A second questionable reinsurance deal is involved in the Securities and Exchange Commission's consideration of civil charges against former American International Group Chairman Maurice Greenberg, it was reported.
According to a Wall Street Journal article, in addition to allegations regarding Mr. Greenberg's alleged involvement with a fraudulent 2001 reinsurance arrangement between AIG and General Reinsurance, the SEC is also looking into a deal between AIG and Capco Reinsurance Co, a reinsurer that was once controlled by AIG and is no longer in operation.
Citing the SEC, the newspaper reported that AIG used a deal with Capco to hide roughly $200 million in underwriting losses for AIG in order to make the insurer's losses "seem less embarrassing…."
As reported by NU Online News Service on May 22, the SEC sent Mr. Greenberg a "Wells Notice," which allows Mr. Greenberg, as the respondent, to address the charges before the SEC decides whether to proceed with further legal action.
The notice was said to be connected to a reinsurance arrangement between AIG and General Re in 2001, which a federal jury found to be fraudulent in a February 2008 case that resulted in the convictions of four General Re executives and one former AIG executive.
The judge who presided at that trial, U.S. District Judge Christopher F. Droney, said recently that there was sufficient evidence for a jury to conclude that the fraudulent arrangement originated with a telephone call from Mr. Greenberg.
In response to the reported SEC actions, Mr. Greenberg's legal team released a statement declaring, "AIG was involved in millions of transactions each year. Mr. Greenberg regularly relied on AIG's auditors, lawyers and other professionals to ensure that transactions were structured, executed and accounted for properly."
The SEC declined to comment, and Vincent Sama, an attorney representing former AIG Chief Financial Officer Howard Smith, who has also been given a Wells Notice by the SEC, did not return a phone call.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
