Benmosche 9% yield hunt may mean AIG got junk

American International Group Inc. hunt to boost investment income may have steered the bailed-out insurer toward junk bonds and securities backed by home loans. Chief Executive Officer Robert Benmosche is working to lift annual returns on AIG’s portfolio by as much as $700 million as he seeks capital in a public share offering after posting insurance underwriting losses. Benmosche is getting yields of 8 percent to 9 percent on about $5 billion invested this year after the Federal Reserve rejected AIG’s bid to repurchase mortgage bonds turned over in its bailout, he said last week.

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