(Bloomberg) — Robert Benmosche, who led American InternationalGroup Inc. for half a decade, said an emerging challenge fromWarren Buffett's Berkshire Hathaway Inc. hasn't amounted to much sofar.

Buffett's firm recruited AIG executives beginning last year toexpand commercial coverage under the Berkshire Hathaway SpecialtyInsurance brand. Benmosche said those who left AIG didn't buy in tohis efforts to increase collaboration.

“They took their bitterness out on AIG and wanted to make a bigshow,” Benmosche, 70, said in an interview with BloombergTelevision's Betty Liu airing today. “They went over there and,boy, are they really not showing us anything at all.”

Berkshire has targeted excess and surplus lines, or businesscoverage that can't be obtained in regulated markets. AIG isdominant in the E&S market, with Berkshire playing a lesserrole, according to Moody's Investors Service. JoAnn Lee, aspokeswoman for BH Specialty, declined to comment on Benmosche'sremarks.

Insurers have been attracted to E&S because rates are risingfor the coverage, Moody's said in a report this month. Thatcompares with lower prices for natural-disaster coverage, which hadbeen an area of focus for Omaha, Nebraska-based Berkshire. Buffettrelies on insurance units like Geico and General Re to generatepremium revenue that he can invest in stocks and takeovers.

Berkshire hired AIG executives Peter Eastwood, David Fields,Sanjay Godhwani and David Bresnahan last year for what Buffettcalled a “big time” expansion into business coverage.

AIG Commitment

The venture is being led by Eastwood, who had been chiefexecutive officer of AIG's property-casualty business in theAmericas and previously led an E&S insurer for the company.AIG's stock slid 3.3% on April 26, 2013, when the departures werereported.

Buffett's company agreed to stop recruiting from AIG for a yearafter the New York-based insurer raised objections, Benmoschesaid.

Departing managers had an obligation “to protect companyproperty and protect company's interests and clients,” he said.“That's a commitment you make.”

Benmosche discussed AIG's recovery from a 2008 bailout duringinterviews last month at his estate in Croatia. He also spoke abouthow he dealt with a 2010 cancer diagnosis and eventually decided toaccelerate his departure from AIG as the prognosis worsened. PeterHancock, who led the property-casualty operation and pickedreplacements for the departing executives, took over as AIG's CEOon Sept. 1.

Travel Insurance

Berkshire has resumed hiring AIG managers at the unit, addingMarc Breuil and Marcus Portbury in Asia, a person familiar with thematter said last month. Buffett's firm yesterday said Brian O'Neilljoined from AIG to lead an expansion into fidelity and crimeinsurance. BH Specialty has also taken on AIG by expanding intotravel insurance.

The Lloyd's of London market is the top provider of excess andsurplus coverage in the U.S., followed by AIG, according toMoody's. Sales at AIG dropped about 4.2% last year to $4.83billion, while the figure at Berkshire climbed 39% to $560.9million.

“The business that they're picking off is unusually profitable,”Meyer Shields, an analyst at Keefe Bruyette & Woods, said ofBerkshire in a phone interview. “It's not hurting Berkshire at allon the underwriting side.”

Benmosche, who led AIG from 2009 until he was replaced byHancock, 56, pushed AIG's businesses around the globe to work moreclosely together. That curbed autonomy for some executives andhelped fuel the departures, he said.

“They wanted to be left alone and run their own franchise,”Benmosche told Liu. “The fact is that they disagreed with a verysimple philosophy. We have to be one AIG.”

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