Greenberg, His Firms Lost $5.8 Billion in AIG Shares This Month

Greenberg, His Firms Lost $5.8 Billion in AIG Shares This Month


Sept. 17 (Bloomberg) -- American International Group Inc. former Chief Executive Officer Maurice ``Hank'' Greenberg saw the value of the AIG stake he controls plunge by about $5.8 billion this month as the insurer struggled to survive.

The U.S. government yesterday reversed its opposition to a takeover of AIG, and provided the insurer with an $85 billion loan to avert the worst financial collapse in history. The Federal Reserve may take an 80 percent stake in AIG and has the right to stop paying dividends to the company's investors.

AIG managers ``presided over the virtual destruction of shareholder value built up over 35 years,'' Greenberg said yesterday in a letter to the company.

Greenberg, 83, controls 11 percent of AIG shares through two investment firms and personal holdings, according to Bloomberg data. He said yesterday in a regulator filing he may consider taking control of the insurer through a proxy fight or buyout. The value of the stake shrank to $698.9 million today from $6.53 billion at the end of August.

AIG declined $1.45, or 39 percent, to $2.30 at 1:37 p.m. in New York Stock Exchange composite trading today.

Greenberg ran AIG for 38 years until he was forced to retire in March 2005 amid state and federal probes into the company's accounting and sales practices. He denies any wrongdoing in the case, which is still pending. Then-New York attorney General Eliot Spitzer dropped portions of the lawsuit in 2006 that included four other allegations tied to the investigation.

Martin Sullivan replaced Greenberg as CEO and was followed by Robert Willumstad, who took over in June. As part of the government takeover, Willumstad, 63, will be replaced by former Allstate Corp. CEO Edward Liddy, 62.

Greenberg runs C.V. Starr & Co. and Starr International Co., two closely held firms once linked to AIG. C.V. Starr diversified its stake and sold some of its AIG shares, Greenberg said in an interview with CNBC yesterday. He didn't say how many.

BLOOMBERG