Industry News Continued:

Greenberg, who will continue on with AIG to help with the transition of management, was succeeded as CEO by Martin Sullivan, who was co-chief operating officer and vice chairman. Greenberg introduced Sullivan as the new CEO during a conference call.

Sullivan commented that AIG’s “fundamental strategic direction is clear” and that “the fundamentals of our business are extremely strong, and we owe all of this to Hank [Maurice] Greenberg.”

Sullivan, who had spoken with Greenberg at length during the last few days, also noted that Greenberg “has agreed to provide me with any assistance I need.” Sullivan hopes to keep growth rates for the company on course and “put any regulatory issues behind us,” adding that AIG would not have additional comments on ongoing regulatory matters.

AIG also named a new chief financial officer: Steven J. Bensinger, who joined AIG in 2002 and was previously a senior vice president.

Regarding the 10-K filing delay, Bensinger commented that he would like the form filed in the next several weeks, but said that it could take a few additional days. “The decision to delay the filing is the result of the management changes, and the ongoing internal review in connection with recently announced regulatory inquiries," he added. "I don't think there's anything more that can be said about it at this time."

Greenberg, who is regarded as one of the most respected global insurance industry executives, was the second chief executive AIG has had since its founding by Cornelius Vander Starr in 1919. Greenberg joined in 1960, and succeeded Starr as CEO in 1967.

Some of AIG's business practices had come under increasing scrutiny by Eliot Spitzer (New York Attorney General) since last October, when AIG was one of several major insurers named in a civil lawsuit against broker Marsh & McLennan Cos filed by Spitzer. The lawsuit charged Marsh with bid-rigging related to brokering insurance contracts with insurers. The Marsh probe resulted in four guilty pleas from AIG.

An internal AIG review has led so far revealed that the problems were confined to the excess casualty division of American Home Assurance.

Spitzer and the SEC are investigating reinsurance agreements that could be used to level the results of primary insurers. Others companies related to the investigations include St. Paul Travelers Cos., Ace Ltd., Berkshire Hathaway Inc.'s subsidiary General Re Corp, Platinum Underwriters Holdings Ltd., MBIA Inc., Swiss Re, and Zurich Financial Services Group.

AIG took an after-tax charge of $53 million in fourth quarter 2004 due to problems with finite reinsurance transactions. This charge was connected to a $126 million settlement reached in late November with the SEC, the U.S. Department of Justice and federal prosecutors in Indiana. The agreement safeguards the company from prosecution with regard to transactions AIG and certain subsidiaries entered with Brightpoint Inc., PNC Financial Services Group Inc. and others.

The financial strength of American International Group is rated A++ (Superior) by A.M. Best Co.