AIG: Chairman Will Shift to CEO if Necessary

NEW YORK ( TheStreet) -- American International Group ( AIG) said Wednesday that Chairman Steve Miller will step into the role of CEO on an interim basis if necessary, though the board doesn't expect that to happen immediately.
AIG Chairman Steve Miller
Steve Miller

The insurance giant's board sought to assure investors that a succession plan is in place if current CEO Robert Benmosche has to step down, following his recent cancer diagnosis. Although he is undergoing aggressive chemotherapy treatment, Benmosche has said he's feeling "fine" and expects to continue in his role through 2012, as planned.

"In the event that Bob would become unwilling or unable to continue to effectively serve in his current role, our Chairman, Steve Miller, would step in as interim CEO of AIG for as long as it takes to identify and select a long-term replacement for Bob," the board said in a statement, following a unanimous vote.

Miller is known for his restructuring prowess, having helped shape Delphi, an auto parts supplier, into a classic turnaround story. Miller took over as chairman a few months ago, when Harvey Golub stepped down following clashes with Benmosche.

The board said in its statement that Benmosche still "feels fine, continues to work a normal schedule, and the Board continues to assume that Bob will remain CEO on this 2012 timetable." However, the board also seems to be handling the situation extra carefully. AIG has seen several CEOs come and go in short stints since the crisis erupted and investor confidence is perhaps more important now than ever.

>>>AIG CEOs, Past and Present: Photo Gallery

The U.S. Treasury Department will be selling a huge tranche of common stock over the next few of years as part of AIG's plan to repay its federal bailout tab. Since Benmosche outlined plans to become independent by 2012, the insurer's stock has gotten support from the market -- closing above $40 since Oct. 6. On Wednesday, shares dropped 0.5% to $41.82, but were recouping some of those losses in after-hour trading.

"We are committed to management continuity and ensuring that we have established appropriate, orderly succession plans," the board's statement said.

The succession-plan announcement came amid widespread speculation about who the next CEO may be. In interviews with TheStreet on Wednesday several insurance-industry sources mentioned a few internal and external candidates.

Peter Hancock, who now oversees risk control at AIG, appears to be a leading contender. Jay Wintrob, head of domestic life and retirement, was also named as a viable choice, as were Miller and Donald Layton, a director who was nominated to the board by the Treasury Department after spending years as CEO of E-Trade ( ETFC).

As far as external candidates go, some industry watchers suggested another restructuring guru, Paula Rosput Reynolds. She was in charge of restructuring at AIG through last summer, under former CEO Ed Liddy. She was considered a top contender for the CEO role when Liddy decided to depart. But when Benmosche was selected instead, Reynolds left AIG, too, to become CEO of Seattle-based business advisory group Preferwest. She's also a director at Delta ( DAL) and Anadarko ( APC).

It's unclear whether AIG's board or the Treasury Department would favor a departed executive, though Reynolds was widely seen as successful in her short tenure at the company.

John DesPrez, former chief operating officer of Manulife was also suggested as a potential candidate. DesPrez spent years running the Canadian insurer's U.S. insurance division, called John Hancock, but departed earlier this year when he was passed over for the top job. Henning Schulte-Noelle, the longtime CEO of Munich-based insurer Allianz ( AZ), was also suggested. He now serves in a role on the board, having retired as CEO a few years ago.

Other names floated include less likely candidates Jay Fishman, who is now CEO of The Travelers Companies ( TRV) - a one-time insurance division of Citigroup ( C); Allstate ( ALL) CEO Thomas Wilson; and MetLife ( MET) CEO C. Robert Henrikson. But there's no sign that any of those top executives are eager to leave their current roles to join AIG.

In its statement, the board said it's reviewing selection criteria for a permanent replacement in 2012 and "will continue to discuss succession planning." It plans to evaluate internal and external candidates alike.

Eli Lehrer, national director of the Center on Finance, Insurance and Real Estate at a think-tank called The Heartland Institute, believes the company is likely to go with an internal candidate.

"AIG is probably going to pick its next CEO on the basis of what kind of company it wants to be, and what kind of company the board and the government wants it to be," says Lehrer, who cautioned that he doesn't have direct knowledge about the board's thinking. "AIG tried to do virtually everything in the insurance business, except health insurance previously. It's not going to continue as that kind of business, so the choice for a CEO will probably in part reflect what vision the board has for the company."

-- Written by Lauren Tara LaCapra in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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