AIG Under Review

A.M. Best Co. placed the financial strength ratings of member companies of American International Group Inc. under review with negative implications following the announcement that the chairman and CEO Maurice Greenberg will retire as CEO, although he remains non-executive chairman.

Greenberg will be succeeded by Martin J. Sullivan, who had been AIG’s vice chairman and co-chief operating officer. The company also announced that the CFO, Howard Smith, has taken leave and that the filing of AIG’s 2004 annual 10-K has been delayed. Smith will be succeeded by Steven J. Bensinger. The retirement of Greenberg follows concern over an increasing number of regulatory inquiries as well as queries from the New York Attorney General and the Securities and Exchanger Commission.

The vast majority of AIG’s major insurance subsidiaries have held financial strength ratings of “A++” for many years. However, Best said there remain a number of unresolved issues with the potential for continued uncertainty. The ratings have been placed under review due to the delay in the filing, the premature retirement of two top senior executives, and the numerous regulatory inquiries. Best believes the operating fundamentals within AIG are sound, there is significant management bench-strength among the leaders of the business segments, and barring any additional negative reports, the ability to generate historical earnings should continue.