AIG CEO Tells Grads Don’t Cry About Economy, Deal With It
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“You have to accept the hand that’s been dealt you in life,” Benmosche said in an interview today with Betty Liu on Bloomberg Television. “Don’t cry about it. Deal with it.”
The CEO is scheduled to give a commencement address May 18 at New York State’s Alfred University, where he earned a degree in math and played football. College graduates have struggled to find jobs after the financial crisis sent the U.S. unemployment rate as high as 10 percent in 2009. Joblessness for recent college graduates, ages 20 to 29, was 12.6 percent in October 2011, a Bureau of Labor Statistics review last month showed.
“They want me to talk to the students and give them a sense of encouragement, especially with the high unemployment,” said Benmosche, 68. “My advice will be, whatever opportunity comes your way, take it. Take it and treat it as if it’s the only one that’s coming your way, because that actually may be the truth.”
The CEO said he plans to tell graduates about his own career path, which included a stint as a truck driver delivering Coca-Cola Co. products that helped him pay his way through preparatory school and college.
After graduating from Alfred in 1966, Benmosche served as a lieutenant in the U.S. Army Signal Corps and then worked at Arthur D. Little Inc., Chase Manhattan Bank and PaineWebber Inc. He joined MetLife Inc. (MET) in 1995 and took the insurer public, retiring in 2006.
Companies surveyed by the National Association of Colleges and Employers plan to hire 2.1 percent more new college graduates this year than last, according to data released last month. That forecast is down from the 13 percent increase respondents projected last year for the Class of 2013.
Benmosche began running New York-based AIG in August 2009, about a year after the insurer’s bailout. AIG received a rescue that swelled to $182.3 billion after housing-related bets soured amid the financial crisis. The insurer repaid the aid last year, in part by raising billions of dollars from asset sales.
The U.S unemployment rate dipped to 7.5 percent in April, compared with 8.1 percent a year earlier. Before the crisis, the last time the joblessness measure exceeded 7 percent was 1993.
Benmosche has been weighing whether to move jobs from the New York area to lower-cost locations as AIG seeks to cut costs to boost shareholder returns. He has cited AIG’s facility in Amarillo, Texas, as a location where expenses aren’t as high.
“We’re in a different economy than existed before for college graduates,” Benmosche said. “They’re going to have to think about what they love to do, and do what they love, and have courage to face the future.”
The insurer has about 63,000 employees according to its annual report. That compares with 116,000 at the end of 2007, before the company had to sell units to help repay its bailout.
AIG delayed a deadline for the sale of its plane-leasing unit to a group of Chinese investors because the insurer hadn’t received approval from regulators in the U.S. and China, Benmosche told Liu. AIG said yesterday that either party can terminate the deal for International Lease Finance Corp. (ILFC) if it isn’t completed by June 14. The earlier deadline was May 15.
“Over the next month we should be able to receive the approvals that we’re expecting,” Benmosche said. “We believe that we’ll have plenty of time in which to close during this quarter.”
Benmosche also said shareholders of JPMorgan Chase & Co. (JPM) are wrong to challenge the authority of Jamie Dimon, 57, the bank’s chairman and CEO. Retirement plans including the AFSCME pension fund are seeking to separate the chairman and CEO roles at New York-based JPMorgan. Pressure on Dimon increased after losses of more than $6 billion last year on derivatives trades.
“Jamie’s got a tough hand to play,” Benmosche told Liu. “He’s playing that hand extremely well.”
JPMorgan’s board, which includes former Exxon Mobil Corp. CEO Lee R. Raymond and Honeywell International Inc. CEO David Cote, has been giving proper oversight, Benmosche said. He cited the reduction in Dimon’s pay to $11.5 million for 2012 from $23 million a year earlier.
Benmosche is eligible for $13 million this year after getting $10.5 million in 2012, AIG said in a regulatory filing last month. AIG has rallied about 30 percent this year in New York trading after surging 52 percent in 2012. JPMorgan is up 14 percent since Dec. 31 and climbed 32 percent last year.
Benmosche’s message of resilience for graduates echoes comments that Charles Munger, the vice chairman of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), made at the University of Michigan in 2010 about dealing with a tough economy.
“There’s danger in just shoveling out money to people who say, ‘My life is a little harder than it used to be,’” Munger said. “At a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”
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