Maurice Greenberg (search) will step down as chief executive of American International Group amid a rising number of regulatory inquiries into the insurance company, The Wall Street Journal and CNBC reported on Monday.

At a board meeting on Sunday in New York, AIG's (AIG) directors worked to hammer out terms of 79-year-old Greenberg's retirement as chief executive, the Journal said, citing people familiar with the matter.

At the same time, Greenberg would stay on as nonexecutive chairman, CNBC reported, and British-born co-Chief Operating Officer Martin Sullivan will be the next CEO. AIG's board is expected to meet again on Monday night.

Shares of AIG, which is the world's largest insurance company by market value, fell 1.1 percent to $64 on the New York Stock Exchange (search).

"The optimal scenario would be where Mr. Greenberg remained AIG's chairman," UBS analyst Andrew Kligerman wrote in a research note. "But note that the caliber of AIG's executive bench is strong across all of its businesses."

AIG did not return calls for comment.

On Thursday, AIG postponed meetings between Greenberg and two investment banks without providing details, stoking talk that change could be imminent at AIG.

AIG has suffered a number of legal setbacks recently, including a settlement over charges that it helped companies hide losses and guilty pleas from former executives to charges stemming from New York Attorney General Eliot Spitzer's probe of the insurance industry.

The Securities and Exchange Commission and Spitzer's office are also probing an AIG deal with Berkshire Hathaway Inc.'s (BRKA) General Reinsurance Corp. unit, the Journal said.

Greenberg started out as a manager at little-known American International Group Inc. in 1960, before rising in the ranks and turning the company into the world's largest insurer.

AIG shares have risen more than 100-fold under Greenberg since the late-1960s, making him, and many other shareholders, very rich. Greenberg currently holds about $2.8 billion worth of AIG shares directly.