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Benmosche's View from the AIG Rollercoaster

During his first week at American International Group CEO Robert Benmosche did what every new CEO should do: he visited the offices and spoke to the troops. By the end of the week, and long before the Wall Street Journal got wind of the story, he was apparently ready to call it quits - appalled at the dysfunctional nature of a huge corporation in turmoil.

He wound up staying and most at AIG are glad he did. But has anything improved six months down the road? What does the future hold in store if he remains? And what keeps him up at night? Here's a sampler.

Reputation: An insurer lives and dies on its reputation, which is, ultimately, its ability to pay claims. AIG has a reputation even a drug dealer wouldn't want. Congressmen are once again holding hearings on the AIG bailout, and while their target is Treasury Secretary Tim Geithner, their press releases are a constant reminder of AIG's history of scandal and greed.

Morale: AIG's thousands of hard-working and honest employees, some of whom had bus tours run past their homes, know their paychecks are frozen. Many are casting envious eyes at Steve Bensinger, the former AIG chief financial officer who proved there was life after AIG when he got the same job at The Hanover Insurance Group.

Stock: AIG's shares rose to nearly $56 on hopes for Benmosche. Now they're trading at $29 and The Big Money is saying, based on the fact that former employees like Anastasia Kelly rejected it, that the stock may be "worthless." Whether or not it is, this kind of publicity hurts.

IPOs: Is AIG going to spin off pieces to pay its $60 billion government debt? It is and it isn't. Benmosche has told employees at units like property carrier Chartis that he can't do initial public offerings until results there improve. The property casualty industry is facing a crisis in 2010, with premiums declining for the fourth straight year. Despite its strong position in this industry - and help from the feds - Chartis is unlikely to break this trend. You can't sell what no one will buy.

Insurance: As for life insurance, another of AIG's once strong suits, it's only fair to ask if people will buy insurance from a company whose life expectancy may be less than theirs. Neither of these units made money in the third quarter on premiums and it's doubtful if anyone is expecting that to change much in the fourth.

Future: AIG's third quarter earnings were initially seen as a turnaround. But Benmosche warned that the third quarter was not predictive. Fourth quarter earnings, which AIG usually reports in mid-February at the end of the cycle, could be the moment at which many short-term investors pull the plug.

Leadership: What about Benmosche himself? A gifted and great CEO can turn a company around. Marsh & McLennan's Brian Duperrault and XL Capital's Michael McGavrick are proof. Friends, foes and associates at MetLife, where Benmosche was once CEO, agree that he fits the bill. Even former fierce competitors like Hank Greenberg, longtime CEO of AIG, give him high marks.

But against these colossal challenges Benmosche has only an iron will, a superb intellect and a belief - common among CEOs - that he can fix anything. Good luck.