AIG chief resigns amid mounting losses

by Gill Montia

Story link: AIG chief resigns amid mounting losses

The world’s biggest insurance company, AIG, has lost its chief executive.

Following days of speculation, Martin Sullivan, who began his career as a clerk in AIG’s London Office, has resigned.

After nearly forty years with the company, he is being replaced with immediate effect by the group’s chairman, Robert Willumstad.

Mr Sullivan’s position became untenable as the group’s writedowns in connection with the US sub-prime mortgage crisis escalated and it recorded losses for two consecutive quarters.

In the first three months of 2008, the group posted a $7.81 billion net loss, after writing down $13.1 billion in sub-prime and other investment losses. The result followed a $5 billion loss in the fourth quarter of 2007.

AIG went on to raise $20.5 billion through the sale of equity and debt issues but its share price remains at around half what it was a year ago.

In 2006, AIG earned a record $14 billion.