AIG Credit Rating Threatened

Greenberg's departure doesn't spare the firm a Fitch downgrade.
By Matthew Goldstein ,

Updated from 11:54 a.m. EST

The 38-year reign of

American International Group

(AIG) - Get Report

Chief Executive Maurice Greenberg has ended with his retirement amid broad regulatory scrutiny of the mammoth insurer.

The scandals surrounding AIG may cost it more than its longtime leader, however. The company is on the verge of losing its prestigious Triple AAA credit rating. Early Tuesday, Fitch Ratings, the smallest of the three big rating agencies, cut its long-term rating on AIG's bonds to AA plus. Moresignificantly, Standard & Poor's and Moody's both said they also might cut their rating for AIG.

Currently, S&P and Moody's Investors Services both give AIG's debt theirhighest rating. Fewer than 10 U.S. companies have a Triple AAA rating from thetwo main rating agencies.

The stock was recently down $1.97, or 3.1%, to $61.88.

The 79-year-old Greenberg tendered his retirement Monday night at the request of the board. He will be succeeded by Martin Sullivan, AIG's co-chief operating officer. In addition, the company's CFO, Howard Smith, has "taken leave," the company said, succeeded by Steven Bensinger, AIG's treasurer.

Donald P. Kanak was named executive vice chairman and sole chief operating officer.

Greenberg's retirement follows a series of investigations into various aspects of AIG's business, including allegations of kickbacks paid to insurance brokers and the promulgation of policies designed to help companies smooth quarterly earnings.

The Wall Street Journal

reported Tuesday that the final straw was a probe into Greenberg's role in a "nontraditional" insurance transaction between AIG and

Berkshire Hathaway's

(BRKA)

General Re unit.

In announcing Greenberg's retirement, AIG said it would delay the filing of its 2004 annual report with the

Securities and Exchange Commission.

It said the delay reflected the management changes as well as a review of transactions included in the various regulatory inquiries. AIG said it doesn't believe the review will result in significant changes to the company's financial position.

Greenberg will remain nonexecutive chairman of the company.

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