The dramatic changes came shortly after powerful activist shareholders expressed concern with AIG's management. See my previous blog for additional details on the concerns raised by activist shareholders. Sullivan leaves the world's largerst insurer according to Reuters,
... after it suffered two quarters of record losses from risky mortgage bets and its share price more than halved over the past year.While the latest management changes were applauded by some of the key activist shareholders. In another Reuters piece Eli Broad was quoted as stating,
"Both are proven, experienced and successful financial executives," he said in an emailed statement. "I expect that they will attract badly needed, first-rate financial and investment executives to AIG."
The real question for me and many others is whether Willumstad is the right person for the position. While he originally contended for the top Citibank position before Charles Prince another casualty of the credit crisis was appointed head of CitiGroup his background was in consumer banking. He is not a real insurance guy. According to report he did have insurance companies reporting directly to him when he was Chief Operating Officer of CitiGroup but that may not be sufficient. At a minimum expect further management changes. The Willumstad and Bollenbach appointments will not be sufficient alone to turn the huge AIG ship around but at least it is a well-needed start.
AIG is already in the process of searching for a new CFO. Expect more changes as Willumstad works to get a handle on all the problems facing the firm. He has already made a formal gesture of some kind to former CEO and Chairman Maurice Greenberg who was forced out under a cloud but still remains a huge stakeholder in the firm and thorn in its back. For some time now Greenberg has been one of AIG management's greatest critics. According to the Washington Times,
Greenberg has been one of most outspoken of AIG's shareholders, many of whom have blamed poor management for AIG's financial troubles. In a May regulatory filing, Greenberg wrote: "AIG is in crisis."
In assessing what might be next for the firm, Hugh Son and Dan Kraut of Bloomberg quoted an analyst from UBS AG, David Havens who said,
"AIG needs to go through some sort of process to prove to the market that it completely understands the credit risk that it faces,'' ... "Some sort of internal and perhaps external study might be necessary here.''
Watch who AIG appoints as CFO and make sure to stay up-to-date on future management changes, there are sure to be more. Willumstad has a tough task ahead of him, besides the sub-prime credit related problems, the insurance business has been straining lately under increasing claims due to weather and natural disasters.
For more:
