Shares of American International Groupaig jumped 21% Thursday after new CEO Robert Benmosche said he expects to repay government bailout money.
In an interview from Croatia, where he has a home, Benmosche said, "We believe we will be able to pay back the government, and we hope we will be able to do something for our shareholders as well."
This comes after Benmosche recently told AIG employees he'll rebuild businesses and won't be rushed by the U.S. into selling assets at unfavorable prices.
"I don't liquidate things. I build them," Benmosche said during an Aug. 4 town hall-style meeting, a recording obtained by Bloomberg shows. "When we get the fair value for those businesses, that's when we're going to sell them. It's not going to be before."
Benmosche, named CEO this month, may diverge from the course set by predecessor Edward Liddy to repay loans within AIG's $182.5 billion bailout. Liddy told staff his first week on the job last year that he planned to divest units before they lost value, and then delayed his plans as the credit crisis hobbled potential buyers' ability to make bids.
The insurer has announced about $9.3 billion in asset sales since its September rescue and still owes more than $40 billion on a Federal Reserve credit line. After more than $100 billion in losses since 2007, AIG posted a $1.8 billion second-quarter profit as investment results improved, allowing Benmosche more time to sell assets, he said.
Shares of AIG surged $5.66 to $32.30 Thursday. The stock had plunged more than 90% in 12 months through Wednesday.
AIG, which operates in 130 countries and owns property-casualty and life insurance operations and a plane-leasing unit, is "too big" and "too interconnected," Benmosche told staff. He will evaluate all AIG businesses in the next few weeks to decide which should be kept.
Benmosche also told staff he is working to get Kenneth Feinberg, the Obama administration's so-called special master for executive pay, to "buy into" a new compensation plan for all employees expected within months. Benmosche will get $7 million in salary and as much as $3.5 million a year in long-term incentive awards, AIG said.
"I want to make sure we all get paid competitively," he told employees. "If you shoot the lights out in a given year, we should have enough flexibility to give you a big increase. It's time the people in Congress stopped talking about you as the problem, because you're the solution," he said. "It's not your fault. It's their fault. It's the regulators' fault."