THE former chief executive officer of American International Group, Maurice Greenberg, sold 40 million shares of the insurer for about US$125.9 million after the stock tumbled more than 90 percent this year.

Starr International, a firm run by Greenberg, sold 35 million AIG shares at US$3.06 each, Starr said in a filing. Greenberg, 83, sold 5 million shares for about US$3.77 apiece. He still controls more than 10 percent of the company, Bloomberg News said.

Greenberg is selling shares "for liquidity," according to another regulatory filing. Greenberg and companies he runs owned about 11 percent of AIG, the largest block, before the sales.

The New York-based insurer averted collapse last week by agreeing to a federal takeover. Greenberg was among investors who met to discuss raising money to reduce federal involvement in a rescue. AIG said the next day it signed a deal for an US$85-billion Federal Reserve credit line, reducing the options left for dissident shareholders.

AIG dropped 8.8 percent, to US$3.02 in New York.

Greenberg still supports efforts to reduce the government dilution of AIG stakeholders, said his lawyer, David Boies. "There is no doubt" the agreement makes "a private sector solution significantly more difficult," Boies said.