Regulators are looking into whether Hank Greenberg, chairman and chief executive officer of American International Group, misled investors about an increase in the insurer’s reserves in 2000, reported the Financial Times.
According to the paper, investigators are examining comments made by Greenberg when he announced the company’s results in February of 2001. “We added $106 million to AIG’s general insurance net loss and loss adjustment reserves” for the fourth quarter of 2000, he reportedly stated in a press release.
The FT cited unnamed sources who claim that investigators are examining whether AIG used a contract purchased from General Reinsurance, an affiliate of Berkshire Hathaway, to inflate its reserves in that quarter. Friday’s Wall Street Journal also reported that federal prosecutors, as well as the Securities and Exchange Commission and New York State, also looking into such a deal.
Citing confidential sources, the Journal noted that Greenberg has personally received at least one subpoena regarding his role in the transaction.
According to the FT, the investigation is focusing on so-called finite reinsurance contracts, which regulators fear that companies may use to manipulate their earnings statements.