The announcement came three months after the insurer said Benmosche had been diagnosed with cancer and was undergoing aggressive chemotherapy. The company has not specified what kind of cancer Benmosche has.
The 66-year-old said in a news release Monday that doctors have given him "an encouraging prognosis," and that he feels "good."
Since he has responded well to treatment, Benmosche said his doctors "believe I can continue to apply the same commitment and energy to AIG over the next 12 to 18 months."
Benmosche said it's likely he'll return to his retirement in 2012. He initially retired in 2006 after leading insurance company MetLife Inc., but was recruited to lead New York-based AIG in August 2009. He replaced Edward Liddy, a former Allstate Corp. CEO who was appointed to lead AIG in September 2008 in connection with the company's federal bailout.
Benmosche has led AIG's efforts to repay the $182 billion bailout, which pulled the company from the brink of bankruptcy. Earlier this month, that rescue came closer to an end as AIG paid its $21 billion outstanding balance to the New York branch of the Federal Reserve. AIG also converted preferred stock owned by the Treasury Department into more than 1.6 billion shares of common stock that can be sold on the open market.
The government will wind down its largest and most complex rescue from the financial crisis by selling stock over the next two years. AIG first announced its repayment plan in September. Since then, the company has worked to raise cash to pay back the government by selling parts of itself around the world.
AIG said on Monday that its board has agreed that its contingency plan to potentially replace Benmosche remains unchanged. On Oct. 27, two days after announcing Benmosche's illness, AIG said that if he became unwilling or unable to continue, current Chairman Robert Miller would step in as interim CEO until a permanent replacement for Benmosche is found.