CEO Watch - Martin Sullivan, AIG

Back in early February I wondered if AIG's CEO, Martin Sullivan, might have been at risk for his job.  At the time, the company's auditor Pricewaterhouse Coopers LLC, found "material weakness" in AIG's accounting for credit-default swap contracts that translated into a huge drop in the company's stock. Despite my blog post, I did not believe Sullivan should have been added to my CEO Watch list.  Today, I am not so sure.  

AIG's surprise announcement earlier today that it posted a $7.8 billion first-quarter loss has put Sullivan in a really difficult spot.  According to a story by Colin Barr for Forbes,

AIG (AIG, Fortune 500) shares tumbled 9% Friday after the insurance giant posted a $7.8 billion first-quarter loss that was driven by another round of mark-to-market writedowns of mortgage-related positions. AIG said the latest quarter included a $5.9 billion pretax writedown of the value of the credit default swap portfolio held by its AIG Financial Products unit, and a $3.6 billion impairment of its mortgage-backed securities holdings.

The spin is already on.  Will shareholders and board members stay quiet as AIG (Sullivan) seems blind sided a second time in a row?  We will just have to wait and see.  For now, Sullivan stays on my CEO watch list.  Keep a close eye on AIG and PR that comes from the firm.

For more:

Financial Times

TheStreet.com

Bloomberg