AIG's Greenberg steps aside; Sullivan named as successor.

Maurice R. "Hank" Greenberg stepped down as chief executive officer of American International Group Inc. amid several widening investigations into the world's largest insurer's business practices.

AIG also said it would delay the filing of its Form 10-K annual report with the U.S. Securities and Exchange Commission, originally due March 16, in light of management changes and an ongoing internal review of accounting for certain transactions. That review was triggered by "previously announced regulatory inquiries" into those transactions.

Greenberg, who will turn 80 in May, will remain as nonexecutive chairman and will help AIG with its transition of management, the insurer said. He was succeeded as CEO by Martin J. Sullivan, 50, who most recently was vice chairman and co-chief operating officer. Sullivan also was elected president, AIG said.

Sullivan said AIG's "fundamental strategic direction is clear" and firmly set. "The fundamentals of our business are extremely strong, and we owe all of this to Hank Greenberg," he said. "As only the third CEO in AIG's long history, I am well aware of the huge responsibility."

Over the next six months, Sullivan said he hopes to keep AIG's growth rotes on course and "put any regulatory issues behind us."

Other executive moves by AIG included naming Donald P. Kanak, 52, executive vice chairman and chief operating officer. He will focus on Asia markets, working closely with Edmund S.W. Tse, senior vice chairman for life insurance. Kanak was vice chairman and co-chief operating officer.

AIG also said Howard I. Smith has "taken leave" as chief financial officer. He was succeeded by Steven J. Bensinger, 50. In addition to assuming the role of CFO, Bensinger was also elected executive vice president and retained his titles as treasurer and comptroller. Bensinger joined AIG in 2002 and had been a senior vice president.

Pressure from the independent members of AIG's board to replace Greenberg had been mounting as New York state Attorney General Eliot Spitzer's investigations focused on specific AIG transactions. One of those independent board members and chairman of its executive committee, Frank G. Zarb, said the board "deeply appreciates" Greenberg's contributions to AIG's growth over the past 35 years.

"However, the board has concluded it is now in the best interest of AIG's shareholders, customers and employees to turn to a new generation of leadership, and we are pleased that Hank Greenberg will assist in the transition," Zarb said in a statement.

Greenberg joined the company that was then known as C.V. Starr & Co. in 1960, and he rose through the ranks to succeed Starr as CEO in 1967.

Some of AIG's business practices had come under increasing scrutiny by Spitzer and by the SEC since last October, when AIG was one of several major insurers named in a civil lawsuit filed by Spitzer against broker Marsh & McLennan Cos. That lawsuit charged that Marsh engaged in bid-rigging and other improper practices related to brokering insurance contracts with insurers. Spitzer eventually obtained guilty pleas from four AIG executives in the Marsh probe.

This column is compiled monthly from BestWire reports.