UPDATE 2-Chief executive of AIG expected to step down-WSJ

(Adds detail on possibilities for CEO successor, background)

NEW YORK, June 15 (Reuters) - The board of American International Group Inc (AIG.N) was meeting on Sunday to accept the possible resignation of Chief Executive Officer Martin Sullivan, The Wall Street Journal reported on its Web site, citing a person familiar with the matter.

The Journal story said the resignation was not a "done deal" but was considered "highly likely."

AIG spokesman Michael Arcaro declined to comment on the report.

In recent weeks, several large shareholders have been pushing for Sullivan's ouster after the giant insurer posted back-to-back quarters of record losses, stemming from about $20 billion in write-downs in the market value of assets linked to subprime mortgages.

To date, the board has expressed its support for Sullivan, who was named CEO about three years ago.

Former director Eli Broad and fund managers Shelby Davis of Davis Selected Advisers LP and Bill Miller of Legg Mason Inc (LM.N) wrote in a letter obtained by Reuters last week that "significant and immediate changes at both the management and board level are clearly called for."

The same group sent another letter to the board last month, also expressing concern over Sullivan's management.

Separately, former AIG CEO Maurice "Hank" Greenberg, who remains a large shareholder, has also been critical of management and AIG's board.

Sullivan, 53, replaced Greenberg as chief executive in 2005, after then-New York Attorney General Eliot Spitzer and the U.S. Securities and Exchange Commission accused Greenberg and the company of financial misconduct.

Greenberg, an octogenarian, is still fighting civil charges. Sullivan, an affable Englishman who is a 36-year company veteran, ushered AIG through the difficult process of reaching a settlement with regulators, paying $1.6 billion to put the matter behind it.

The Wall Street Journal report also said that the AIG board would discuss replacements for Sullivan. The article said one possibility is for AIG Chairman Robert Willumstad, a former top Citigroup Inc (C.N) executive, to take over as CEO on either a temporary or permanent basis.

Some shareholders are hoping that director Stephen Bollenbach will be named to take the helm, according to the Journal.

Bollenbach is non-executive chairman of U.S. homebuilder KB Home (KBH.N), a company founded by one of the dissident shareholders, Eli Broad. Bollenbach was elected to AIG's board earlier this year, and sits on the boards of several other companies, including Time Warner Inc (TWX.N) and Macy's Inc (M.N).

The board could also conduct an outside search, the Journal said, citingg the person familiar with the matter. (Reporting by Nicole Maestri and Lilla Zuill, Editing by Jonathan Oatisk)