Benmosche’s latest tantrum is over a lack of board support for the sale price of AIA, the company’s Asian unit. Prudential UK, which planned to buy the unit, was not able to raise the funds. Benmosche advocated dropping the price for AIA to $30.4 billion from the original price of $35.5 billion. The AIG board rejected the plan.
According to Bloomberg, “During a June 25 meeting of New York-based AIG’s board, Benmosche, 66, demanded more control over the divestiture of the company’s main Asia unit, including making top-level management changes.” The action was nothing less than an attempt to undermine the power of AIG’s independent board. Bloomberg also reports that Benmosche insisted that the company’s chairman, Harvey Golub, a seasoned financial executive, step down.
AIG’s board has had to deal with enough of Benmosche’s explosions that it is best to let him go. Golub has enough experience to take his place and it would add stability to AIG’s management. A CEO who repeatedly pressures his board by saying he is prepared to leave is really no CEO at all.
AIG received more than $180 billion in government aid when its financial collapse was imminent. Fed and Treasury officials argued that the insurance company’s web of relationships with large US and foreign banks meant the AIG disaster would spread throughout the credit system
Now AIG’s board is faced with paying back as much of that taxpayer bailout as it possible. The board believes that an IPO of AIA would unlock the value of the business as much as a sale would. No one can know which path is the best way to get the largest price for AIA. That includes Benmosche.
Douglas A. McIntyre
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