AIG in 'Crisis' Says Former CEO
By HUGH SON,
The former chief executive officer of American International Group Inc., Maurice "Hank" Greenberg, said the insurer is in "crisis" and should delay its annual meeting so shareholders can consider the impact of two losing quarters.
Investors need more time to discuss the record $7.81 billion first-quarter net loss disclosed last week before meeting in two days at AIG's New York headquarters, Mr. Greenberg said in a regulatory filing yesterday. Mr. Greenberg, who controls the largest AIG stake, said shareholders have lost $80 billion in the past year.
The current chief executive officer, Martin Sullivan, said last week AIG needs $12.5 billion in capital and may face more writedowns after losses tied to debt markets. Mr. Greenberg, 83, who was forced out in 2005 amid sales and accounting investigations, yesterday called recent quarters the worst in AIG's history and questioned management's decision to raise money by issuing shares.
"It's just a constant thorn in everybody's side," the chief executive of Tampa, Fla.-based Great Companies Inc., which manages $350 million including 162,000 AIG shares, James Huguet, said. "The threats at management need to be curtailed. Hank has gotten extremely personal in this thing, and he's not going to let it go."
AIG's board will respond to Mr. Greenberg's suggestion soon, spokesman Chris Winans said in a statement, declining to comment further. The company has declined 47% in the past year and fell $1.91, or 4.7%, to $38.37 in New York Stock Exchange composite trading yesterday.
New York's insurance department is reviewing yesterday's filing by Mr. Greenberg to see if it violates an earlier mandate to stop shaking up AIG's management, spokesman David Neustadt said.
Mr. Greenberg said in a November regulatory filing that he intended to approach investors concerned about AIG's leadership, its stock performance and the possibility of selling units. He curtailed that effort two months later after New York Insurance Superintendent Eric Dinallo told him to stop.
"Several top shareholders of AIG have called me expressing deep concern about the persistent and seemingly endless destruction of value at AIG," Mr. Greenberg said in yesterday's filing.
Mr. Greenberg controls at least 9.8% of stock as of May 1, according to Bloomberg data.
Mr. Sullivan, 53, succeeded Mr. Greenberg as CEO in March 2005. Two months later, then-New York Attorney General Spitzer sued AIG and Mr. Greenberg, accusing him of ordering improper transactions to hide losses and inflate reserves.
Mr. Greenberg denies any wrongdoing in the case, which is still pending. Mr. Spitzer dropped portions of the lawsuit in 2006 that included four other allegations tied to the investigation.
