"Hank" Greenberg steps down at AIG

Though he had long resisted retiring, retirement unkindly caught up with M R "Hank" Greenberg, 79, on 14 March. After the American International Group (AIG) board spent a weekend grappling with serious investigations by the Security and Exchange Commission and the New York Attorney General into questionable transactions that AIG CEO Greenberg may have personally directed with a unit of Berkshire Hathaway, the man who personified, constructed and controlled AIG for nearly four decades, stepped aside "to protect the company I built".

And while at one time, the very thought of Mr Greenberg's departure, upright or feet first, from AIG brought predictions from analysts and investors, reinforced subtly by Mr Greenberg himself, of a severe collapse of its stock price, the stock fell $1.93, to $61.92, the day after Mr Greenberg resigned as CEO. One major credit rating agency dropped its "AAA" debt rating to "AA" and two others put the company on review. A ripple, but little else.

Martin J Sullivan was elected president and CEO. Mr Greenberg will serve as non-executive chairman. Mr Sullivan, who has held a variety of senior positions during his more than 30-year career at AIG, was most recently vice chairman and co-chief operating officer.

Not more than a month ago, Mr Greenberg had complained that the many investigations of the insurance industry by the federal government, state attorneys general, insurance commissioners and others "have gone too far." But, for Mr Greenberg the tumult had just begun.

Predictions are that Mr Greenberg, though without executive power, may continue to give orders. This could compel the board to oust him earlier than May, and strip him of his control over three CV Starr units, which together own a substantial percentage of AIG shares.

The SEC and New York Attorney General Eliot Spitzer are examining AIG and Berkshire Hathaway concerning questionable transactions at AIG involving finite insurance products. In late February 2005, Mr Greenberg himself was issued a subpoena by Mr Spitzer. The charge centers on whether Mr Greenberg personally called the head of General Re, a subsidiary of Berkshire Hathaway, to arrange for a transfer of some $600m of General Re claims to AIG in exchange for General Re's payment of $500m in premiums. This transaction may have unfairly enhanced the financial position of AIG, rather than met rules for transfer of risk to be an insurance transaction.

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