AIG's New Chief Reaches Out to Former CEO Greenberg
American International Group Chairman Robert Willumstad said one of the first things he did after being named chief executive was to reach out to former CEO Maurice (Hank) Greenberg, a large AIG shareholder who has had an acrimonious relationship with the insurer since leaving three years ago.
The move was the first of many steps that Willumstad has vowed to take after being installed as chief executive late on Sunday, as he faces the daunting task of returning the 89-year-old insurer to profitability after the company recorded its worst-ever losses over the last two quarters.
Willumstad said he telephoned Greenberg and the two planned to meet this week, as long as schedules permitted.
A meeting could begin to mend a rift between AIG and its former leader.
Greenberg has in recent months been scathing in his criticism of AIG's board and management, and there are numerous lawsuits outstanding between the two sides.
Greenberg left AIG in 2005 under the cloud of an accounting scandal, and is still fighting civil charges stemming from those events.
Willumstad, who replaced Greenberg's successor, Martin Sullivan, in an investor call early on Monday, vowed to move swiftly to straighten things out at AIG, which has been badly hit by market losses from risky mortgage bets.
He described himself as a "hands on" manager, and promised to unveil a concrete turnaround plan by early September, after conducting a "thorough strategic and operational review." AIG's shares are trading at less than half the value they held a year ago, after larger-than-expected write-downs on assets linked to subprime mortgages.
Investors, badly burnt by the losses, will expect Willumstad to deliver on promises, said analysts.
"Before AIG rebounds, we think investors will need to see more than a new CEO, such as solid execution," said UBS analyst Andrew Kligerman, in a note.
Willumstad, a former Citigroup
He said he does not foresee breaking the company apart, as some have suggested.
The company operates in more than 100 countries, and apart from insurance, its businesses include asset management, financial products and aircraft leasing.
"Nothing is off the table, and there will be no sacred cows," said Willumstad. (See the accompanying CNBC video for more.)
Some question if Willumstad, who has spent the past four decades working largely in consumer finance, is the right choice for the job.
"Willumstad brings with him financial services managerial experience, but he lacks an insurance background," said Citi analyst Joshua Shanker in an investor note.
On top of AIG's mortgage woes, investors have grown increasingly concerned that it is also losing its edge in insurance markets around the world, reporting lower-than-expected operating earnings for both life and property and casualty operations in the first quarter.
Willumstad's history with AIG, having joined the board two years ago, could also make investors wary.
"The current crisis seems to be one of a failure in broad risk management and Willumstad presided over AIG's board as these problems emerged and evolved," said Citi's Shanker.
Willumstad said he plans to quickly recruit a new chief financial officer to help him execute AIG's turnaround, after Steven Bensinger, who had been CFO, last month said he would step aside.
Willumstad on Sunday told Reuters the company's search is already well under way, and external candidates with financial services experience are being considered.
Willumstad said investors should not read the management change as a sign of what will be reported for the current quarter, calling the change "entirely unrelated" to those results.
AIG is expected to release second-quarter results in early August, and Willumstad says he has no plans for a delay.