By Lilla Zuill
NEW YORK (Reuters) - Maurice "Hank" Greenberg, who was chief executive of American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) for nearly four decades, said on Wednesday the insurer's financial position must be stabilized swiftly if it is to have any future.
AIG, once the world's biggest insurer by market value, ran into trouble because of billions of dollars in losses on complex derivatives known as credit default swaps that were linked to subprime mortgages.
It lost nearly $24.5 billion in the latest quarter, and about $18 billion over the three prior quarters. Over the same period, the company's stock market value has crumpled to about $6 billion from around $155 billion.
"Unless you get a manager in there that understands the company to turn it around, not in five years, promptly, there is a very big risk," Greenberg told the Reuters Global Finance Summit in New York. "When you lose $24 billion underwater, it does not take long until it is toast," he added.
AIG averted bankruptcy in September with an $85 billion federal bailout. On Monday, the United States raised its total support for AIG to $150 billion. AIG has to sell assets to repay $60 billion of that debt.
"The solution is first to stabilize AIG. When a parent company is bleeding as it has been bleeding, it is hard to get value for anything. Selling off assets is hardly the way to solve the problem," Greenberg said.
Greenberg, who has criticized the management that replaced him when he left AIG in 2005, said current CEO Edward Liddy may not have the necessary experience to turn the insurer around.
Liddy ran U.S. home and auto insurer Allstate Corp (ALL.N: Quote, Profile, Research, Stock Buzz) for 16 years.
"AIG is in 130 countries and in a wide range of businesses. Liddy ran a domestic automobile company. It is like putting someone in a spaceship who ran a train -- it is a different business," Greenberg said.
Greenberg, 83, was AIG's second chief executive, succeeding founder Cornelius Vander Starr in 1967. He said reviving AIG would take someone with insider's knowledge of the company, and that he would only return if invited.
"I can't invite myself back. And I'm not egotistical enough to think I am the only one who can fix it," he said. "I think under the right management the company could be saved."
The circumstances surrounding Greenberg's 2005 departure from AIG would likely prevent his returning to it. At the time, then New York Attorney General Eliot Spitzer accused AIG of questionable accounting on insurance contracts, leading to Greenberg's departure and AIG paying a more than $1 billion settlement.
Greenberg, like other investors, has seen his AIG stock diluted since the federal bailout, which gave the U.S. government an 80 percent stake in the company. The decline in AIG's stock has wiped out much of his personal wealth.
Before the bailout, his stake was equal to about 11 percent of AIG's outstanding stock, through a personal stake and shares owned by companies he controls.
Greenberg heads investment firms C.V. Starr and Starr International Co, which were once closely aligned with AIG.
(Reporting by Lilla Zuill)
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