AIG, Greenberg Settle Disputes

NEW YORK (TheStreet) -- American International Group (AIG) said Wednesday it has resolved longstanding disputes with ex-Chairman and CEO Maurice "Hank" Greenberg and another former executive, and agreed to pay up to $150 million in the duo's legal expenses.

Greenberg, former CFO Howard Smith and AIG have agreed to settle all disputes and release one another from all claims, including those by Greenberg and Smith for future legal fees, expenses and settlement costs. Greenberg's investment firms C.V. Starr & Co. and Starr International have also agreed to the resolution.

Greenberg, Smith and AIG are submitting claims for past legal fees to an independent third party, with a cap of $150 million.

"We are pleased that we have resolved our differences," AIG CEO Robert Benmosche said in a statement. He added that the settlement "will remove a significant distraction and expense."

Greenberg also said he is "pleased that these long-running disputes are now over," thanked Benmosche and the board for their cooperation, and indicated that he will play some kind of role in AIG's restructuring.

The parties had agreed in September to resolve the dispute privately, after Benmosche extended an olive branch to Greenberg and publicly offered kind words about his experience and wisdom. It was a sharp reversal from previous management's stance toward Greenberg, who was ousted in 2005 amid an accounting scandal after having spent decades building AIG into the financial behemoth it has become.

Greenberg remained a large shareholder after his departure and publicly denounced what he perceived to be AIG management's missteps in regulatory filings and media interviews. Since Benmosche changed his tone, Greenberg has stopped berating AIG as well.