3 Reasons AIG Will Thrive Even Without Its Rock-Star CEO
Since he took the helm at American International Group in 2009, CEO Robert Benmosche has been a constant force driving the megainsurer back to its former glory. But with his announcement that he will retire in early 2015, some investors may begin to worry the progress will erode once Benmosche is gone.
Here are the top three reasons why those fears are unfounded.
1. Back to basics
Since its near collapse in 2008, AIG has been systematically shedding non-core businesses and investments -- returning its focus to pure insurance functions.With all of that work under his belt, Benmosche has just one piece of the puzzle remaining: International Leasing Finance Corp.
With the sale of ILFC to AerCapHoldings scheduled to close during the second quarter this year, Benmosche will be leaving a centered, focused company to his successor. Though that's not saying the company will be a simple operation to run.
The business is a "very large, complex" one, stated Benmosche in his recent interview on Fox Business Network's Opening Bell, adding it will be of the utmost importance any candidate recognizes the complexities and risk management at work within the firm. But he also acknowledged a strong foundation to work from, with successful progress in updating risk management tools, big data analysis, and strong market presence.
2. Very Important
Though the company will face added scrutiny from regulators down the road, thanks to its systemically important designation, Benmosche is confident the company is up to the task.
Thanks in part to the government's ownership from 2009 to 2012, AIG and its management team has worked hand in hand with Federal Reserve regulators to develop a strong system of financial checks. With that system, and knowledge of the Fed team it will be working with, AIG and its investors have little to fear from the increased oversight.
With all of that groundwork in place, investors can be certain the company's strength will allow it to continue paying out dividends and completing share buybacks in the future.
3. Deep benches
Though the company is currently seeking out candidates from both internal and external sources, AIG remains one of the best staffed insurers in the country.
The insurer already demonstrated its deep benches in 2013 after rival Berkshire Hathaway poached four top executives to start a new line of excess liability operations. This should leave both Benmosche and investors confident whoever takes the helm will be backed by a team of managers and staff that's experienced within the market and within the very large, complex operations of AIG itself.
It's always a little sketchy when a top performing CEO makes his way out the door. But for AIG investors, Robert Benmosche's exit shouldn't create any lasting fear the company won't thrive after the transition. From its core businesses, its strong regulatory relationships, and its key employees, AIG is poised to continue growing, even without the man that steered it through the financial crisis and aftermath.
Playing the long game
It's clear that Benmosche has set AIG up for the long haul. By cutting back on the superfluous businesses and focusing on core operations, he's set up a solid foundation that any new CEO would be proud to run. In a similar manner, great investors know that spreading yourself too thin can be a detriment to your long-term financial goals.
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
The article 3 Reasons AIG Will Thrive Even Without Its Rock-Star CEO originally appeared on Fool.com.Jessica Alling has no position in any stocks mentioned. The Motley Fool recommends American International Group and Berkshire Hathaway. The Motley Fool owns shares of American International Group and Berkshire Hathaway and has the following options: long January 2016 $30 calls on American International Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.