AIG chief resigns

Source: Exec Digital USA

Date :6/16/2008 6:45:52 AM

Martin Sullivan, the British-born chief executive of AIG, has become one of the most senior casualties of the credit crisis.

Sullivan resigned from AIG, the world’s largest insurer, after an emergency board meeting called last night, June 15. He will be replaced by the group’s chairman, Robert Willumstad, 62, former Chief Operating Officer at Citigroup who was twice passed over to become Chief Executive at Citi - losing out once to Chuck Prince and later, when Mr Prince was forced to resign in the wake of the credit crunch, to Vikram Pandit.

The news of Sullivan’s resignation comes after a turbulent few weeks in which investors had been calling on Sullivan to stand down as head of the company following back-to-back quarter losses, stemming from $20 billion in writedowns in the market value of assets linked to sub-prime mortgages.

Reassurance

Mr Sullivan reassured shareholders in December 2007 that losses from the US housing slump would be “manageable”, but investors have lost confidence, witnessing the company’s share price more than halve in the past year, closing on Friday at US$34.18.

His resignation brings the curtain down on a four-decade love affair with AIG, where he started in 1971, joining as a clerk in the London office. Sullivan became chief executive in 2005 after founder Maurice Greenberg was ousted after more than three decades amid a multi-billion dollar accounting scandal.

Wasn’t easy

It has not been an easy three years for Mr Sullivan, but he gained credit for steering AIG through a difficult regulatory probe and regained shareholder confidence while coping with a US$1.15 billion regulatory fine.

He also survived America’s worst hurricane season but the US mortgage meltdown was simply a bridge too far.