AIG CEO replaced amid subprime woes
NEW YORK (Reuters) - Martin Sullivan, chief executive officer of American International Group Inc, has stepped down after three years at the helm of the world's largest insurer, the company said on Sunday.
Robert Willumstad, AIG's chairman, will take the position of CEO effective immediately, and retain the chairman title.
With his departure, Sullivan becomes the latest in a string of Wall Street chiefs -- including former Citigroup Inc Chief Executive Charles Prince and Merrill Lynch & Co's Stan O'Neill -- who have left their jobs amid large losses from risky mortgage bets.
AIG said Sullivan was also quitting the board, where he has had a seat since 2002.
"The board has determined that Bob's broad managerial and financial services experience makes him the right person to lead AIG through today's turbulent markets, drive further organizational change and rebuild shareholder value in the years ahead," George Miles, chairman of AIG's nominating and corporate governance committee, said in a statement.
Sullivan's departure comes after several large shareholders in recent weeks pushed for his ouster after AIG posted back-to-back quarters of record losses, stemming from more than $20 billion in write-downs in the market value of assets linked to subprime mortgages.
Willumstad, 62, joined AIG's board two years ago, a year after leaving Citigroup where he had been chief operating officer. When he left Citi, he expressed a desire to lead a public company.
"In the coming months, we will conduct a thorough strategic and operational review of AIG's businesses and their performance," Willumstad said sin AIG's statement. "The board and I recognize that results over the past two quarters have been unacceptable, but we are confident in AIG's future.
"We are determined to get the organization back on track as quickly as possible and ensure it is well positioned for future success," Willumstad added.
Stephen Bollenbach, who was named to AIG's board earlier this year, will become lead director, the company said. Bollenbach is favored by some of AIG's most critical shareholders, including billionaire Eli Broad.
Broad, a former director who founded SunAmerica, a life insurer that AIG bought several years ago, and fund managers Shelby Davis of Davis Selected Advisers LP and Bill Miller of Legg Mason Inc 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 Chief Executive Officer 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 state Attorney General Eliot Spitzer and the U.S. Securities and Exchange Commission accused Greenberg and the company of financial misconduct.
Greenberg, through a spokesman, on Sunday declined to comment on the changes at AIG.
Greenberg, an octogenarian, is still fighting civil charges. Sullivan, a quick-witted Englishman who spent almost 36 years with the insurer, ushered AIG through the difficult process of reaching a settlement with regulators, paying $1.64 billion to settle charges of fraud, bid rigging and improper accounting, one of the largest regulatory settlements in U.S. history.
Sullivan initially won investor favor by seeing AIG through the regulatory probe, but more recently saw his reputation become tarnished as losses mounted and AIG's stock fell precipitously.
The stock's price has been than halved over the last year, closing on Friday at $34.18. A year ago, shares were trading at
$72.91.
(Additional reporting by Dan Wilchins, Editing by Jonathan Oatis)
