Former AIG Chief to Cancel Transfer of Shares to Wife
Maurice “Hank” Greenberg, American International Group Inc.’s former chief executive, will reverse a transaction that transferred his fortune in AIG shares to his wife days before accounting probes forced him to resign, his lawyers said Tuesday.
Greenberg and his wife, Corinne, will both own the 41.1 million shares after the transfer is canceled.
The transfer, valued at $2.68 billion at the time, “has been completely misunderstood and caused needless distraction and wasteful litigation,” the lawyers said in a statement.
Greenberg, 80, transferred the stock March 11, four days before an investigation of reinsurance accounting forced him to step down from the world’s largest insurer.
Ohio state pension funds, which have sued Greenberg in connection with an alleged securities fraud, have asked a judge to appoint a receiver to take control of the shares, saying they were concerned that the transfer might be an attempt to shield the Greenbergs’ wealth from lawsuits.
“By transferring the shares back to joint ownership, the Greenbergs hope to put this behind them and move on,” the Greenbergs’ lawyers said.
New York Atty. Gen. Eliot Spitzer has since sued AIG and Greenberg, alleging they used sham reinsurance contracts and other transactions to understate liabilities and polish profit. The probe spurred AIG to lower net income from the last five years by $3.9 billion, or 10%, in a restatement last month.
Also on Tuesday, AIG said quarterly profit rose 44%, citing strong Asian life insurance businesses and gains from derivatives.
The company said net income for the first three months of the year rose to $3.68 billion, or $1.40 a share, from $2.56 billion, or 97 cents, a year earlier. Profit excluding realized gains on investments and derivatives was $1.21 a share, beating the $1.18 average estimate of analysts polled by Thomson First Call.
AIG may rely more on life insurance sales in countries such as Japan and China as prices for property and casualty coverage decline and the loss of its AAA credit rating makes some U.S. clients hesitant to do business. The rating has been cut twice since Spritzer launched the accounting probe.
“Foreign life is still healthy, it’s still growing and it still has lots of potential,” said Brian Meredith, an analyst at Banc of America Securities in New York, before the earnings were announced. “That adds a substantial amount of value to the company.”
Shares of New York-based AIG rose $1.33 to $56.50 in after-hours trading. The stock, which rose 14 cents to $55.17 in regular trading, had fallen 25% since the company disclosed Feb. 14 that it had received subpoenas from Spitzer and the Securities and Exchange Commission.
AIG’s pretax profit from foreign life insurance units surged 52% to $1.36 billion in the first quarter. Earnings from property and casualty coverage climbed 18% to $1.7 billion, and earnings from life insurance in the U.S. decreased by 3.3% to $860 million.
AIG had delayed the first-quarter report to prepare the restatement.
Martin Sullivan, the former chief operating officer who replaced Greenberg as CEO, told investors in a May 31 conference call that some of the banks, brokers and agents that sell AIG life insurance and retirement products in the U.S. were more cautious because of the downgrade and the negative publicity.
AIG has said it intends to settle with Spitzer, and lawyers for Greenberg have said he will dispute the allegations.
