Ieva M. Augstums
AIG’s new CEO raises conflict questions
American International Group Inc. said Wednesday it is aware of potential conflicts of interest related to the hiring of former MetLife Inc. Chairman and CEO Robert Benmosche as its new CEO, and would deal with any conflicts as necessary.
That includes potential deals as the global insurer seeks to sell assets to help pay off a massive government loan.
Benmosche, 65, took over the New York-based AIG on Monday. He replaced CEO Edward Liddy, former CEO of Allstate Corp., who took over last fall after the government bailed out the troubled insurer.
When the credit crisis hit last year, the U.S. government rescued AIG from the brink of collapse with a loan bailout package worth up to $182.5 billion. The government now owns roughly 80 percent of the huge insurer.
Benmosche takes over a company in flux, as AIG continues to restructure itself as a means to repay the government loan. In recent months AIG has moved forward with plans to spin off three different divisions and has been selling assets.
On Wednesday, the Wall Street Journal reported the possible conflict of interest, saying AIG has been in talks with MetLife about a possible deal for all or part of one of AIG’s largest foreign life-insurance units. MetLife is the nation’s biggest life insurer by assets.
Benmosche, because of his former executive roles at MetLife from 1998 until 2006, remains a MetLife shareholder.
As of April 2006, Benmosche directly held 349,181 shares and indirectly controlled another 15,739 shares, according to Thomson data, the Journal reported.
According to MetLife regulatory filings, Benmosche is in line to get a $98,000-a-month pension from MetLife starting Jan. 2010, for 20 years, the Journal reported.
AIG spokeswoman Christina Pretto said AIG’s board was aware of Benmosche’s holdings in other companies and “thoroughly considered the issues of potential conflicts before his appointment.” ”The Board will adopt appropriate procedures to address any potential conflicts as necessary,” she told The Associated Press.
Early this year, AIG and MetLife had discussed a possible deal involving its American Life Insurance Co. unit, or Alico, with a preliminary price of $11 billion or so, the Journal reported, citing people familiar with the matter.
But turbulent markets have made it difficult for AIG to sell-off its assets.
However, when market conditions improved markedly, another round of talks began, the Journal reported, and the talks have gone farther than the earlier ones, with MetLife proceeding continuing to look at AIG’s operations.
Still, the revived talks remain preliminary and may not lead to a sale, the Journal report said.
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