Former AIG chief Greenberg urges annual meeting's delay

By Lilla Zuill

NEW YORK (Reuters) - Maurice "Hank" Greenberg, former chief executive of American International Group (AIG.N: Quote, Profile, Research, Stock Buzz), 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.

"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 said it would raise $12.5 billion to strengthen its balance sheet.

A quarter earlier, AIG posted a 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, and called on the company to postpone its annual general meeting, which is scheduled for Wednesday.

AIG spokesman Chris Winans said the company received Greenberg's letter on Monday, and had forwarded it to members of the board. "The Board will respond to Mr. Greenberg's request shortly," he added.

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.