Meetings with the London Press

On my second day in London I met with the insurance correspondent for the Financial Times and the London editor for A.M. Best Europe and did a book signing at that most venerable of booksellers--Waterstone's in Leadenhall Market.

Among the top or almost the top question of these journalists: how is Martin Sullivan, AIG's English born CEO, doing and will he survive. My response: He had done exceptionally well in managing the enterprise during a time of difficult transition taking over from an extraordinary CEO that served 37 years. Be it keeping up the morale of employees to assuaging investors to consoling his board to that most important piece of business--settling with the authorities and getting them off AIG's back, he has performed exemplary.

But managing and growing the enterprise is another matter. Generally, he can blame his predecessor for problems for one year, maybe two, but surely not three. The write off of about thirteen billion dollars over the past year, the weakness in the core business and the nearly 50 percent stock drop in the last year to the lowest price in a decade is unacceptable. He can blame Greenberg or extraneous circumstances but stockholders who have lost their shirt won't accept it. In fact, many would like Greenberg back. While the board stands behind him for the moment, there is clearly some uneasiness on that board. One more big write off will end his tenure. And if the stock doesn't turn around with six months, he will be forced out.

And that in itself is a dilemma because an outsider could not run AIG, unless it is broken up. It would take years to understand the complexity of perhaps the world's most complex company. So an insider is absolutely needed. I have a recommendation on who that should be to discuss another day.