It was the second time in three years the board took such action, and it came in reaction to the company's falling stock price, as well as regulatory concerns relating to its accounting, the newspaper said.
Meeting in closed session, the board replaced Martin J. Sullivan, who was named chief executive in 2005 when the board removed his predecessor over an accounting scandal.
AIG's stock price has fallen 40 percent since December.
The board Sunday named Robert B. Willumstad, chairman of the board and a former top executive at Citigroup, to succeed Sullivan, AIG said in a prepared statement.
The board named Stephen F. Bollenbach as its lead director.
Maurice Greenberg, the head of AIG's largest shareholder group and a former company chief executive, said last month the company was in crisis. Greenberg -- who left AIG in 2005 during an investigation into the company's accounting practices -- made the comment in a letter filed with the U.S. Securities and Exchange Commission.
Five co-defendants were found guilty in February of doctoring the books to inflate AIG's the share value in 2000 and 2001.