4:44 PM
AIG CEO Benmosche has cancer, in treatment
Addison Ray
By Ben Berkowitz
NEW YORK | Mon Oct 25, 2010 6:59pm EDT
NEW YORK (Reuters) - Bailed-out insurer American International Group said on Monday Chief Executive Robert Benmosche has cancer and has an unclear prognosis, casting another shadow on the company as it undergoes a comprehensive restructuring.
AIG did not disclose what kind of cancer Benmosche, 66, has but said he is undergoing "aggressive chemotherapy."
Benmosche, in a statement, said he felt fine but that his long-term prognosis would not be clear until he had a couple more months of treatment. In a letter to AIG employees, Benmosche said he intended to maintain a normal schedule and to work until his intended retirement in 2012.
AIG watchers said the news was a clear negative.
The company's shares fell 32 cents to $40.80 in thin after-hours trading from a $41.10 close on the New York Stock Exchange.
"Investors should be worried about this. He's going to keep working while he's getting chemotherapy. Most people wouldn't find that very tenable," said Sean Egan, principal of Egan-Jones Ratings Co, which rates AIG's debt.
"Keeping him in place might be reasonable in the short-term, but I question if it's in the company's longer-term interests," Egan said.
Others said if Benmosche has to be replaced, it would be a less daunting task now than three or four months ago, given the progress he has achieved.
"At the end of day the CEO position has been a difficult one to fill at AIG, but what Benmosche has been able to do by hook or by crook will presumably make it a less difficult position to fill," said Aite Group analyst Clark Troy.
Benmosche has been an authoritative presence at AIG since becoming CEO in August 2009, getting much of the credit for a turnaround that included selling foreign life unit ALICO at an attractive price to MetLife and sorting out the mess surrounding the failed sale of Asian unit AIA.
In July, Benmosche won a boardroom battle with former chairman Harvey Golub over the failed AIA sale. Reports indicated Benmosche had threatened to resign if Golub was not replaced.
AIG said it was engaged in contingency planning in case Benmosche needed a substitute. Aite Group's Troy said any new CEO would likely have to come from within the organization, given the complexity of challenges AIG faces.
(Additional reporting by Paritosh Bansal; Editing by Gary Hill, Bernard Orr)
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