American International Group
is reportedly ready to pay more than $1 billion to settle civil charges that it used accounting tricks to inflate its earnings over a five-year period.
Negotiations with state authorities in New York and the
Securities and Exchange Commission
are in their final stages, the
Wall Street Journal
reported, with the SEC looking for a payout closer to $1.5 billion. The settlement talks do not include former AIG chieftain Maurice Greenberg, who was ousted last year.
Such a settlement would be one of the largest ever paid by a company to settle allegations of wrongdoing. It would terminate lawsuits filed by the New York attorney general and New York State Insurance Department and would also include the SEC, which hasn't filed a lawsuit.
AIG's accounting has been the subject of multiple probes for about a year. While several aspects of the insurer's bookkeeping have garnered scrutiny, most of the attention has focused on its accounting for certain reinsurance policies that can be structured like corporate loans with no legitimate element of risk transfer.
Last May, AIG restated five years of financial results to shave off about 10% of its previously recorded earnings. The accounting shenanigans occurred under Greenberg's watch, and though the 87-year-old former CEO has denied all wrongdoing he remains a focus of separate state and federal inquiries.
AIG is now run by Martin Sullivan.