Advertisement
YOU ARE HERE: LAT HomeCollections

Deal Said Near in AIG Case

January 14, 2006|From Bloomberg News

American International Group Inc. may be close to a settlement with state and federal regulators to resolve allegations that the insurance giant used accounting tricks to manipulate earnings, investors said Friday.

"They have to put all the investigations behind them and stabilize the situation and finalize a settlement," said Nicholas Xie, an analyst at Philadelphia-based PNC Advisors, which held 3.8 million AIG shares at the end of September. "The worst is behind them."

AIG may pay more than $1 billion to resolve the allegations, said a person familiar with the talks. An 11-month probe by New York Atty. Gen. Eliot Spitzer and the Securities and Exchange Commission wiped out as much as $59 billion of AIG's market value and ended the 38-year reign of former Chairman and Chief Executive Maurice "Hank" Greenberg.

A settlement would be a step toward ending the insurance industry's biggest scandal, which led to a $3.9-billion earnings restatement last year. Spitzer sued New York-based AIG and Greenberg, 80, in May, accusing them of using sham reinsurance contracts to help understate liabilities from claims and hide losses. A spokesman for Greenberg said Friday that he would fight the allegations at trial.

The Wall Street Journal reported Friday that an accord would include the SEC, which has not sued. The joint settlement may be completed within two or three weeks, the newspaper said, citing unidentified people familiar with the matter.

AIG spokesman Chris Winans said the company continued to cooperate with regulators, but declined to comment further. Spitzer spokesman Darren Dopp and SEC spokesman John Heine declined to comment.

Advertisement
Los Angeles Times Articles
|
|
|