AIG CEO Liddy To Step Down When Replacement Is Named

   DOW JONES NEWSWIRES 
 

American International Group Inc. (AIG) said Chairman and Chief Executive Edward M. Liddy plans to step down from the company once a replacement is found, furthering the company's recent efforts to strengthen its corporate governance in the wake of the U.S. government's rescue last year.

The company said in a release Thursday that Liddy also recommended the chairman and CEO role be separated.

Last week, trustees overseeing the government's nearly 80% stake in the embattled insurer promised swift changes to the board and pleaded for lawmakers' cooperation as the company aimed to formulate "a fair and effective compensation system."

The furor has died down, but earlier this year AIG was the subject of sharp criticism when it paid out big bonuses after receiving billions in government aid. However, the trustees have warned Congress's chilly relations with AIG put the government's huge investment at risk.

The insurer on Tuesday unveiled a slate of six new board nominees, which are to be voted on at the annual meeting June 30. The new board will be composed mostly of independent directors.

AIG said Thursday that Liddy determined the company should take actions to install a more permanent leadership team and structure when it reconfigures the board. The company said the search for Liddy's replacements will include participation by both the new board and the trustees of the AIG Credit Facility Trust.

Liddy was named to his post in September after the company agreed to a bailout by the federal government. The funding was contingent on the agreement that CEO Robert Willumstad would step aside. Before taking the helm at AIG, Liddy served as head of insurer Allstate Corp. (ALL).

Shares rose 2.2% after-hours to $1.84.

-By Shara Tibken, Dow Jones Newswires; 201-938-2168; [e-mail];