AIG Vice Chairman Frenkel Retires

NEW YORK (TheStreet) -- Robert Benmosche's drive to retain top talent at the bailed-out insurer American International Group (AIG Quote) took an ironic turn for the worse on Wednesday, with a high-profile vice chairman's departure getting a lot of attention, as reports continued to circulate that the CEO himself is threatening to leave.

In a note to employees on Tuesday, Benmosche announced the departure of Jacob Frenkel, AIG's vice chairman of global economic strategies for over five years. Frenkel had planned to retire for some time, but delayed his departure to assist AIG through its crisis.

"Although he had been contemplating this change for some time, Jacob had agreed to stay on to help AIG through its challenges," Benmosche wrote. "Now that AIG has stabilized, Jacob has decided to move ahead with his retirement."

AIG spokeswoman Christina Pretto declined comment on reports that Benmosche had told board members he wants to quit because of regulators' interference with managing the firm. The tart-tongued executive has been advocating for his employees since taking the top job in August. He recently butted heads with the Obama administration, and its pay czar Kenneth Feinberg, over mandated pay constraints though he did win approval for his own pay package of up to $10.5 million.

Benmosche has the credentials to help restore AIG, after spending several decades competing insurance powerhouse MetLife (MET Quote), eventually retiring as CEO in 2006. A relatively bullish Moody's note on Tuesday bolstered his claims of improvement, with the ratings agency predicting that AIG will probably repay its $90 billion in government support.