AIG CEO Calls Buffett’s Remarks on Expansion Strange
American International Group Inc. (AIG) Chief Executive Officer Robert Benmosche said he was surprised by Warren Buffett’s account of how he hired away four AIG executives in a push into commercial insurance.
“It kind of sounds a little strange to me,” the AIG CEO said today in an interview on the “In the Loop” program after Bloomberg Television’s Betty Liu showed a clip of Buffett’s remarks. “But that’s OK. I’m sure it was opportunistic.”
Buffett, the billionaire chairman and CEO of Berkshire Hathaway Inc. (BRK/A), told Liu yesterday that he hired the AIG managers to expand in business coverage after the men reached out to his company. Some of them had been in contact with Berkshire for a long time, Buffett said. Berkshire is seeking to add sales of commercial coverage “very big time,” Buffett said in the interview in Omaha, Nebraska, where Berkshire is based.
“I’m surprised that Warren would want to get into a business and wait for people to call,” said Benmosche, 68. “We have plenty of talent. And so, Warren wants to take a few people, and wait for them to call him to build a business, god bless him.”
Peter Eastwood, who was CEO of AIG’s property-casualty operation in the Americas, was among the executives joining Berkshire. AIG named managers this week to fill some posts after the insurer’s shares slumped 3.3 percent on April 26 as the departures were reported.
Robert Schimek was assigned by AIG to lead the Americas property-casualty unit, the company said in an April 29 statement. Alexander Baugh took over the global casualty business, replacing David Fields, who left with Eastwood.
Schimek has shown his value in other roles, including his prior job running the Europe, Middle East and Africa region, Benmosche said. He also worked with clients in 2008, the year the insurer was bailed out, and assured them the company would survive the financial crisis, Benmosche told Liu.
“And you know what, he was pretty right,” said Benmosche, who joined the company in 2009 and repaid the U.S. rescue last year. “The brokers, the customers are all satisfied with who we put in place”
Berkshire has units that sell auto coverage and reinsurance and hasn’t played a big role in providing business policies, Buffett said. He’s built Berkshire into a company valued at more than $265 billion by investing premiums from operations such as car-insurer Geico before paying out claims. Buffett, 82, is hosting the company’s annual meeting tomorrow in Omaha.
AIG surged today to the highest in more than two years, after yesterday posting first-quarter results that beat analysts’ estimates. The shares rose 5.7 percent to $44.52 at 4 p.m. in New York.
The departures prompted the first analyst question on a conference call AIG held today to discuss results. Benmosche said New York-based AIG has been successful in retaining top managers and the remaining executives are “outstanding.”
“I can see that our competition is struggling a little bit with their flows,” he said in responding to the query about executive departures, without naming rivals. “And so they have to get in businesses they weren’t in traditionally.”
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