American International Group Chief Executive Officer Martin Sullivan told an investors meeting this morning that the company will complete an audit of its reserves and other reviews by the end of the year.
Mr. Sullivan told the group that the loss reserve audit is just one of several internal examinations at the company where investigations by federal and state authorities into accounting procedures and relationships with brokers led to the ouster of longtime CEO Maurice Greenberg earlier this year.
Mr. Sullivan did not address the status of negotiations with New York Attorney General Eliot Spitzer over a possible settlement of charges he filed in a civil suit in May, which accused the insurer and its former top management of accounting fraud. The suit seeks to recover damages and illegal profits made by the company.
A total of 36 multidisciplinary teams have been reviewing all of the company's operations throughout the world, which include independent audit and legal reviews as well as internal and audit committee reviews.
The year-end completion target represents a "very aggressive timetable," Mr. Sullivan said.
Other improvements at the company stemming from the tumultuous events of the year include a board that now consists of a two-thirds majority of independent directors and the hiring of former Securities and Exchange Commissioner Chairman Arthur Levitt as a special advisor to the board.
Mr. Sullivan said the company expects to incur losses of about $1.1 billion from Hurricane Katrina, which represents less than one quarter of earnings.
As for reinsurance pricing, he said he expects price hikes in property, marine and energy, both on and offshore.
"But other than that we are not seeing a particular price movements," Mr. Sullivan noted.
At the same meeting, AIG Chief Financial Officer Steven Bensinger said maintenance of the company's triple-A rating was not worth the incremental cost it provided.
AIG had been one of the few to hold the top ratings, which fell to double-A earlier this year as the company restated earnings to account for some transactions it admitted were improper.
Mr. Bensinger said that rating was sufficient for most of the business the company conducts.
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