Four former executives of American International Group Inc., including ex-CEO Maurice “Hank” Greenberg, agreed on Thursday to settle a long-standing shareholder lawsuit for $115 million.
The insurer will receive proceeds from the settlement, less fees.
The settlement will save the case from going to trial, which was to have begun next week in Delaware.
An insurance policy covering the former directors and officers will pick up about $85.5 million of the settlement.
C.V. Starr, a company that was once affiliated with AIG and is today overseen by Greenberg, will pay the rest, according to Lee Wolosky, a partner with law firm Boies, Schiller and Flexner, which represents Greenberg.
C.V. Starr’s payment represents “a small fraction of the $1 billion to $2 billion damages sought in this case,” Wolosky added.
AIG spokesman Nicholas Ashooh said the company was “pleased the matter has been resolved.”
The settlement resolves the lawsuit brought in 2002 by the Teachers Retirement System of Louisiana, an AIG shareholder.
It alleged, among other things, that certain executives and directors breached their fiduciary duties by directing business worth hundreds of millions of dollars in commissions to C.V. Starr, arguing the business should have gone directly to AIG, according to a statement issued by the plaintiff’s lawyer, Grant & Eisenhofer.
Greenberg’s lawyer Wolosky said arrangements that Greenberg presided over during his tenure as AIG CEO had been “proper,” and contributed to the insurer’s growth.
Besides Greenberg, former chief financial officer Howard Smith, former vice-chairman of investments Edward Matthews and former vice-chairman Thomas Tizzio were named in this action.
STRING OF LAWSUITS
The settlement brings one legal action involving AIG and Greenberg to a close. However, a string of lawsuits between the insurer and either Greenberg, former executives or Greenberg-controlled entities remain outstanding.
Greenberg left AIG in 2005 after then New York-Attorney General Eliot Spitzer and the U.S. Securities and Exchange Commission made allegations of financial misconduct against him and the company. Greenberg has denied all wrongdoing.
AIG paid $1.64 billion to settle the charges more than two years ago.
Greenberg was on Thursday being deposed in New York in connection with civil charges in that matter.
(Reporting by Lilla Zuill; Editing by Andre Grenon, Phil Berlowitz)
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