Greenberg: 'AIG is in crisis'

Greenberg: 'AIG is in crisis'

The former CEO of the world's largest insurer charges the company's businesses are deteriorating.

NEW YORK (AP) -- Maurice R. Greenberg, the former chief executive and largest individual shareholder of AIG, is urging the insurer to postpone its annual meeting in the wake of its massive first-quarter loss, according to regulatory filing Monday.

American International Group Inc., the world's largest insurance company, said Friday it lost $7.81 billion, or $3.09 per share, in the first quarter. AIG also announced plans to raise $12.5 billion in the coming months to shore up its capital base.

In a letter to the board dated Sunday, Greenberg said he and other top shareholders are deeply concerned "about the persistent and seemingly endless destruction of value at AIG." He said the company's leadership has also lost credibility with the investment community.

"AIG is in crisis," Greenberg wrote.

"The company's problems are more than financial and extend far beyond its subprime credit exposure or approach to capital management," he said in the letter. "Core businesses are also deteriorating."

Greenberg said New York-based AIG (AIG, Fortune 500) has not explained why it chose to raise $12.5 billion in the capital markets rather than pursuing other options, such as divesting noncore assets or seeking other sources of funding.

"Shareholders deserve to know how this decision was reached and what other alternatives were considered and evaluated," Greenberg wrote. He also questioned AIG's decision to increase its dividend by 10%, to 22 cents per share.

AIG spokesman Chris Winans said the board received the letter Monday morning but sees no need to postpone the annual meeting, which is scheduled for Wednesday.

AIG shares dropped $1.91, or 4.7%, Monday to close at $38.37, their lowest point since October 1998, following a downgrade from Goldman Sachs. Shares slipped another 12 cents in after-hours electronic trading.

Greenberg was forced out of the company in 2005, when then-New York State Attorney General Eliot Spitzer accused him of fraudulent accounting.

CNN