Greenberg Says He Will Quit As AIG Chair
By Daniel Hays
National Underwriter News
March 29, 2005
Maurice Greenberg, the feisty head of American International Group for nearly four decades, told the company in a letter yesterday that he will not seek reelection as chairman and will retire by week's end.
With the company under increasing scrutiny for transactions linked to Mr. Greenberg, the AIG board replaced him as chief executive officer two weeks ago with Martin Sullivan. The board announced last night that Frank G. Zarb, the board's lead director, will assume the post of chairman.
Mr. Greenberg, the board said, is expected to retire tomorrow or Thursday when he returns from a business trip to China and Europe. The board said it was informed of Mr. Greenberg's decision in a letter from his attorney, David Boies, to the board's lawyer Richard Beattie.
AIG in February had announced it was subpoenaed by the U.S. Securities and Exchange Commission and New York Attorney General Eliot Spitzer's Office in an investigation of non-traditional insurance products that investigators said might have been used to improperly improve the company's financial picture.
The company has delayed its annual financial report while it investigates changes that may be necessary in its financial reporting.
Two senior AIG executives--former Chief Financial Officer Howard Smith and Christian Milton, a vice president for reinsurance--were let go when they refused to testify in the SEC and New York attorney general's inquiry, citing their right against self-incrimination. Mr. Greenberg is due to testify next month.
In addition, last week the AFL-CIO, whose member unions are major shareholders in AIG stock, sent a letter to the board urging Mr. Greenberg's removal as chairman.
The letter from Mr. Boies said Mr. Greenberg recognized the need to speedily resolve investigations of the company that are underway. It also complained of press leaks concerning board discussions and suggested that the company look for a chairman with international financial and insurance experience.
Mr. Zarb, who serves as chairman of the Executive Committee of AIG's board, said Mr. Greenberg was thanked "for one of the most spectacular performances in any business career."
M. Bernard Aidinoff, chairman of the board's Nominating and Corporate Governance Committee, called Mr. Greenberg "one of the pillars of the international financial services business, and his accomplishments will live on through AIG and the insurance industry, as well as through his philanthropic leadership."
Mr. Spitzer, according to a spokesman, felt the replacement of Mr. Greenberg would help resolve his investigation and the AIG board has acted wisely.
A portion of the letter from Mr. Boies stated: "Over the last 35 years, Mr. Greenberg has had the opportunity to lead AIG through its greatest years of growth and development. When AIG first became a public company, it had net income in the tens of millions of dollars. Now it is in the tens of billions of dollars. The company is stronger by every measure, financial and non-financial. But even with all the changes we've seen in the past, the industry today is going through even more profound changes. It is doing so at an increased pace, moving towards greater levels of complexity.
"Mr. Greenberg's objective has been, and is, for AIG to be in the vanguard of these changes. In order to lead meaningful changes in the industry and at AIG, the company and its officers and directors must resolve any outstanding questions or issues and move forward. To that end, Mr. Greenberg recognizes the need to promptly and cooperatively resolve all inquiries and investigations by regulators and other authorities."
"Mr. Greenberg's intention has always been to leave AIG as part of an orderly succession process that recognizes and taps the great talent in this organization, and he believes that it is in the interest of the company and its shareholders that, with the transition to new management now in place, a new chairman be selected who will guide AIG's growth and success over the next decades."
"Mr. Greenberg has also asked me to convey to the Board one concern, one recommendation, and one offer. The concern is that it is not in the interests of the company or its shareholders to have members of the Board or their representatives prematurely and selectively leaking to the press (sometimes accurately and sometimes inaccurately) what has been discussed and proposed at meetings of members of the Board without the press release and SEC filing required to accurately convey material information to the entire market."
"The recommendation is that a search be initiated immediately to identify a person with the extensive international financial and insurance experience required to serve as Chairman. Mr. Greenberg believes that it is important to the company and its shareholders that the uncertainty created by current regulatory issues and the repeated leaks of discussions among members of the board be resolved promptly. In that connection, he believes that it is important to as promptly as possible select someone as chairman who is capable of participating in providing AIG with strong and effective leadership over the long term."
"As you know, Mr. Greenberg has great affection and admiration for the current members of the AIG Board, and he believes that they, like him, must put the interests of AIG and its shareholders above any personal interests."
"The offer is to assist AIG in whatever way, if any, the new Chairman and Mr. Sullivan believes is in AIG's interests, particularly in connection with international operations where Mr. Greenberg has unique experience and relationships."
"AIG is a great company, and Mr. Greenberg retires with the greatest of confidence in the ability and integrity of its 93,000 employees, the strength of its fundamentals, and its ability to master future challenges."