(Bloomberg) ?American International Group Inc. chief operating officer Donald Kanak is leaving the company, almost a year after being passed over to succeed Maurice "Hank" Greenberg as head of the world's biggest insurer.

Kanak, 53, will step down for personal reasons at the end of the month, the New York-based company said in a statement. AIG separately appointed former Citigroup Inc. President Robert Willumstad and former Estee Lauder Cos. chief executive officer Fred Langhammer to its board as the company recruits potential candidates to succeed chairman Frank Zarb.

Kanak, who spent most of his 14-year career at AIG in Asia, had been one of two frontrunners to become CEO when Greenberg was ousted in March amid accounting probes by state and federal regulators. Martin Sullivan, a UK native who shared the COO title, got the job instead.

"He was in the horse race," said Kevin Callahan, who helps manage more than $2 billion at Century Capital Management in Boston, including more than 230,000 AIG shares as of September. "If he's not going to get the top spot and he wants to be a CEO, that could clearly be a reason why he's exiting."

Kanak is also resigning from AIG's board, which has changed in complexion since Greenberg stepped down as chairman in March. Zarb, 70, took Greenberg's spot on an interim basis and wants to relinquish the post by the company's annual meeting this year.

The Wall Street Journal reported today that Willumstad, 60, may be the most likely candidate to succeed Zarb, who used to be chairman of the Nasdaq Stock Market. Willumstad's chairmanship is an option before the board, the newspaper said, citing an unidentified person familiar with the matter.

"Clearly all the new directors are possible successors to Frank," said former US Securities and Exchange Commission Chairman Arthur Levitt, who was hired in July to recruit and groom new directors who may ultimately become chairman. "I don't think the decision has been made."

Levitt said he wasn't "particularly involved" in Willumstad's appointment and hasn't discussed the possibility of the chairmanship with him. The company, which has now added six independent directors since Greenberg's ouster, will add one or two more, he said. Levitt is a board member of Bloomberg LP, the parent of Bloomberg News.

Willumstad, named president of Citigroup in 2002, said in July he would leave the biggest U.S. financial services firm to pursue a CEO position at another company. As part of his severance package, he must steer clear of top positions at JPMorgan Chase & Co. and six other rivals. Willumstad didn't return a call seeking comment.

"He has built and developed all kinds of consumer finance and consumer banking types of products," said Michael Paisan, an analyst at Stifel Nicolaus & Co. in New York who has a "buy" rating on AIG. "That will be a big growth area for AIG."

AIG shares fell 31 cents to $68.30 at 2:29 p.m. in New York Stock Exchange composite trading. The stock has risen 36 percent since the accounting investigation pushed it to an almost two- year low in April.

AIG's senior management shuffle stems from an 11-month probe by New York Attorney General Eliot Spitzer and the SEC. Spitzer sued AIG and Greenberg in May, accusing them of using sham reinsurance contracts to help understate liabilities from claims and hide losses. Sullivan, 51, has pledged to resolve the suit, while Greenberg said he will fight it. The company lowered 2000 through 2004 net income by $3.9 billion, or 10 percent.

Kanak isn't joining a competitor and AIG doesn't plan to replace him, said spokesman Chris Winans, declining to comment on Kanak's plans. The company will rely on Edmund Tse, head of its life insurance business in Southeast Asia and China, to fill some of his duties, Winans said.

Before becoming co-COO in January 2004, the Spokane, Washington-native spent three years running Japan's largest foreign life insurer as head of AIG in Japan and South Korea. Under his leadership, AIG bought Japan's Chiyoda Mutual Life Insurance Co. out of bankruptcy in 2001 and General Electric Co.'s Edison Life in 2003.

In the 1990s, he headed the financial-services committee at the American Chamber of Commerce in Japan, helping the Office of the US Trade Representative negotiate ending restrictions on the prices and policy terms levied by foreign insurers.

Kanak graduated from Harvard Law School and Oxford University and had been living in Japan until his promotion to co-COO brought him to New York. Last January, he moved back to Asia to work closely with Tse, Winans said.

"Every major US and European life insurance company is looking toward Asia," said Rodney Clark, an analyst at Standard & Poor's. "The potential opportunities are enormous,"