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Financial Planning > Behavioral Finance

AIG Insurers Settle Derivative Claims Suit against Greenberg

By Chad Hemenway

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Former American International Group Inc. Chief Executive Maurice “Hank” Greenberg and the company’s former chief financial officer will get $60 million from AIG’s insurers as part of a proposed settlement to resolve shareholder derivative claims.

The money paid by AIG’s insurance carriers will go to Greenberg and Howard Smith, former chief financial officer, “as reimbursement for their legal fees and expenses,” AIG spokesman Mark Herr said.

The settlement total is $150 million, with $90 million going to AIG, minus attorneys’ fees for the plaintiffs that filed the claims on behalf of AIG, Herr said.

More than 20 current and former officers and directors are involved in the settlement, he said. The investors alleged they were deceived about problems at the insurer and lambasted bonuses the executives received.

“We are pleased this matter has been satisfactorily resolved,” Herr said in an email.

In September 2009, AIG, Greenberg and Smith agreed to binding arbitration to settle various legal disputes including this one, American International Group Inc. Derivative Litigation, in Delaware Chancery Court.

Lee Wolosky, a partner at Boies, Schiller & Flexner LLP, who represents Greenberg, did not immediately return a call for comment.

AIG recently agreed to pay $725 million to Ohio and Florida public pension plan funds in a securities class-action settlement to resolve bid-rigging allegations.

In November 2009, AIG and Greenberg settled all outstanding disagreements that ensued after the ex-CEO left in March 2005.

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