July 17 (Bloomberg) -- American International Group Inc., the world's largest insurer, appointed former Goldman Sachs Group Inc. Vice Chairman Suzanne Nora Johnson to the board to help restore investor confidence after two record losses.

Nora Johnson, 51, worked for 21 years at Goldman, retiring in 2007 as the highest-ranking woman at the firm, the New York- based insurer said yesterday. Richard Holbrooke resigned from AIG's board, the company said today in a regulatory filing.

Chief Executive Officer Robert Willumstad is under pressure from investors including billionaire Eli Broad to bolster the company's financial leadership and reverse a 60 percent share decline this year. Willumstad, 62, replaced Martin Sullivan last month after two quarterly losses totaling $13 billion tied to the subprime mortgage market collapse.

``Suzanne's insights and guidance will be invaluable as AIG addresses the challenges presented by today's unsettled financial conditions,'' Willumstad said in a statement.

Nora Johnson's committee assignments will be determined later, AIG said today in the filing. She is a member of the boards at Intuit Inc., Pfizer Inc. and Visa Inc.

Holbrooke, 67, has been an AIG director since 2001. He is a former U.S. ambassador to the United Nations and former vice chairman of Credit Suisse First Boston, according to an April 4 AIG filing. He is currently vice chairman of private equity firm Perseus LLC, AIG said.

Seeking Respect

Broad said June 30 he ``recently'' advised Willumstad to select someone the ``financial community really respects on the board to chair an investment committee.''

Broad, a former AIG director, said the company will bring in a ``new team'' to manage finances. Willumstad, who is also chairman of AIG, is searching for a new chief financial officer to replace Steven Bensinger, who was named vice chairman in May. Broad's letters to AIG urging management changes preceded the June 15 departure of Sullivan.

Broad didn't respond to a request for comment.

In addition to selling life insurance and protecting property, AIG owns or manages about $25 billion of real estate, including residential, industrial and retail properties. The company had private equity and hedge fund holdings of $29.4 billion as of March 31 and owns International Lease Finance Corp., the largest lessor of planes to airlines.

The insurer, the largest by assets, has posted net losses of $5.29 billion for the fourth quarter of 2007 and $7.81 billion for this year's first quarter. The losses stem from writedowns of credit-default swaps sold to protect fixed-income investors, and from declines in mortgage-related holdings.

To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; Erik Holm in New York at eholm2@bloomberg.net.

Last Updated: July 17, 2008 09:29 EDT