Robert Benmosche, rescuer of AIG, dies at 70

Robert H Benmosche, a former MetLife chairman who engineered one of the greatest financial turnarounds in American corporate history when he took charge of the failed industry giant American International Group (AIG) and restored it to health after it had been rescued by American taxpayers in a $182 billion bailout, died on Friday in Manhattan. He was 70.

His death, at NYU Langone Medical Centre, was announced by AIG. The company said in 2010 that he had lung cancer. After the prognosis worsened in August, he was succeeded by Peter D Hancock on September 1.

Benmosche’s salvage operation began on a sunny afternoon in Croatia in July 2009. He was enjoying another day of retirement at his home on the outskirts of Dubrovnik, with the Adriatic Sea spread out before him and his vineyard in back, when he received a desperate phone call from New York. It was the executive search committee for AIG’s board.

Once the largest insurance company in the world, AIG became the worst casualty of the global financial crisis of 2008. It was labeled “the most hated company in America” after the bailout.

The search committee was calling Benmosche (pronounced ben-moh-SHAY), the former chairman and chief executive of another insurance giant, Metropolitan Life, to entreat him to come out of retirement and atake the helm of AIG.

“My first response to them was, ‘You must think I’m crazy,’ ” Benmosche recalled in a 2012 interview. “But then I thought about it and said to myself, ‘You know, they’re right — the financial industry is in chaos, and I’ve got the skills.’ ”

Larger-than-life personality

The drama and self-regard were typical of Benmosche, a larger-than-life executive who was also an imposing physical presence at 6-foot-4. Not only did he restore AIG to health by 2012, but he also repaid its entire debt to the American taxpayers and returned $22 billion in profit to them as well.

When he took over AIG, it was teetering on catastrophe after dominating global insurance for decades under its legendary chairman, Maurice Greenberg, known as Hank. Expanding beyond conventional property, casualty and life insurance, A.I.G. had plunged into esoteric financial products, most of them linked to mortgage-backed securities.

By 2007, it had built up a $500 billion portfolio of so-called credit-default swaps, which were supposed to insure the mortgage-backed securities of banks, pension funds and other insurers. Many of these mortgages were made to homeowners and businesses that could not afford them. When the mortgages went into default, the market in mortgage-backed securities collapsed, leaving AIG with staggering insurance obligations that it could not cover.

But because AIG’s demise would have toppled financial pillars worldwide and erased the assets held by pension funds for ordinary retirees, President George W Bush and Congress felt obliged to save the company with the $182 billion bailout — in effect, nationalising it.

AIG further enraged Washington and the public by insisting on handing out $165 million in executive bonuses. The wrath was strikingly nonpartisan.“How do they justify this outrage to the taxpayers who are keeping the company afloat?” President Obama, newly elected, asked. Senator Charles E Grassley, an Iowa Republican, suggested that AIG senior executives “resign or commit suicide”.

An ambitious youngster

Robert Herman Benmosche was born on May 29, 1944, in Brooklyn, the grandson of a rabbi who moved to the United States from Lithuania a half-century before. The family moved to Monticello, New York, where young Bob’s father owned an unsuccessful motel in the Catskills.

As a strapping teenager, Benmosche became a truck driver for Coca-Cola to pay his way through Alfred University, where he earned a degree in mathematics. He served in South Korea as a lieutenant in the Army Signal Corps.