Posted on 25 Jun 2010
The failed sale of one of AIG's crown jewels has strained relationships at the top of the insurer, increasing tensions between Robert Benmosche, the chief executive, and Harvey Golub, the chairman, according to people close to the situation.
The rift between AIG's two senior executives has triggered concerns within the board and among officials in the US government, the controlling shareholder, who fear one of the two men might leave less than a year after their appointment.
The authorities, which own 80 percent of AIG, have overhauled senior management since rescuing the insurer in late 2008 and further upheaval could complicate plans for the repayment of billions of dollars in bail-out funds.
AIG and the US Treasury declined to comment. People close to the situation said the relationship between Mr. Benmosche, the outspoken former head of MetLife, and Mr. Golub, who used to run American Express, was not yet at breaking point.
However, they said that the board’s behaviour in the run-up to this month’s collapse of the proposed sale of AIA, AIG’s large Asian arm, to the UK’s Prudential angered Mr. Benmosche and soured his relations with the chairman.
Mr. Benmosche supported the Pru deal and argued for accepting a reduction of about $5bn in the $35.5bn price to help the UK company win support from its shareholders. But the board, led by Mr Golub, rejected the idea by an overwhelming margin, forcing AIG to go back to its original plan for a listing of AIA.
“Benmosche did not take kindly to being outvoted by his own board, especially on such an important matter,” said a person familiar with the matter.
Mr. Benmosche’s supporters said Mr Golub was acting more as co-chief executive than part-time non-executive chairman and his assertive style was stoking tensions. Mr. Golub’s camp maintains that the board had a duty to do what was best for investors.
Both men enjoy the backing of the board and Barack Obama’s administration. The two were appointed in August when Edward Liddy, the former chairman and chief executive, left amid a political backlash over AIG’s pay policy, and the authorities decided to split the roles. Mr. Golub was expected to take the lead in managing AIG’s relationship with the government, with Mr. Benmosche focusing on the company’s operations.