American International Group, Inc. : U.S., Ex-AIG, Gen Re Executives Reach Agreement
06/22/2012| 03:05pm US/Eastern
--'The parties have reached agreements to resolve this matter" -filing
--Details to be disclosed in court later Friday
--Court filings last month revealed the two sides were in settlement talks to resolve the lengthy legal battle
NEW YORK--The U.S. government and five former insurance executives have reached an agreement resolving accusations that the executives engineered a bogus reinsurance transaction to mask a drop in reserves at American International Group Inc. (AIG), according to a court filing.
Details of the agreement will be disclosed in court later Friday, according to the filing made in federal court in Connecticut.
"The parties have reached agreements to resolve this matter," the filing said. "Documentation reflecting these agreements will be filed with the Court later today."
Court filings last month revealed the two sides were in settlement talks to resolve the lengthy legal battle between the government and the five former insurance executives--four former General Re Corp. executives and one former AIG executive.
The federal criminal case grew out of investigations in 2005 by the Securities & Exchange Commission and the New York State Attorney General's office into AIG's accounting.
Prosecutors had argued the General Re executives agreed to engage in a sham transaction with AIG, the reinsurer's largest client at the time. The deal improperly boosted AIG's earnings, which artificially inflated its stock price, the government said.
Former General Re chief executive Ronald Ferguson; Christian Milton, a former AIG vice president; and three former Gen Re executives--Chris Garand, Elizabeth Monrad and Robert Graham--were convicted of conspiracy, fraud and other charges in 2008. The defendants were sentenced to prison terms ranging from 18 months to as long as four years.
Last year, a federal appeals court threw out convictions of the five individuals, including Mr. Ferguson, and ordered a new trial, citing in part the improper introduction of evidence regarding a drop in AIG's stock price after news of the government probe became public.
A spokesman for the U.S. Attorney for the District of Connecticut declined to comment.
Phone messages left with attorneys for the defendants weren't immediately returned.
--Chad Bray and Ashby Jones contributed to this article.
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