Updated from 10:03 a.m. EDT
It didn't take long for Maurice Greenberg to revert back to his cranky, defiant old self, even as a new chapter of scandal potentially erupted at
American International Group
and the insurer reported lackluster third-quarter earnings.
A week after Greenberg sounded unusually contrite in addressing AIG's role in a burgeoning kickback and bid-rigging investigation, the 79-year-old dean of the nation's insurance business returned to form in a Thursday conference call with analysts.
"I can't tell you how many phone calls and letters I've gotten supporting AIG," said Greenberg, the company's longtime chairman and chief executive. "That clearly speaks for itself."
He disputed the notion that the myriad of scandals now enveloping AIG were hurting the firm's business and reputation. He suggested aggressive prosecutors and a scandal-driven press were as much to blame for the 16% decline in the company's stock the past several weeks as the company's actions.
"It's the feeding frenzy that the press takes," said Greenberg. "We can't control the press. They can say and do what they want."
Greenberg questioned the motive of the regulators and prosecutors leading the charge in some corporate investigations.
"It's a tragedy. What's going on in the United States is causing harm to many companies," he said. "If a company is dishonest from the top down it should be dealt with as harshly as possible, but that is not the case with AIG."
More specifically, he said, it "may not be accidental" that news of the newest investigation involving AIG came a day before the company released its earnings.
Greenberg was referring to a probe being conducted by a federal grand jury in Indiana, which is looking into an alleged "income smoothing" deal between AIG and
. The incident was previously investigated by the
Securities and Exchange Commission
and resulted in AIG paying a $10 million fine last year.
But AIG said Thursday that it recently learned from federal prosecutors that the firm is the target of a criminal probe.
The transaction in question involves an insurance product that AIG sold to Brightpoint for the alleged purpose of helping the wireless devices company conceal $11.9 million of losses in 1998. The deceit action enabled Brightpoint to overstate its pretax net income that year by 61%.
Greenberg said he couldn't discuss the transaction, except to say that the fee it generated for AIG was $100,000.
But the investigation into what many had believed was a closed matter is just the latest regulatory headache for AIG and its 79-year-old chairman.
Last week, the company found itself implicated in allegations of kickbacks and bid-rigging involving insurance broker
Marsh & McLennan
. Although not charged in the civil fraud action filed by New York Attorney General Eliot Spitzer against Marsh, two AIG employees have pleaded guilty to participating in a scheme to submit false bids for an insurance contract in order to boost premium charges.
A month ago, the SEC notified AIG that it's close to filing civil charges against the insurer over a series of questionable off-balance sheet deals it arranged for
and several other companies. Federal prosecutors also are investigating those transactions. In addition, the SEC is considering filing charges against AIG for what regulators say were a series of misleading press releases describing the nature of the investigation.
Greenberg claims he isn't worried by the scandals. If people at the firm did something wrong, they will be dealt with, he said, but for now they appear to be isolated matters.
He also angrily denied that the investigation led by New York Attorney General Eliot Spitzer was targeting his family, dismissing the notion as "gossip." Greenberg's oldest son, Jeffery, is chairman and CEO of Marsh. Another son, Evan, is the CEO of
, another insurer that's been implicated in the investigation.
"The gossip about that is just outrageous," said the elder Greenberg. "I've never discussed business with Jeff or Evan. They are both very busy with their own lives and families."
As for earnings, the company reported that profits rose 7.5% in the quarter. But the insurance company, which had to deal with the fallout from four Florida hurricanes during the quarter, offered up a mild disappointment on that front, too.
The firm earned $2.51 billion, or 95 cents a share, compared to $2.34 billion, or 89 cents a share, a year ago. Excluding capital gains, the firm earned $2.51 billion, or 97 cents a share, compared with $2.58 billion, or 98 cents a share, a year ago. Analysts, however, were looking for the firm to once again earn 98 cents a share.
The after-tax impact of the hurricanes at AIG totaled $512 million, or 19 cents a share. A year ago, natural disasters resulted in an after-tax cost of $46.2 million, or 2 cents a share.
In its earning release, AIG offered only a few comments on the many investigations it's facing. With regard to the Spitzer inquiry, the firm said it "cannot at this time estimate its potential costs."
In late-morning trading, shares of AIG were down 60 cents, or 1%, to $57.