American International Group (AIG) said on Monday chief executive Robert Benmosche has cancer and an unclear prognosis, casting a shadow on the bailed-out insurer as it undergoes a restructuring.
AIG did not disclose what kind of cancer Benmosche, 66, has but said he was undergoing “aggressive chemotherapy.” He is thought to have been recently diagnosed, although it is not clear exactly when. Benmosche said in a statement he felt fine and that he had started the chemotherapy last week.
The insurance company has had four chief executives since mid-2008. That turnover is evidence of the turmoil the company has faced after massive derivative positions forced it to receive more than US$180 billion of US government support.
In recent months AIG’s outlook has improved. Last month, the company came up with a plan to pay back the roughly US$100 billion that it still owes US taxpayers.
On Friday, AIG sold US$17.9 billion of shares in AIA, its Asian life insurance arm, bringing the company a step closer to repaying the US government.
“Had this happened three or four months ago it would have occasioned more fright for a path forward for the organization,” said Clark Troy, an analyst at Aite Group.
“Now I think it’s more of a question of finding the right person and concern for Benmosche personally,” Troy said.
Benmosche said his long-term prognosis would not be clear until he had a couple more months of treatment.
The US Treasury Department said it was informed about Benmosche’s health earlier on Monday.
In a letter to AIG employees, Benmosche said he intended to maintain a normal schedule and to work until his intended retirement in 2012.
The company’s stock edged lower to US$40.80 in thin after-hours trading from a US$41.10 close on the New York Stock Exchange. The stock is up 37 percent this year, against a gain of 11.5 percent for the S&P insurance index.
“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.
AIG said it was engaged in contingency planning in case Benmosche needed a substitute.
The board was planning a conference call today to discuss succession, the Wall Street Journal reported.
A director might step in as interim CEO if Benmosche had to stop working temporarily, WSJ said on its Web site, citing unnamed sources.
WSJ said AIG chairman Robert “Steve” Miller and directors Douglas Steenland and Ronald Rittenmeyer would be among possible candidates for interim CEO.
An AIG spokesman declined to comment.
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