Insurance

Return to Article

AIG Chief Steps Down: Report

TSC Staff

The fallout from the subprime meltdown and related credit crisis has claimed another corporate chieftain.

Martin Sullivan has resigned as CEO of American International Group(AIG Quote), according to a report Sunday on The Wall Street Journal's Web site.

Sullivan is being replaced immediately by AIG's chairman, Robert Willumstad, according to the report, which cited one person familiar with the situation. Stephen Bollenbach, an AIG director and a former CEO of Hilton Hotels, will become AIG's lead director, the report said.

The insurance giant's board held a special meeting Sunday to consider Sullvan's fate, according to the Journal.

Sullivan had come under fire over the past month, after AIG raised $20 billion to cover $7.81 billion in first-quarter losses tied to writedowns on its portfolio of credit derivatives and mortgage-related products.

Former CEO Maurice "Hank" Greenberg, who has feuded with the company since leaving under the cloud of an accounting scandal in 2005, has since said AIG is "in crisis" and noted "a complete loss of credibility" among investors. And former director Eli Broad and fund managers Shelby Davis of Davis Selected Advisers and Bill Miller of Legg Mason(LM Quote), in a letter obtained by Reuters earlier this week, called for "significant and immediate changes at both the management and board level."

Sullivan joins a rapidly expanding list of fallen Wall Street executives during the credit crisis that has gripped markets since last summer. Lehman Brothers(LEH Quote) CFO Erin Callan and COO Joseph Gregory were ousted Thursday. Ex-Merrill Lynch(MER Quote) CEO Stanley O'Neal and former Citigroup(C Quote) chief Charles Prince were the first major casualties last fall.

AIG shares closed up 1.5% at $34.18 Friday.