American International Group plans to hold its stockholder's meeting tomorrow despite a letter from its former chief executive Maurice R. Greenberg urging it to postpone the session in the wake of the firm's announcement of a $7.8 billion first-quarter loss.

In a letter to the board dated Sunday, and filed with the Securities and Exchange Commission, Mr. Greenberg called for a postponement of AIG's meeting to give shareholders time to digest the company's recent actions and losses. He wrote that the company “is in crisis” and that shareholders need time to “give careful thought to how best to move AIG forward.”

AIG on Friday posted the net loss of $7.8 billion on $15.2 billion in write-downs from its position with credit default swaps and other financial vehicles connected with the ongoing credit and housing crisis.

A series of write-downs, going back to December of 2007, has led to “a complete loss of credibility with the investment community and even further loss of value for shareholders,” Mr. Greenberg wrote.

In response to the request, a spokesman for the New York-based insurer said the board declined Mr. Greenberg's request and would have no further comment on the matter.

During an interview yesterday on CNBC's Kudlow & Company, Mr. Greenberg reiterated his observations made in the letter that the recent performance was the worst the company has suffered in its 40-year history.

He blamed the results on a change in the company's culture that is poorly managing AIG's investment portfolio and allowed for an explosion in its expense ratio with the addition of 24,000 employees–”the equivalent of two Army divisions,” he said.

The former chief executive left the company in 2005 after an investigation by then New York Attorney General Eliot Spitzer and other agencies raised questions about AIG's accounting practices and resulted in a financial restatement that trimmed AIG's net income between 2000 and 2004 by $3.92 billion and reduced shareholder equity by $2.26 billion.

When asked if Martin J. Sullivan, the current president and chief executive officer, was at fault for the losses, he said he was not in the blame game, but re-emphasized his point that shareholders needed the opportunity to re-think the direction the company is going in.

He said he would not wage a proxy battle, but appeared to urge shareholders to consider such a move.

During his time as the company's chief executive, he said there were investments made in collateralize debt obligations, blamed for the write-down, but he put the onus on current management for not properly handling the portfolio.

“To say this happened on someone else's watch is ridiculous,” he remarked.

He said it is not clear how much more the company stands to lose in write-downs, which he said could potentially go as high as $11 billion, though AIG claims it could be far less.

Mr. Greenberg was also critical of the company's plan to raise capital while at the same time increasing its dividend, commenting that it “hardly makes any sense.” AIG raised its dividend 10 percent, or 2 cents, to 22 cents a share.

“The culture has been damaged considerably,” said Mr. Greenberg. “The organization is not as sharp as it was.”

Putting added pressure on AIG is a report that first appeared in the Wall Street Journal this week that one of AIG's subsidiaries, International Lease Finance Corp. (ILFC), which leases airplanes to the airline industry, is considering spinning itself off because of AIG's current financial difficulties.

Despite ILFC's profitability, several rating agencies downgraded the company because of the parent, making borrowing more expensive, which could raise the cost of leasing, making its position less competitive.

The insurer announced yesterday that it increased its initial stock offering to raise capital from $7.5 billion to $11.9 billion. In its report of first-quarter results, the company said it planned to raise $12.5 billion in capital.

Mr. Greenberg was critical of the move, saying AIG did not adequately explain its rational for raising capital, adding the move unnecessarily diluted shareholder value.

AIG and Mr. Greenberg have had an acrimonious relationship since the chief executive's departure, with claims and counterclaims and suits accusing one another of business blunders.

This February, a 2001 transaction between AIG and Gen Re, that prosecutors said was a sham reinsurance deal to bolster AIG's financial picture, resulted in the conviction of five executives. Federal authorities identified Mr. Greenberg as an unindicted coconspirator in that deal.

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AIG To Hold Stockholder Meeting Despite Greenberg

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