By Chris Sanders
Reuters
Monday, July 11, 2005; 5:23 PM
NEW YORK (Reuters) - American International Group
Attorney General Eliot Spitzer are exploring a settlement of the
prosecutor's civil lawsuit over the insurer's accounting practices,
Spitzer's office said on Monday.
"It's just a preliminary dialogue," Spitzer's spokesman Darren Dopp said,
adding that the attorney general had said early on that he intended to
settle with AIG.
Dopp added that there have been no sit-down talks or discussions of terms
with AIG, which is the world's largest insurer by market value.
Spitzer and the New York Insurance Department filed a civil lawsuit against
insurer AIG, its former Chief Executive Maurice "Hank" Greenberg, and its
former chief financial officer, in May saying they committed fraud and
manipulated the books.
Greenberg and former CFO Howard Smith, who were ousted when the
investigation first picked up steam, took part in numerous fraudulent
business deals that exaggerated the strength of the company's core
underwriting business and propped up its stock price, according to the
lawsuit.
Along with New York authorities, the U.S. Justice Department and the
Securities and Exchange Commission have been investigating AIG.
AIG spokesman Chris Winans said the insurer continues to cooperate with all
investigations and has no comment on continuing litigation.
"As an investor, it would be very good news to put this issue behind us."
said Hugh Johnson, chief investment officer Johnson Illington Advisors.
Since just before news of the probes into AIG hit the headlines on February
14, AIG's share price has fallen about 17 percent while the S&P insurance
index <.GSPINSC> is down about 2 percent.
At the end of May, AIG said it had overstated net income for the past five
years by $3.9 billion, or 10 percent.
Following an internal review, AIG finally released a thrice-delayed
regulatory filing in which it also cut its net worth through the end of 2004
by $2.26 billion, or 2.7 percent -- less than an early May warning of a
possible $2.7 billion.
