General Re Corp., a reinsurance unit of billionaire Warren Buffett’s Berkshire Hathaway Inc., agreed to pay $72 million to settle investor claims about its role in a fraudulent transaction involving American International Group Inc.
The settlement was announced Wednesday by Ohio Attorney General Richard Cordray, who led the lawsuit on behalf of three Ohio pension funds. The settlement requires approval by a federal judge in Manhattan.
Omaha, Nebraska-based Berkshire did not immediately return a call seeking comment.
The case centered on a so-called finite reinsurance transaction with General Re that investigators said allowed AIG to improperly boost its loss reserves by $500 million in 2000 and 2001, smoothing and improving results.
“When the truth about this fraud and other AIG manipulations was made public, the price of AIG stock declined,” Cordray said in a statement. “Investors, including Ohio’s pension funds, had been deceived and suffered significant financial losses.”
The pension fund plaintiffs included the Ohio Public Employees Retirement System, the State Teachers Retirement System and the Ohio Police and Fire Pension Fund.
Four former General Re executives, including onetime chief executive Ronald Ferguson, and a former AIG vice president were convicted last February in federal court in Hartford, Conn., over the reinsurance transaction.
AIG in 2006 paid $1.6 billion to settle civil charges brought by Eliot Spitzer, then the New York attorney general, in connection with the case. (Reporting by Jonathan Stempel; editing by Carol Bishopric)
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