AIG chief executive exits as regulators circle

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The Independent Online

In this shocking season of high-profile resignations in corporate America, the number came up yesterday for Maurice Greenberg, the iconic leader of the financial services company American International Group.

Mr Greenberg, who has overseen the expansion of AIG into a worldwide insurance behemoth for four decades, was reported to be preparing to step down as chief executive officer.

He was set to be replaced by AIG's co-chief financial officer, British-born Martin Sullivan.

Mr Greenberg, 79 and widely known as Hank, will leave at a time when the company is being buffeted by regulatory inquiries into alleged instances of fraud and book-keeping problems. A reinsurance contract with Berkshire Hathaway's General Reinsurance last month became the latest deal to be scrutinised by US regulators amid allegations such contracts were being used by insurers to inflate reserves. Similar investigations have swept other industry giants.

There was wide agreement among Wall Street observers last night that Mr Greenberg's removal was probably long overdue. In November the company had agreed to pay $126m (£66m) to settle securities fraud charges filed by the Securities and Exchange Commission and the US Justice Department. Five months ago, meanwhile, two AIG executives resigned after admitting they helped Marsh & McLennan illicitly steer customers to favoured insurance companies. Moreover, in October last year, Mr Greenberg's son, Jeffrey, was himself forced to resign as chief executive of Marsh & McLennan in the wake of an investigation by Eliot Spitzer, New York's Attorney General.

The fall from grace of Mr Greenberg will add to the bewilderment at recent events atop some of America's best-known companies. He will be joining Carly Fiorina, ousted by Hewlett Packard, and Harry Stonecipher by Boeing. Mr Greenberg joined AIG in 1960 and became its president seven years later. Under his stewardship it has grown into a property-casualty powerhouse with a market worth $168.5bn and operations in 130 countries.

AIG said no final decision had been taken by the board, which was due to meet yesterday. Although there seemed no doubt that Mr Greenberg would be asked to step down, some observers expected he might remain as chairman.