AIG Unit’s Suit Claims Conflicts of Interest

An American International Group Inc. unit sued three directors of New California Life Holdings Inc., claiming they were hampering efforts to resolve a lawsuit involving a failed California insurer’s assets.

AIG Retirement Services, which owns 33% of New California, contends that Patricia Barbizet, John J. Ryan III and Gilles Erulin are harming efforts to resolve a California suit over the 1992 buyout of Executive Life Insurance Co.’s bonds and other assets. AIG Retirement claims that Barbizet and Ryan also serve as directors of another company involved in the California suit, Artemis, billionaire Francois Pinault’s holding company. Artemis also employs Erulin, the suit says.

The directors “have refused to recuse themselves despite obvious and severe conflicts of interest,” the AIG unit said in the suit filed Jan. 6 in Delaware Chancery Court.

California Insurance Commissioner John Garamendi is scheduled to begin a jury trial next month that will seek $2 billion on behalf of about 320,000 Executive Life policyholders. Executive Life, once California’s largest insurer, collapsed in 1989 from losses tied to junk bonds.