Did American International Group really get the best price possible for its sale of Hartford Steam Boiler to Munich Re, and might it yet secure a better deal? Those are among the tough questions posed by AIG's former chairman and chief executive, Maurice Greenberg, to the company's board.

Mr. Greenberg's letter to the board, filed with the Securities and Exchange Commission, said the $742 million sale of Hartford Steam Boiler to Munich Re "can only be viewed as a distressed sale price."

"We believe that a full explanation of the sale process is required from the board that led to approve the sale of such a major asset at such a low value," wrote Mr. Greenberg, now CEO of C.V. Starr & Company.

He left AIG in 2005 after an accounting scandal, but retained control of substantial stock holdings and has been a regular critic of the company's senior management since last spring, when its financial difficulties first came to light.

AIG has been selling assets to pay off billions in federal loans it secured to keep the company afloat after a liquidity crisis brought on by the conglomerate's involvement with the subprime market.

Mr. Greenberg said he wanted to know if Hartford Steam Boiler--which he purchased while heading up AIG for $1.2 billion in 2000--was sold "for the highest available price," and who the other bidders were. He asked what data was provided, and to whom, about the business. He also inquired what market checks were done to assure the highest price.

Mr. Greenberg went on to ask whether, if a higher bidder should emerge, AIG can accept a new bid without penalty or significant break-up fee. Finally, he wanted to know why the sale was being made at this time in such an unstable economy.

"Certainly, selling major assets at fire sale prices is not a viable strategy for reviving the company or even repaying the government," Mr. Greenberg wrote.

As a major shareholder, he said he and other shareholders are entitled to a prompt reply to these questions, "to satisfy ourselves, and all shareholders, that the board has carried out its fiduciary duties responsibly."

Mr. Greenberg at one point controlled approximately 11 percent of the AIG conglomerate's stock through a personal stake, several foundations, C.V. Starr and other companies that he controls. But in an SEC filing last year, he said he would be selling shares "for liquidity and other purposes," and that such sales could materially decrease his stock ownership.

His latest letter did not threaten any further legal actions but did "reserve all our rights in connection with this matter."

A representative for AIG said the company had no comment on the letter.

In other AIG news, Ironshore announced last week that the latest executive defectors from AIG Environmental--Joe Boren and John O'Brien--have joined the company as leaders of a newly established Ironshore environmental insurance facility.

Mr. Boren, who was CEO at AIG Environmental, will become CEO of the new Ironshore unit, which is to be based in New York. Mr. O'Brien, previously president and chief operating officer of the AIG unit, will be president of Ironshore's new division.

The move comes just two weeks after three other environmental experts from AIG Environmental in Chicago--Adrien Robinson, Gregory Heidemann and Patrick Crotty--defected to join Navigators Environmental in Chicago.

Early last month, Ironshore also announced that it snagged two other senior managers from AIG--Kevin Kelley, the former CEO of AIG's specialty insurer, Lexington Insurance, and Shaun Kelly, who had been Lexington's president and COO.

Kevin Kelley became Ironshore's new CEO, replacing founding CEO Robert Deutsch, who is now president. Shaun Kelly took on the role of CEO of Ironshore's U.S. Operations.

AIG said Russell Johnston had been appointed to fill the CEO slot vacated by Mr. Boren, who had worked at AIG Environmental for the last 13 years, while Mr. O'Brien was with AIG for 17 years.

(With additional reporting by Susanne Sclafane.)

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Greenberg Challenges AIG Over Hartford Steam Boiler Sale Price

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