Profile: Martin Sullivan

Martin Sullivan, chief executive officer of insurance giant AIG, says writedowns the company has been forced to make on assets linked to the US housing market are “manageable.” “The effectiveness of our risk management efforts will show through in our results,” he adds, sending shares up more than 4 percent to $58.15. Joseph Cassano, head of the company unit that sells derivatives known as credit default swaps, says the value of such contracts declined by $1.1 billion in the first two months of the fourth quarter. [Bloomberg, 9/16/2008] Cassano’s statement is inaccurate, and AIG will later reveal the loss is close to $5 billion (see February 11, 2008).

Joseph Cassano, head of the financial products unit at troubled insurance giant AIG, will leave the company, Chief Executive Officer Martin Sullivan says in a statement. Cassano’s unit was responsible for a recently announced $11.1 billion writedown due to credit default swaps (see October-December 2007), and he is stepping down with the company’s consent. Cassano had co-founded the unit in 1987 and built it into a business providing guarantees on more than $500 billion of assets at the end of 2007, including $61.4 billion in securities tied to subprime mortgages. At the same time, AIG says it has $14.5 billion to $19.5 billion in “excess capital.” [Bloomberg, 9/16/2008]

At the annual shareholder meeting of the insurance giant AIG, Chief Executive Officer Martin Sullivan says he is “not discouraged,” despite the fact that the company has posted successive losses (see October-December 2007 and January-March 2008). Company chairman Robert Willumstad says the directors support the management, adding, “We think Martin’s the right guy.” Shares close at $39.44, a 46 percent drop over the past year. [Bloomberg, 9/16/2008]

Martin Sullivan, chief executive officer of insurance giant AIG, says the company needs to raise a total of $20 billion to cover potential losses related to credit default swaps. Sullivan made a similar announcement two weeks earlier, but the potential problem was substantially lower then (see May 8, 2008). Shares fall to their lowest level since 1998, closing at $38.12. [Bloomberg, 9/16/2008]

Martin Sullivan, chief executive officer of troubled insurance giant AIG, is fired and replaced by Robert Willumstad, formerly chairman of the company’s board of directors. Board member Stephen Bollenbach is also named lead independent director. The next day, Willumstad says “there will be no sacred cows” as he launches a companywide review of AIG’s operations. [Bloomberg, 9/16/2008] However, he will only remain in the position for three months (see September 18, 2008).