Reports: Willumstad named head of AIG

American International Group Inc., which has lost billions on bad bets on the mortgage market, on Sunday named former Citigroup Inc. executive Robert Willumstad to replace the insurer's chief executive, The Wall Street Journal reported.

Willumstad will take over for Martin Sullivan effective immediately, according to the Journal, which cited an unnamed source. Willumstad is AIG's chairman of the board and was president and chief operating officer at Citigroup.

An AIG spokesman's telephone rang unanswered on Sunday and he did not immediately respond to an e-mail.

New York-based AIG lost $7.8 billion during the first quarter of the year due to investments and contracts tied to bad loans. The insurer's first-quarter deficit was even more massive than its fourth-quarter loss of more than $5 billion. After its two straight quarterly losses, AIG revealed plans to raise $20 billion in fresh capital – but investors reacted skeptically, unsure that extra cash would solve the insurer's problems.

Shares of AIG have fallen by more than 50 percent over the past 12 months, closing at $34.18 on Friday.

In addition to big losses, AIG is reportedly facing a regulatory probe.

Many angry shareholders blame poor management for AIG's financial troubles.

Last August, shortly after mortgage-related losses began roiling the financial services industry, Sullivan told investors that AIG was “well-positioned, even in the event of further deterioration in this market.” But by May, Sullivan acknowledged that “the severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations.”