GOOD FOR THE MONEY
My Fight to Pay Back America
Bob Benmosche (with Peter Marks and Valerie Hendy)
St Martin's Press
270 pages; Rs 499
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Good for the Money, put together from interviews with Benmosche over the last year of his life, describes how he achieved one of the most dramatic corporate turnarounds in US history, not only paying back the loan by the end of 2012, but also returning a profit of $22.7 billion. (He retired in September 2014.) But the process was hardly a smooth one, owing in large part to Benmosche's prickly persona, the ferocity with which he guarded his turf, and his initial run-ins with US treasury department and Federal Reserve officials. He was irascible, pugnacious, headstrong, and offensive, and the mandarins in Washington DC did not take kindly to him. Sceptics abounded both inside and outside the firm.
Morale among the firm's 100,000 employees was at rock-bottom because of attacks by the US Congress, triggered by AIG's payment of $165 million in bonuses to executives responsible for the disastrous deals. Benmosche's surprising defence of these bonuses - he believed that they had been earned by executives for good performance, and that "these employees were entitled to the money, regardless of the company's dire straits" - was of a piece with his insistence on keeping his 500,000 shares of rival insurer MetLife, with options for 2.1 million more (despite the potential conflict of interest), and the use of AIG's corporate jet.
Oddly enough, though Benmosche (who claimed to be a "believer in a free market as unfettered by government as possible") concedes US regulators' argument that AIG was too integral to America's financial health and had to be bailed out, he rails against the fact that, in their anxiety to ensure that the loan was repaid, they sat in on board meetings and even gave themselves a say in setting executive compensation. He should have known that he who pays the piper calls the tune.
Benmosche built up morale through pep talks at town hall meetings, got employees to cough up a part of the bonuses, and kept up a constant channel of communication with them. He also fought a bruising battle with the chairman of AIG's board, former American Express CEO Harvey Golub, over the precise manner in which to sell one of the firm's largest Asian subsidiaries. A threat to resign (which Benmosche often used to get his own way) finally had the desired effect and the board persuaded Mr Golub to quit, smoothing things down for Benmosche.
Those looking for a detailed turnaround strategy will find little other than the use of common sense. Benmosche decided to hold on to AIG's insurance core - domestic annuities and life insurance, mortgage insurance and the property and casualty business - and sell an assortment of other entities around the world that were brought under the AIG flag by long-time chairman Maurice Greenberg during a reign that lasted from 1968 to 2005. He resisted government pressure to liquidate the company quickly, delaying divestments until the stock market had partially recovered. Within three years he halved AIG's $1 trillion in assets, reducing the employee count from over 100,000 to some 62,000. By the end of 2012, AIG was not only debt-free but had once again become the biggest and most valuable insurer in the US, with vastly improved governance.
Earlier in his career, Benmosche had played key roles in both technology and human resource management at Chase Manhattan Bank (now part of JPMorgan Chase) and brokerage firm PaineWebber (acquired by Swiss bank UBS in 2000), and was also instrumental in taking MetLife public. He put all this experience to good use at AIG: He drove managers to use technology to fashion better, more profitable insurance products; and he spent time constantly talking to and motivating a demoralised workforce. A believer in transparency who thought that Apple Inc's secrecy over Steve Jobs' cancer had hurt the company's shareholders, Benmosche informed AIG's employees and shareholders that he had developed the dreaded disease, but withheld precise details.
Good for the Money is a little too full of self-praise, and the middle chapters - which describe Benmosche's years at Chase and PaineWebber - do not make absorbing reading. It nevertheless succinctly chronicles AIG's near-death experience and subsequent revival, and successfully recreates the frenzied atmosphere in which Benmosche had to get his act together.