Two former AIG executives have agreed to settle with the Office of the New York Attorney General over their role in misrepresenting the company’s finances.
As part of the settlement, former CEO Maurice “Hank” Greenberg and former CFO Howard Smith have agreed to return the $9.9 million that they received in bonuses between 2001 and 2004.
New York Attorney General Eric Schneiderman said his office is pleased that Greenberg and Smith have now recognized their role in the transactions.
“Today’s agreement settles the indisputable fact that Mr. Greenberg has denied for twelve years: that Mr. Greenberg orchestrated two transactions that fundamentally misrepresented AIG’s finances,” Schneiderman said in a statement.
Greenberg will personally pay $9 million to the State of New York, the New York attorney general said.
The case was originally brought forward in 2005 by Eliot Spitzer, then attorney general, after the company admitted it had engaged in certain improper reinsurance transactions while Greenberg was CEO.
AIG was also a defendant in the case, but settled with the attorney general’s office in 2016 for $1.6 billion.
Greenberg and Smith said in Friday statements that they knew that the transactions were intended to increase AIG’s loss reserves and convert underwriting losses into investment losses.
“As a result of these transactions, AIG’s publicly-filed consolidated financial statements inaccurately portrayed the accounting, and thus the financial condition and performance for AIG’s loss reserves and underwriting income,” Greenberg and Smith said in their statements.
Greenberg admitted he “initiated, participated in and approved the transactions.” Smith said in his statement that he also participated and approved the transactions.
This story is developing. Please check back for further updates.