Former AIG Chief Dies Of Cancer At 70

By Arthur D. Postal
InsuranceNewsNet

WASHINGTON – Robert Benmosche, the former head of AIG who once described himself as “an in-your-face CEO,” died this morning in New York after a five-year battle with lung cancer. He was 70.

Benmosche stepped down as AIG’s CEO in August 2014. At the time, he told Bloomberg News he had been informed a few months earlier that he nine months to a year to live. His retirement had originally been scheduled for this year.

Benmosche took over AIG in August 2009, while in the midst of government control after an emergency takeover by the federal government on Sept. 16, 2008. The company’s insurance subsidiaries were in good shape, but it was under intense pressure from margin calls associated with the $2.77 trillion in credit default swaps issued by its Financial Products subsidiary to insure mortgage-backed securities. It was later learned that AIG had collateralized purchase of collateralized debt obligations also backed by mortgages of various grades with the reserves of its 13 life insurance subsidiaries.

According to a 2011 report by the Government Accountability Office, the situation was so bad that at one point in 2009, the government contemplated acquiring the life insurance subsidiaries in order to protect AIG’s customers.

AIG went through three CEOs in 2008 and early 2009 before the Treasury Department and the Federal Reserve appointed Benmosche in August 2009.

The tumult had really begun in 2005, when Maurice “Hank” Greenberg, its long-time chairman and CEO and the force behind creation of AIG as the world’s largest insurer, was forced to step down after an investigation by Eliot Spitzer, then New York’s attorney general.

Greenberg was succeeded by Martin Sullivan, who resigned as the scope of the crisis became public in June 2008; Robert B. Willumstad, AIG board chairman since 2006, and Edward M. Liddy, who had retired several years before as chairman and CEO of Allstate.

The government provided $182 billion in capital in September 2008 to AIG in return for 79.9 percent of its stock. The U.S. and the Federal Reserve also provided AIG cash that at one point exceeded $300 billion as it gradually worked its way through its crisis to become a totally private company again by the end of 2012.

Most of the workout was accomplished by divestiture of some of AIG’s best assets, including Nan Shan, its Taiwanese-based life insurance unit; AIA Group Ltd., the predecessor of AIG started in 1919 in Hong Kong by C.V. Starr and American Life Insurance Co. (ALICO). It also sold its shares in the Blackstone Group, and AIG Starr and AIG Edison, two of its Japan-based companies. AIA was sold through an initial public offering, ALICO to MetLife and AIG Starr and AIG Edison to Prudential Financial.

The deal is now the subject of a lawsuit by its biggest shareholder, Greenberg, who argues that the terms of the takeover amounted to an attempt to ‘steal the business’ by the government. Greenberg made a deal to sell his 13 percent stake in AIG back in return for the core company, Starr International, in 2012.

During his time at MetLife, Benmosche headed up that carrier’s transition from a mutual to a stock company in 2000, transforming the company into a sleek competitor which has ultimately emerged as the nation’s largest insurance company.

Benmosche joined MetLife in 1995 as executive vice president responsible for business integration and product development, marketing and sales efforts focused on MetLife’s individual customers. Before that, he served as executive vice president for PaineWebber, where he directed the merger of Kidder Peabody into PaineWebber.  He also served in various capacities with Chase Manhattan Bank from 1976 to 1982.

One AIG shareholder, commenting about Benmosche on the website Seeking Alpha, said, “RIP. He lived his life with bravery and gusto. When he was ill, he could think of no better challenge than to bring a near corpse of a company back to life, impacting thousands of people. He will be missed.”

Another shareholder said, “I really love it when people say exactly what is on their mind. It makes most people targets, but then again they just don't care. That is what made him great. Thanks for doing a fantastic job at AIG and giving me what is probably the largest gain I will ever see. You will be missed.”

AIG chairman Robert S. Miller said “Bob was one of the most inspirational and successful leaders in corporate America by any measure. We will never forget that under Bob’s extraordinary leadership, the people of AIG repaid America in full plus a profit of nearly $23 billion. Everyone in the AIG family has been greatly blessed by Bob’s vision, his loyalty, and his friendship during his five years with the company.  Bob was a brilliant man who brought tremendous leadership, energy, passion, and tenacity to his job.   At AIG, we will honor his legacy by continuing to focus on integrity and performance.  He will be deeply missed.”

In an internal memo to employees, Peter D. Hancock, AIG president and CEO, said, “Bob believed that people matter and that we are what we choose to make of ourselves. He showed this to be true at different times throughout his life: selling soda to pay for his educational experiences after his father died young without insurance, taking MetLife public and restoring its industry leadership, becoming a winemaker and harvesting original Zinfandel plants in Croatia to bring a country back its legacy.

“And then there was AIG. Bob was known as “The Man Who Saved AIG,” but if you asked him about it, he said it was the people of AIG who saved this company. He believed in you and got strength from you, when all the while we thought it was the other way around. Bob saw the best in every one of us and helped us have the courage to release the energy, the optimism that led us to where we are today.”

Benmosche is survived by his wife, Denise, daughter Nehama, son Ari, and longtime companion Lisa, all of who were at his bedside when he died, the family said.  He is also survived by his daughter Beth; Ari’s wife, Clair; Nehama’s partner, Terry; three siblings, Judith, Jayne and Michael; and six grandchildren.

InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at [email protected].

© Entire contents copyright 2015 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.