Spitzer, SEC subpoena AIG over nontraditional productsPosted On: Feb. 14, 2005 12:00 AM CST
NEW YORK--American International Group Inc. said Monday that it has received subpoenas from New York Attorney General Eliot Spitzer's office and the Securities and Exchange Commission relating to investigations of nontraditional insurance products and certain assumed reinsurance transactions, as well as AIG's accounting for these transactions.
AIG said it will cooperate in responding to the subpoenas, which it received subsequent to its Feb. 9 earnings conference call.
Last year, AIG agreed to pay $126 million in penalties and disgorgement payments to the U.S. Department of Justice and the SEC to settle charges over certain structured financial transactions between AIG units and Pittsburgh-based PNC Financial Services and Plainfield, Ind.-based Brightpoint Inc., a mobile phone distributor.
The insurer also agreed to the appointment of an independent consultant to review certain transactions from 2000 and 2004 to determine whether they were used to violate accounting rules or to manipulate financial results.
In recent months, regulators as well as rating agencies and some industry executives have started to question the use of nontraditional risk financing products, including finite risk products, which are esoteric reinsurance transactions used to help finance hard-to-place risks and protect reinsurers from endless losses.