American International Group Inc. is moving closer to resolving an accounting investigation as Maurice R. "Hank" Greenberg relinquishes ties to the company that he spent more than 40 years building into the world's largest insurer.
AIG shares rose 2.1 percent after the New York-based company said in a statement yesterday that Greenberg, 79, would give up his post as chairman of the company's board. Two weeks ago, he stepped down as chief executive officer.
Greenberg's chairmanship was cut short as the Securities and Exchange Commission and New York Attorney General Eliot Spitzer broadened an investigation of reinsurance contracts that might have been used to manipulate earnings.
"The board has made difficult decisions, including major personnel changes," Spitzer said in a statement. "The wise actions of the AIG board will help set this investigation on a path toward resolution."
AIG said Frank G. Zarb, the insurance giant's lead director and a former Nasdaq chairman, will assume the duties of chairman until a new one is selected. Greenberg's departure is effective today or tomorrow when he returns from an overseas business trip.
AIG's shares gained $1.18 to $58.20 on the New York Stock Exchange yesterday, rising for a second straight day. The shares are down 20 percent since AIG said Feb. 14 that it had received subpoenas on reinsurance accounting, wiping out almost $39 billion in market value.
Greenberg resigned as CEO amid investigations into why he initiated a reinsurance transaction with Warren E. Buffett's Berkshire Hathaway Inc. four years ago, a person familiar with the investigation told Bloomberg News. His departure as chairman follows an SEC subpoena AIG received Friday demanding information on reinsurance with offshore entities, the person said.
A Berkshire Hathaway statement yesterday said that "to the contrary, Mr. Buffett was not briefed on how the transactions were to be structured or on any improper use or purpose of the transactions."
Buffett has been called in for questioning by SEC officials, a person familiar with the matter told the Associated Press. It was not immediately clear whether Spitzer's investigators would join in the session.
AIG replaced Greenberg as chief executive March 14 as scrutiny mounted over the reserve transactions that appeared to have been used to artificially boost the company's reserves. AIG used private, offshore companies for at least six times more reinsurance than any of its nine biggest U.S. competitors, 2003 state regulatory filings show.
Insurers buy reinsurance to limit their risks from claims.
The Associated Press and Bloomberg News contributed to this article.Copyright © 2015, The Baltimore Sun