The former chief executive and major stakeholder insurer in American International Group Inc Maurice Greenberg called on the company to delay this week's annual meeting.
In a letter dated March 11, he said the meeting should be postponed so that shareholders can consider how to move the company forward after it reported heavy first quarter losses on Friday.
AIG is in crisis. The company's shareholders need to absorb the significance of the company's first quarter losses, he wrote in a letter filed with the Securities and Exchange Commission. They also need time to consider the board's response to the crisis and the issues raised by this letter.
Greenberg, who is also Chair of Starr Internaional, AIG's largest shareholder, resigned from the company in 2005 after investigations by former New York attorney general Elliot Spitzer into accounting and other improprieties at the firm. Greenberg was not brought up on criminal charges. However he does face civil suits.
In the letter Greenberg noted the company's recent losses and questioned the ability of the current management.
He mentioned that the company changed estimates of the company's super senior credit default swap portfolio and discovered problems with internal controls over financial reporting in oversight.
A decline in value of the portfolio, as assessed by AIG, changed from between $1.4 billion and $1.5 billion in on December 5 of last year to $11.5 billion by December 31. On May 8, 2008, the company said the portfolio lost $9.1 billion more in value and that the company would need to raise $12.5 billion in capital.
These events have led to a complete loss of credibility with the investment community and even further loss of value for shareholders, Greenberg wrote.
He questioned why AIG said it would raise about $12.5 billion by sales of stock rather than selling non-core assets at the company, or getting investment from sovereign wealth funds or private equity funds, as other large, diversified U.S. financial institutions have done.
Shareholders deserve to know how this decision was reached and what other alternatives were considered and evaluated, he wrote.
He also said the company's core businesses in U.S. life insurance were stagnant and Asian businesses were eroding.