NO CRIMINAL CHARGES LIKELY AGAINST AIG:

New York Attorney General Eliot Spitzer reassured the business world and those affiliated with American International Group that criminal charges are not likely to flow from his department’s continuing investigations of AIG. Also, the attorney for former AIG Chairman Maurice Greenberg said the industry leader committed no fraud and never would have agreed to certain reinsurance transactions if he thought they were improper. Spitzer issued a statement that a civil resolution of all complaints against AIG was likely given the cooperation of the insurer’s management. “An investigation of certain American International Group financial transactions and the way these transactions were reported is proceeding,” Spitzer stated. “The board and current management of the company are now cooperating with this investigation. Based upon these efforts, and based upon our knowledge to date, we believe that a civil resolution with the corporation will ultimately be achievable.” Spitzer has been investigating AIG’s accounting practices primarily related to reinsurance transactions with General Reinsurance and other offshore reinsurance companies. Former AIG Chairman Greenberg, who resigned after authorities began probing transactions between AIG and General Reinsurance, thought the transaction was legal and proper, according to his attorney, David Boies. Spitzer and the SEC have been looking into whether the reinsurance was utilized not to transfer risk but to manipulate AIG’s finances. Boies said Greenberg did not know the accounting of the product might be questioned. AIG has since acknowledged that the accounting of the General Re reinsurance purchase was improper and that it and other reinsurance deals may have misrepresented AIG’s net worth by as much as $1.7 billion over 14 years. AIG admitted that the General Re transaction added $500 million to its premiums and reserves for claims. It unwound $250 million of the deal last year’s fourth quarter.

Topics Fraud Reinsurance AIG