American International Group Inc (AIG) is shuffling its management ranks, ousting longtime CEO Maurice "Hank" Greenberg and naming a trio of new executives as the insurance and financial services company works to resolve regulatory inquiries.
Greenberg, 79, will retire but remain nonexecutive chairman of the company he built into a financial titan over 37 years as chief executive.
In an announcement late on Monday, the New York-based company said vice chairman and co-chief operating officer Martin Sullivan, 50, was promoted, becoming AIG's third CEO.
"As a result of Hank's leadership, AIG today is the largest and best capitalized insurance and financial services organization in the world," independent board member Frank Zarb said in the statement, which did not quote Greenberg. "However, the board has concluded it is now in the best interest of AIG's shareholders, customers and employees to turn to a new generation of leadership, and we are pleased that Hank Greenberg will assist in the transition."
Annual report
AIG also said its annual report, which was to be filed today, would be delayed because of the management shakeup and internal accounting review. That review is not expected to result in "significant changes to the company's financial position," according to the statement.
Greenberg was only the second chief executive of the insurance giant, leading the New York-headquartered company with an iron hand since he replaced founder C.V. Starr after his death in 1968. A graduate of New York Law School, Greenberg has been with the company since 1960.
In its announcement, AIG also said that it was making several other changes in its management team:
Donald Kanak, 52, was named executive vice chairman and chief operating officer, focusing on Asia. He previously was vice chairman and co-chief operating officer.
Steven Bensinger, 50, was selected as chief financial officer, replacing Howard Smith, 60, who "has taken leave," the company said. Bensinger also was named an executive vice president and will retain his previous titles of treasurer and comptroller.
Greenberg's departure as CEO was the third such high-profile departure in recent weeks. The boards of Hewlett-Packard Co and Boeing Co have recently forced out CEOs.
Dynasty
Greenberg is the head of an insurance industry dynasty.
His son Jeffrey Greenberg resigned last October as chairman and chief executive of the insurance brokerage Marsh & McLennan Companies Inc amid an investigation by the New York attorney general's office into bid rigging, price fixing and hidden incentive fees. Marsh & McLennan reached a settlement in the case Jan. 31, agreeing to pay US$850 million in restitution.
Another son, Evan Greenberg, is president and chief executive officer of Bermuda-based ACE Ltd.
With a market capitalization of US$168.5 billion, AIG is one of the largest insurance companies in the world. And Maurice Greenberg is one of the company's largest individual shareholders.
According to recent filings with the Securities and Exchange Commission, Greenberg directly controls more than 43.3 million AIG shares and indirectly controls an additional 23.7 million. The company had 2.64 billion shares outstanding last year.
Sullivan joined AIG in 1971 in London. He held a number of management positions before assuming the posts of co-chief operating officer and vice chairman in May 2002. At that time, he also was named one of seven members of the "office of the chairman" and added to AIG's board.
In a statement accompanying the announcement, Sullivan said it was "a daunting task to step into the shoes of Hank Greenberg."
He added: "The company is committed to cooperating with the governmental authorities in their ongoing investigations. We take these matters seriously and want to bring them to resolution."
Investigation
AIG currently is under investigation by New York Attorney General Eliot Spitzer, federal prosecutors and the Securities and Exchange Commission into the use of so-called finite insurance, or financial reinsurance, which critics say could be used to manipulate earnings.
The transaction being probed took place between AIG and Berkshire Hathaway Inc's General Reinsurance unit four years ago and apparently was intended to shore up AIG's reserves. Reports have said Maurice Greenberg was personally involved.
Earlier, AIG was mentioned in the case Spitzer brought against Marsh & McLennan, but was not formally charged. But four former AIG executives have entered guilty pleas to criminal charges stemming from the investigation.
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