Greenberg: AIG Stock Price Will Rebound

Asked to break a 25-year tradition of not commenting on the group's stock price, Mr. Greenberg said the correction in AIG's price reflects a general correction going on for large companies.

"We weren't singled out," he said. AIG's stock, which traded as high as 100 late in 2000, and 87 early last year, closed at 68.80 yesterday.

"Do I think we ought to have higher market cap? Do I think we ought to have a higher price-earnings ratio? Yes," Mr. Greenberg said.

Over time, as AIG hits its earnings targets, "the stock will take care of itself," Mr. Greenberg said.

Although another questioner noted that AIG's stock price had been hurt by rumors that the insurer has been the subject of an investigation by the Securities & Exchange Commission earlier this year, Mr. Greenberg said that such rumors were unfounded.

While AIG did communicate with the SEC regarding a product it sold to PNC Financial Services Group, Mr. Greenberg said, "there's no serious issue involving AIG with the SEC. At least there wasn't when I came in this morning," he quipped.

In late January, AIG issued a statement saying that it had confirmed that a subsidiary, AIG Financial Products Corp., had entered into three structured transactions with The PNC Financial Services Group, and that accounting treatment of those transactions by PNC had no impact on AIG's financial statements.

The January announcement came a day after PNC announced that it would have to restate its 2001 income downward by $155 million as a result of accounting advice from the Federal Reserve Board about the three transactions.

During the investor conference this morning, Mr. Greenberg was also asked about various issues such as congressional action on a terror insurance backstop, the prospect of asbestos liability reform, and the possibility that AIG would make future acquisitions.

"There is a good chance we're going to get a [terror] bill" out of Congress, he said, but expressed doubts that the president would sign it, as Mr. Greenberg reviewed some of the compromises being proposed with respect to punitive damage claims–a sticking point for the Bush Administration. "There's a lot of pressure for Congress to pass it. This is a critical week," he said.

As for the asbestos issue, Mr. Greenberg said he didn't foresee any immediate change in the course of asbestos litigation or the prospect for imposing caps on asbestos liability, noting that such proposals would not get through "a Senate controlled by the Democrats."

"The asbestos problem is going to have to run its course."

As for acquisitions, Mr. Greenberg responded: "On the domestic life front, we don't need to have another acquisition to hit our growth goals. That doesn't mean we won't make acquisitions of opportunity," he said, adding that AIG is a "growth company" in every one of its companies, including the property-casualty business.

As for the ever-popular question of Mr. Greenberg's successor, the chairman said he had "nothing more to add" to the announcement made last month appointing two co-chief operating officers and creating an office of the chairman.

"The board knows my choice. That may change from time to time," he said. "It depends on conditions in time and performance," he said. For example, "if the guy rides with me on the plane and the plane goes down, he's not the choice obviously," he remarked drawing laughter from the crowd.

Responding to a final questioner asking whether Mr. Greenberg was confident that anyone else in the organization had the same grasp of all of AIG's businesses that he possesses, he said, "absolutely."

Demonstrating his confidence in the company operation, Mr. Greenberg noted that he is a "fairly large shareholder" and "if something happens to me, my estate is not selling the stock."