AIG Regulatory Woes

The decision by Maurice Greenberg to step down as American International Groups longtime CEO came in the wake of the carrier's clashes with multiple government investigators and regulators in recent months. The following is a brief summary:

Sept. 10, 2003: AIG pays a $10 million civil penalty to settle the Securities and Exchange Commission's charge that the insurer sold an income-smoothing product that helped Brightpointa Plainfield, Ind.-based mobile phone distributorhide its losses and report false and misleading financial information to the public.

Sept. 29, 2004: AIG discloses that the Justice Department began a criminal investigation into AIG Financial Products Corp. regarding transactions for PNC Financial Services that allowed PNC to hide $762 million in bad loans and underperforming investments off its accounting.

Oct. 14, 2004: New York Attorney General Eliot Spitzer files a civil lawsuit against March & McLennan Companies accusing its Marsh brokerage of rigging bids and other anti-competitive practices. Four AIG executives have been arrested so far related to this case.

Oct. 22, 2004: AIG discloses it is the target of a criminal investigation by the U.S. Attorney for the Southern District of Indiana regarding the transaction that allowed mobile phone distributor Brightpoint to put out a misleading balance sheet in 1999.

Nov. 30, 2004: AIG reaches a settlement with the SEC and the Justice Department regarding investigations of its non-traditional insurance product sales and the PNC Financial Services case. The company pays $126 million in penalties and fees, and embraces an independent consultant to examine AIG transactions.

Feb. 14, 2005: AIG discloses that it has again received subpoenas from Mr. Spitzer's office and the SEC seeking information on non-traditional insurance products. Subpoenas center on certain transactions involving finite insurance between AIG and Berkshire Hathaway's General Re.

March 2005: Mr. Spitzer's office has reportedly found that Mr. Greenberg himself was involved in a four-year-old reinsurance deal with General Re being probed.

Reproduced from National Underwriter Edition, March 17, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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