AIG Chairman Exiting Amid Probes
American International Group Inc. said Monday that Maurice R. “Hank” Greenberg would retire as chairman, two weeks after probes of potential earnings manipulation forced his resignation as chief executive of the world’s largest insurer.
Greenberg, 79, is expected to step down Wednesday or Thursday, and will be replaced as chairman by director Frank Zarb, who has led the board’s executive committee, the New York-based company said.
The departure was accelerated as New York Atty. Gen. Eliot Spitzer and the Securities and Exchange Commission expanded probes of reinsurance that the company might have used to distort its financial picture. AIG lawyers told regulators Monday that accounting on more than 50 reinsurance contracts might need to be corrected, including at least one transaction in which Greenberg was involved, a person familiar with the probe said.
“While there is a long way to go before this investigation is complete, the wise actions of the AIG board will help set this investigation on a path toward resolution,” Spitzer said in a statement.
David Boies and Robert Morvillo, attorneys representing Greenberg, didn’t return phone calls. Zarb and John Nester, a spokesman for the SEC, didn’t return phone calls.
The SEC has sent subpoenas to a dozen executives at AIG as part of several probes, a person familiar with the matter said Monday. The person, speaking on condition of anonymity and confirming a report Monday in the Wall Street Journal, also said federal investigators were aware of 10 transactions that warranted review.
Under investigation are a number of transactions involving reinsurance -- insurance purchased by insurance companies -- that regulators contend were designed to improve AIG’s financial statements without the transfer of risk. Risk transfer is necessary for a deal to be an insurance transaction and determines how it’s carried on a company’s books.
On Sunday, the company forced out another longtime executive, Michael Murphy, who worked for American International Co., a Bermuda-based unit of AIG.
AIG spokesman Chris Winans said Murphy was terminated “for failure to cooperate with investigators.” He declined to comment further.
The Journal said Murphy was a confidante of Greenberg and an expert on tax matters. Murphy’s attorney, Sean O’Shea, said Sunday that he had not been informed of his client’s dismissal, and did not know whether Murphy had been notified.
A number of other AIG executives have been dismissed, including four who entered guilty pleas in the probe launched by Spitzer into bid rigging and price fixing by New York-based broker Marsh & McLennan Cos.
Shares of AIG rose $1.41, or 2.5%, to $57.02 on the New York Stock Exchange, near the low end of a 52-week range of $54.28 to $77.36.
*
Associated Press and Bloomberg News were used in compiling this report.
