NU Online News Service, March 27, 10:30 a.m. EST
Robert H. Benmosche, president and chief executive officer of American International Group Inc., says American taxpayers will pocket up to $10 billion when the government assistance it received more than three years ago is repaid.
Benmosche tells Jim Cramer, host of “Mad Money” on CNBC, “The American people—between the Fed and U.S. Treasury—they’ll make between $5- and $10 billion profit when this is done.”
AIG was saved from collapse when the U.S. government made about $182 billion available to bail out the insurance conglomerate.
The company recently paid another $1.5 billion back to the U.S. Treasury Department to reduce the remaining debt it owes to the U.S. government to about $45 billion. The Treasury now owns $36.7 billion in AIG stock (a 70 percent stake), and the Federal Reserve Bank of New York (FRBNY) is still owed another $9 billion in a loan to Maiden Lane III, which holds collateralized debt obligations purchased by AIG Financial Products (AIGFP)—the unit blamed for AIG’s near-bankruptcy.
Benmosche tells Cramer that if AIG had followed the plan set when he arrived at the company, AIGFP would have lost $10 billion to $20 billion. Instead, according to the CEO, it made $4 billion as its complicated book was unwound.
In the meantime, the government’s support has not been a hindrance, he says.
“They let us run the company,” Benmosche says.
In selling off or getting out of business Benmosche says the company should not have been in, AIG has become a simpler, more diversified insurer with an “awful lot of capacity to buy back shares.”
“My assumption will be, we’ll be buying back those shares from the U.S. Treasury,” he adds.
The CEO also says he is in no rush to retire. Benmosche had made plans to retire after being diagnosed with cancer, but he told Cramer treatments have worked and he wants to stay on.