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The Actuary The magazine of the Institute & Faculty of Actuaries

General Insurance: American International Group (AIG)

Towards the end of May, the Securities and Exchange Commission (SEC) served a “Wells notice” on Maurice Greenberg, the former chairman and chief executive of AIG in relation to his alleged role in helping the company inflate its reinsurance loss reserves by the use of sham reinsurance deals with General Re, under which no risk was transferred.

The Wells notice indicates that he may face civil charges in connection with his role in the deal. This follows the conviction in February of five executives from AIG and General Re in connection with the same deal. In addition AIG has received enquiries from the SEC and the US Department of Justice into the valuation of credit default swaps, following enormous write-downs on the portfolio.

Martin Sullivan resigned as chief executive of AIG in mid-June and has been replaced by Robert Willumstad. This follows pressure from shareholders arising from the company’s losses on credit default swap business and the regulatory enquiries reported above.