AIG's legendary ex-CEO Maurice 'Hank' Greenberg may be forced to sever all ties with the insurer.

NEW YORK (CNN/Money) - American International Group, the big insurance company whose dealings are being probed by regulators, is close to cutting all ties to ex-CEO Maurice "Hank" Greenberg, a newspaper reported Saturday.

The New York Times, citing two people briefed on deliberations of AIG's board of directors, said the board's discussions come after the investigation into AIG has expanded and about two weeks before Greenberg is due to testify before prosecutors who work for New York State Attorney General Eliot Spitzer.

Greenberg, 79, was forced out as CEO of New York-based AIG nearly two weeks ago after directors learned of a suspect deal with General Re, a unit of Warren Buffett's Berkshire Hathaway.

According to investigators, the deal artificially inflated AIG's reserves by about $500 million. Changes to the reserves that insurers set aside for future claims are watched closely by investors.

Greenberg, who's run AIG (Research) for nearly four decades and is a legend on Wall Street, was allowed to stay on as non-executive chairman.

But he also is CEO and a director of two private offshore companies with close ties to AIG and some of its top executives. How the board can deal with those issues is unclear, the newspaper report added.

AIG stock has tumbled 24 percent since the company disclosed in mid-February that it had been subpoenaed by investigators, knocking about $45 billion off the company's market value, the newspaper's report said.

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