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AIG Chief Faces the Music

05/09/08 - 04:13 PM EDT

Nat Worden

Sullivan responded to questions about the dividend raise on a conference call with analysts on Friday morning.

"The dividend increase is a reflection of the board's and management's long-term view of the strength of the company's business, earnings, and capital generating power," said Sullivan. "The capital raised is a response to the events of the last two quarters and its effect on our capital position. It will fortify the balance sheet you expect us to maintain and provide us with increased financial flexibility in these turbulent times. It will also position us well for the future. The two are simply reflexes of a positive long-term view and a prudent response to the current environment."

Sullivan faces renewed scrutiny after Wall Street's credit crisis has already led to the ouster of corporate chieftains at the helm of companies like Citigroup C, Merrill Lynch MER, MBIA MBI and Bear Stearns BSC.

AIG spokesman Chris Winans said that Sullivan has proven himself capable of shepherding the company through a crisis and a high degree of confidence in him remains.

"Any discussions about the future of his job are very speculative," WInans said. "If there's an ultimatum out there, it's certainly something that we're not aware of."

AIG's stock is now down 40% from where it stood at the end of 2005. Shares closed down $3.87, or 8.8%, to $40.28 Friday, after the company reported disastrous results for its first quarter on late Thursday. The company wrote down $9.1 billion of its credit derivatives portfolio and lost an additional $6.1 billion in its investment portfolio.


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