American International Group Incorporated’s Maurice “Hank” Greenberg, who has run the world’s largest insurer for almost four decades, said he will step down as chief executive officer amid probes of potential earnings manipulation and bid-rigging, CNBC reported.

AIG’s board met last night to discuss Mr. Greenberg’s future, a person familiar with the situation said. The 79-year-old will be replaced with the co-chief operating officer, Martin Sullivan, 50, and become a nonexecutive chairman, CNBC reported. An AIG spokesman, Chris Winans, declined to comment except to say “the board has taken no action.” Mr. Sullivan didn’t return phone calls and an assistant for Mr. Greenberg said he wasn’t available.

Mr. Greenberg’s resignation would mark the biggest executive fallout since New York Attorney General Eliot Spitzer touched off an industrywide investigation of fraud last October. Since taking over in 1967, Mr. Greenberg has boosted AIG’s assets more than a thousand-fold, making $50 billion in acquisitions to reach 50 million customers in 130 countries.

Mr. Spitzer and the Securities and Exchange Commission are probing a four-year-old reinsurance transaction between AIG and Berkshire Hathaway Incorporated’s General Reinsurance unit that Mr. Greenberg may have initiated to smooth the company’s own earnings, said people familiar with the matter. The attorney general obtained information in the last 10 days to two weeks that Mr. Greenberg himself was involved, said one of the people, who declined to be identified.

AIG said last month that Mr. Spitzer and the SEC had subpoenaed the company as a probe of collusion with insurance brokers widened to the investigation of insurance and reinsurance that may be used to hide losses.

AIG said Mr. Greenberg personally received one of the Spitzer subpoenas, which sought information on the “nontraditional” policies and AIG’s accounting for reinsurance it sold. Shares have fallen 13% since AIG disclosed the requests on February 14.A spokesman for Mr. Spitzer, Darren Dopp, and an SEC spokesman, John Nester, declined to comment.

Mr. Spitzer’s investigation has already forced Greenberg’s son, Jeffrey Greenberg, from his post as CEO of Marsh & McLennan Companies, the world’s largest insurance broker.

In an October 14 lawsuit against New York-based Marsh, Mr. Spitzer alleged that the broker colluded with insurers including AIG. Since then four AIG employees have pleaded guilty to rigging bids with Marsh, agreeing to testify in future cases. AIG hasn’t been sued.

AIG contacted the SEC to let the agency know the board would be meeting yesterday to take up Mr. Greenberg’s future role after AIG’s lawyers canceled a meeting with investigators March 11, a person familiar said.

“We will probably see the regulatory issues start to be resolved not so long after his resignation,”said an analyst at Columbia Management Advisors in New York, Al Copersino. Columbia, a unit of Bank of America Corp., holds about 18.7 million shares of AIG.

Investors had been asking Mr.Greenberg for years to share his succession plans. His choice for successor had been unclear since his son Evan Greenberg left the company in 2000.

“We have been waiting to find out for some time because of Greenberg’s age,” said Roman Cizdyn, an analyst at Oriel Securities Ltd. in London.

AIG shares fell 2% March 11 after AIG canceled two Greenberg meetings with clients of Goldman Sachs Group and JPMorgan Chase & Company late the day before, spurring speculation about the status of the probes.

Of AIG’s non-executive board members, Frank Zarb, Stephen Hammerman, Ellen Futter, Carla Hills, Marshall Cohen, Martin Feldstein, and Frank Hoenemeyer didn’t return phone calls seeking comment. Richard Holbrooke said in an interview that any discussions held by the board are a “confidential matter,” and declined to comment further. Bernard Aidinoff and William Cohen declined to comment. Chia Pei-Yuan couldn’t be reached.

Mr. Sullivan will start in his new role today, CNBC reported.He has been chief operating officer since May 2002 and shares his title with Donald Kanak, who had been the other favorite to succeed Mr.Greenberg. A London native, Mr.Sullivan started at AIG as a teenager.

His first job was in British finance department of American International Underwriters, AIG’s property and casualty subsidiary outside of America. He rose through the ranks of AIU, and moved to New York in the 1990s to become president of the unit.

Mr. Greenberg has run the company as if he founded it and few companies are so strongly identified with a single man. The successor to founder Cornelius Starr, Mr. Greenberg took the company public in 1969 and has driven its market value to $168.5 billion.

Mr. Greenberg, who was paid $7.59 million in 2003, increased AIG’s net income by at least 15% in eight of the past 10 years.

In 2003, the company spent 93% of every premium dollar on claims and expenses — the third-best ratio among the 12 property and casualty insurers on the S&P 500 Insurance Index.

When prices on property and casualty insurance as much as doubled following the September 2001 terrorist attacks, he used the company’s AAA credit rating to justify charging more than competitors.

As price increases started slowing in 2003, he bought General Electric’s Japanese life insurance business to further diversify.

“I’m thinking about the business all the time, it’s not something I can start and stop,” Mr. Greenberg said in an interview in September 2004. “You have to have passion for what you do. If it’s a chore, if you want to shut yourself off from what you do, then you’re doing the wrong thing.”