AIG finite-reinsurance transactions and accounting controls

Claim under review

Did transactions without meaningful risk transfer smooth earnings and misstate reserves?

Chronology

A 2000 General Re transaction added $500m to AIG reserves. AIG restated accounts in 2005 and settled SEC charges in 2006 for $1.64bn. Hank Greenberg settled civilly without admission and was acquitted in a separate criminal case.

Court, regulatory and primary evidence

SEC orders, restatements and General Re prosecutions document transactions. Corporate resolution and other executives’ pleas are not Greenberg criminal convictions.

Independent cross-checks

Independent corroboration: SEC AIG settlement (2006) provides a separate record relevant to this case. Corporate civil resolution.

Competing account and limits

Finite reinsurance can be legitimate; contract substance controls. Greenberg’s civil settlement was not an admission; criminal acquittal is material.

Evidence that could alter this assessment

Contracts, risk models, reserve communications and appellate records could refine transaction and knowledge attribution.

Skeptical finding

AIG control failures are documented; Greenberg was not criminally convicted. Respect acquittal and settlement terms.

Annotated sources

1. SEC AIG charges (2005)Regulator’s allegations about accounting transactions.
2. SEC AIG settlement (2006)Corporate civil resolution.
3. Second Circuit, U.S. v GreenbergCriminal proceedings and verdict record.

Historical research only; not legal or investment advice.