AIG sees no need to honor ex-CEO request to delay AGM

By Lilla Zuill

NEW YORK (Reuters) - Maurice "Hank" Greenberg, former chief executive of American International Group (AIG.N), has said the insurer is in "crisis" and urged a delay in its annual general meeting scheduled for Wednesday, according to a letter he sent to the board.

But AIG said late on Monday its board sees no need to postpone the meeting, according to a spokesman.

"Several top shareholders of AIG have called me expressing deep concern about the persistent and seemingly endless destruction of value at AIG," Greenberg said in the May 11 letter to the board, a copy of which was filed with the U.S. Securities and Exchange Commission on Monday.

AIG shares fell nearly 5 percent after news of the letter, with the stock ending the day at its lowest point since October 1998.

The letter followed AIG's reporting last Thursday a $7.8 billion first-quarter loss, its largest-ever, as a result of a large write-down to the value of securities linked to subprime mortgages. Overall results also disappointed, with lackluster operating results reported by a number of units. The company also said it was raising capital to bolster its balance sheet.

The company late on Monday raised $11.9 billion, according to an underwriter -- more than the $7.5 billion that the offerings of common stock and mandatory convertibles were expected to raise. AIG plans to raise $5 billion more at a later date with the issue of fixed-income securities.

AIG's loss came after it a quarter earlier posted a then record net loss of $5.3 billion, also as a result of writing down the value of the same securities -- credit default swaps -- which basically guaranteed subprime mortgage bonds and other assets against default.

"AIG is in crisis," Greenberg said, in the letter calling on AIG's board to postpone its annual general meeting.

Greenberg is chairman of C.V. Starr and Starr International, entities that were once affiliated with AIG and continue to be the insurer's largest shareholders.

Along with a personal stake, Greenberg controls roughly 12 percent of AIG stock, according to Reuters data.

"The company's shareholders need to absorb the significance of the company's first quarter losses," wrote Greenberg in the letter to AIG's board.

"They (investors) also need time to consider the board's response to the crisis and the issues raised by this letter.

"For this reason and others, a postponement of this week's annual meeting should be considered, so that all shareholders can give careful thought to how best to move AIG forward," Greenberg added.

Greenberg parted ways with the insurer in 2005 after building it into the world's largest insurer during a 38-year tenure as CEO. He was forced out by the board after then-attorney general Eliot Spitzer and the SEC accused the company and him of financial misconduct.

Martin Sullivan, an Briton who joined AIG at 17 and had worked his way up through the insurer's ranks, took over from Greenberg, who had been his mentor.