AIG Said To Have Indentified More Than 30 Accounting Errors

by Mike Godfrey, for LawAndTax-News.com, New York

29 March 2005

Insurance giant AIG, under investigation by New York Attorney General Eliot Spitzer and the SEC, told regulators it has uncovered accounting errors that may total up to $3bn.

AIG, which has had major interests in Bermuda for 50 years, has been under investigation since last year. Recent reports have alleged that AIG used Barbados-based Union Excess Reinsurance Co and Bermuda-based Richmond Insurance Co. Ltd to park reinsured risks off its balance sheet inappropriately.

CEO Hank Greenberg resigned 2 weeks ago and will become non-executive Chairman; the company fired its CFO and a senior reinsurance executive last week after they refused to answer investigators' questions on the grounds that their answers might be self-incriminating.

AIG's own investigation, which continues, is said to focus on more than 30 transactions, some of them involving offshore companies. Questionable aspects of the transactions may have included the timing of booking of revenue or the propriety of liability transfers. According to the Wall Street Journal, senior management may have been aware of some of the transactions, which may open up the possibility of regulatory action against executives.

AIG is due file its annual regulatory report with the SEC next Thursday. Mr. Greenberg is scheduled to give a sworn statement to investigators from Mr. Spitzer's office and the SEC on April 12.

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