Greenberg Steps Down, AIG 10-K Put On Hold

By Daniel Hays

NU Online News Service, March 15, 12:16 a.m. EST?Maurice Greenberg, the American International Group chief executive whose bare-knuckled business approach has played poorly in the post-Enron regulatory climate, was replaced last night after 37 years as CEO.

The company said Martin J. Sullivan, an AIG co-chief operating officer, was taking over as president and CEO as part of a succession plan and Mr. Greenberg would serve as non-executive chairman.

AIG, which during Mr. Greenberg's past tenure routinely shrugged off regulators' concerns about its operations, in the past few months has been buffeted with subpoenas as investigators probe transactions suspected of providing a false picture of the finances of AIG and other companies.

AIG said it was delaying the filing of its 2004 annual report due Thursday as a result of the management shift and an internal review of "the accounting for certain transactions" that resulted from the regulatory inquiries by the Securities and Exchange Commission, New York Attorney General's Office and federal prosecutors.

The company said it did not expect the review to result in significant changes in its financial position.

Martin G. Zarb, chairman of the AIG board's executive committee, thanked the 79-year-old Mr. Greenberg for his contributions and said in a statement that it was now in the best interest of AIG stockholders, clients and employees to, "turn to a new generation of leadership."

Mr. Sullivan, 50, a native of the U.K., has been with AIG since 1971. He joined the firm in London and in 1991 was made chief operating officer of AIG Europe. He was one of seven members in the company's "office of the chairman" reorganization in May 2002 and joined the AIG board that year.

AIG said it was making co-COO Donald P. Kanak, 52, executive vice chairman and COO.

The departure of Mr. Greenberg from his post is a setback in a meteoric insurance career that began in 1953 after he fought in World War II and the Korean War.

Mr. Greenberg joined AIG in 1960 and became a prot?g? of C.V. Star, who founded AIG initially as a life insurer in China. Mr. Greenberg became CEO in 1967 and with a variety of bold moves grew it into America's largest insurer.

In past years, the company was examined for its involvement with an offshore reinsurance firm, which investigators felt did not involve a proper transfer of risk and for improperly charging for terrorism insurance. No fines were imposed.

But that bullet-proof reputation ended last November when the company agreed to pay $126 million--a combination of fine and penalty arrangement-- to settle inquiries by the SEC and U.S. Justice Department for allegedly helping a mobile phone distributor and a bank distort their financial statements.

At that point, AIG agreed to take on an outside monitor to look into its accounting. The agreements did not end the inquiries and the company later announced further subpoenas from the SEC and New York Attorney General Eliot Spitzer concerning its involvement with complicated finite insurance transactions.