NU Online News Service, March 14, 2005, 11:45 p.m. EST

Maurice Greenberg, the 79-year-old head of American International Group Inc., New York, is hanging on to his post as head of the insurance company.[@@]

Martin Sullivan, 50, who has been AIG’s vice chairman and co-chief operating officer, has taken over as AIG’s president and chief executive officer, but Greenberg is still AIG’s non-executive chairman, AIG says.

Sullivan came up through the property-casualty side at AIG.

AIG also is postponing the date when it will file its 10-K annual report with the U.S. Securities and Exchange Commission, and it says Howard Smith, 60, the company’s chief financial officer, has taken a leave of absence.

Steven Bensinger, 50, now will be AIG’s chief financial officer, treasurer and comptroller. He also will be promoted to executive vice president, from senior vice president. Bensinger has been AIG’s treasurer and comptroller.

In other news, AIG has named Donald Kanak, 52, executive vice chairman and chief operating officer for Asia. Kanak, who previously was vice chairman and co-chief operating officer, will work closely with Edmund Tse, AIG’s senior vice chairman for life insurance, AIG says.

Frank Zarb, chairman of AIG’s board executive committee, issued a statement implying that AIG’s board was responsible for the decision to change Greenberg’s role at the company.

“As a result of Hank’s leadership, AIG today is the largest and best capitalized insurance and financial services organization in the world,” Zarb says in the statement. “However, the board has concluded it is now in the best interest of AIG’s shareholders, customers and employees to turn to a new generation of leadership, and we are pleased that Hank Greenberg will assist in the transition.”

Standard & Poor’s Ratings Services, New York, and Moody’s Investors Service, New York, have reacted by putting AIG’s AAA credit rating on review, and the New York office of Fitch Ratings already has cut its rating on long-term AIG debt to AA plus.

“Standard & Poor’s is not aware of any transaction or group of transactions that would result in a material financial impact on AIG at this time,” Grace Osborne, an S&P credit analyst, says in a comment on AIG. “However, uncertainty exists as to whether the financial information–both public and private–upon which the ratings have been based will be modified.”

At Fitch, analysts are emphasizing that the agency is maintaining its AIG insurance financial strength ratings and that the outlook on the holding company rating is stable.

Greenberg, who was born in New York, served in the U.S. Army in Europe during World War II and helped storm Omaha Beach on D-Day. Later, during the Korean war, he helped end a prison insurrection, according to “Same Bed, Different Dreams,” a book by David Lampton.

Greenberg went on to earn a law degree from New York Law School in 1950, then began working for AIG in 1960. He succeeded the late Cornelius Vander Starr as chief executive officer in 1967 and as chairman in 1989. Greenberg led the company through a public stock offering in 1969.

Greenberg has played a key role in drawing U.S. executives’ attention to the idea of doing business in Japan, China and other countries in Asia.

This year, regulatory investigations concerning financial risk management tools, brokerage compensation strategies, possible efforts to pressure one of the specialists who shepherd trading of AIG’s stock, and other matters led to speculation that Greenberg might step down.

Greenberg reportedly has retained Robert Morvillo, a defense lawyer who has represented Martha Stewart.

Meanwhile, many companies have been responding to investor and regulator concern about corporate governance by splitting the roles of chairman and CEO.

Investigations dealing with mutual fund management practices and brokerage compensation practices led Greenberg’s son, Jeffrey Greenberg, to step down as chairman and chief executive of Marsh McLennan and Companies Inc., New York, in October 2004.

A link to a recording of the teleconference AIG held to discuss the changes will soon be on the Web at http://www.aigwebcast.com/phoenix.zhtml?c=76115&p=irol-audioarchives