmosche became CEO, resigned as chairman on July 14, 2010. Benmosche often clashed with Golub and pushed for his ouster after feuding with him over the stalled divestiture of AIA Group Ltd., AIG’s main Asia division.
Golub was succeeded by Miller, an AIG director who became the company’s sixth chairman since 2005. Miller oversaw the bankruptcy of auto-parts supplier Delphi Corp. and helped Chrysler Corp. return to profitability.
Benmosche’s strategy was to delay asset sales until higher prices could be garnered, telling employees he was “appalled” at pressure from U.S. regulators to liquidate the company.
AIG has retrenched the derivatives unit responsible for housing-market losses. The company has sold more than $75 billion worth of businesses and assets since 2008, including a U.S. consumer lender, a Russian bank, an Israeli mortgage insurer and its New York headquarters building. The sale of plane-leasing business International Lease Finance Corp. in May 2014 was the last major divestiture, AIG said at the time.
Among the biggest deals that helped AIG repay the rescue were the $16 billion sale of Asian insurer American Life Insurance Co. to MetLife and the divestiture of AIA in four public offerings that raised a total of $35 billion.
The U.S. wound down the rescue through six share sales after owning as much as 92 percent of AIG. Following the final sale in December 2012, the Treasury Department had recouped more than $200 billion, giving the U.S. a profit of about $22.7 billion on the bailout.
“We are not going to stop here and take a rest,” Benmosche wrote to employees in a memo at the time. “We are not at the finish line.”
On Oct. 25, 2010, weeks after announcing AIG’s road map to independence, Benmosche told staff that he had begun treatment for cancer, without disclosing the type, and said he’d step down in 2012. Benmosche later decided he’s stay on until the first quarter of 2015, then moved up his departure to August 2014.
Just prior to leaving AIG, Benmosche sat for an interview with Bloomberg TV’s Betty Liu at his Croatian villa. He told Liu that he felt he’d completed his goals for AIG, and explained his decision to depart by citing advice his mother once gave him.
“My mother told me, ‘Don’t wait too long,’ and I’m glad I didn’t wait too long,” Benmosche said. “She said, ‘Live your life when you’re healthy enough to live it.'”
- SPECIAL REPORT: Inside AIG’s Tortuous Turnaround
- After ‘Terrible’ Cancer Diagnosis, Benmosche Accelerated Exit from AIG
- Ex-CEO Benmosche Writing Book on Turnaround at AIG
- AIG’s Benmosche Receives Leadership Award From St. John’s University in N.Y.
- AIG’s Benmosche: ‘AIG Has Not Only Survived, It’s Got Its Strength’
- Hancock Takes Over at AIG After Benmosche’s ‘Great Leadership’: Miller
Was this article valuable?
Here are more articles you may enjoy.