NEW YORK - Maurice "Hank" Greenberg has been forced to quit as head of American International Group (AIG), the world's biggest insurance group amid a probe by US authorities into its dealings, the company said.
AIG announced late Monday that Greenberg, a giant in the international insurance industry, was stepping down as chief executive as part of a "management succession plan." Credit ratings agencies immediately put the spotlight on AIG after the announcement.
A statement said the board had chosen British-born Martin Sullivan, 50, to replace Greenberg, 79, as president and chief executive officer of the company.
Greenberg will continue to work as AIG's non-executive chairman. But the scope of his responsibilities was not clear. Finance director Howard Smith also left the company as part of the reshuffle.
AIG has come under a cloud of suspicion amid reports that the Securities and Exchange Commission (SEC) and the New York attorney general were looking into some of its transactions that may have artificially burnished the company's financial picture.
In light of these suspicions, the firm said it would delay the filing of its 2004 annual report, which was due out March 16.
Officials said the delay was the result of both the management changes and the company's internal review of its transactions and accounting procedures.
"The company does not believe that any of the matters subject to the review are likely to result in significant changes to the company's financial position," the statement said.
In November, The Wall Street Journal said Greenberg was the target of a federal investigation for allegedly manipulating AIG's stock prices in 2001. AIG paid 126 million dollars to put an end to the investigations by the SEC and the Attorney General's Office.
"We cannot ignore the issues that we have," Sullivan told a conference call with analysts at the start of a campaign to reassure investors. "Our success will be measured in a large part on how well we address these issues."
At 2000 GMT, AIG's share price was down 2.75 percent on the day at 62.10 dollars.
Board chairman Frank Zarb said the company appreciated "the enormous contributions that Hank Greenberg has made to AIG's growth and success."
"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," Zarb added.
As part of the shakeup, former vice chairman Donald Kanak, 52, was elected executive vice chairman and chief operating officer in charge of the group's key Asian operations.
Steven Bensinger, 50, became executive vice president and chief financial officer, succeeding Smith.
As the world's largest insurance firm, AIG has more than 92,000 employees in more than 130 countries and territories is believed to be worth more than 166 billion dollars under current market prices. It claims to have the most extensive worldwide property-casualty and life insurance networks.
Sullivan reassured investors that the company's "extremely strong business and our financial fundamentals remain intact."
"The company is committed to cooperating with the governmental authorities in their ongoing investigations," Sullivan said. "We take these matters seriously and want to bring them to resolution."
AIG's credit ratings were under scrutiny after the changes.
Fitch Ratings downgraded AIG debt to AA-plus from AAA.
"Today's rating action reflects Fitch's view that the 'AAA' rating, which had been on negative outlook since May 2003, has been further pressured by the negative circumstances surrounding recent government investigations into select business practices of AIG and members of its management," Fitch said.
"Fitch believes that the uncertainties and disruptions created by these events are inconsistent with the highly conservative and stable profile required of a company assigned an 'AAA' unsecured senior debt rating."
Standard and Poor's said it put the company on "CreditWatch with negative implications."

03/15/2005 20:04 GMT