NEW YORK - A former American International Group Inc. chief executive, Maurice Greenberg, says the federal government's $85 billion loan to the huge insurance company will drive it out of business unless its terms are changed.

"The role of government should not be to force a company out of business, but rather to help it to stay in business, especially a company that has been the pride of its industry," Greenberg wrote in a letter sent late Tuesday to the insurer's current CEO, Edward Liddy.

In the letter, Greenberg said AIG will not be able to pay off the loan from proceeds tied to asset sales and potential earnings. That will eventually lead to the liquidation of AIG, he said in the letter.

Last month amid the ongoing credit crisis, AIG received a two-year, $85 billion loan from the government in an effort to avoid a liquidity crisis that could have put the insurer out of business.

In return for the loan, the government received warrants to acquire a 79.9 percent ownership stake in AIG.

AIG then received a second loan from the government for $37.8 billion. The second loan though is collateralized by investment-grade, fixed-income securities owned by AIG.

AIG said it will sell various assets to repay the loans.

Greenberg said changing the terms of the initial loan with the government should make it feasible for AIG to remain in business and pay the government back.

He suggested that instead of the government receiving an ownership stake, it receive preferred stock with an annual dividend ranging between 5 percent and 6 percent and a 10-year term for AIG to redeem the loan at a 10 percent premium.

Greenberg ran AIG for 38 years until 2005. Before the initial government loan, Greenberg was AIG's largest shareholder. After the deal with the government, Greenberg said he planned to sell some of his shares in the company.

AIG shares slipped 5 cents to $2.75 in Wednesday premarket trading after closing Tuesday at $2.80.