May 24 (Bloomberg) -- American International Group Inc. investors including Ohio firefighters are being compensated for stock declines dating to Eliot Spitzer’s 2004 probe as the insurer raises funds to move beyond a U.S. rescue.
AIG will use $550 million from a share sale scheduled for today to pay for a settlement reached last year in a securities- fraud case brought by investors led by Ohio pension funds. The bailed-out insurer and U.S. Treasury Department are selling 300 million shares to replace government funds with private capital. The sale would raise about $9 billion at yesterday’s closing share price, with two-thirds going to Treasury.Chief Executive Officer Robert Benmosche, 66, has been working to resolve legal disputes tied to probes by Spitzer, who won a $1.64 billion settlement with AIG in 2006 when he was New York attorney general. Benmosche needs to attract private investors as Treasury seeks to lower its stake in the New York- based insurer from 92 percent.“The new shareholders, after day one of this share sale, they absolutely want a clean slate,” said Roddy Boyd, author of “Fatal Risk: A Cautionary Tale of AIG’s Corporate Suicide.” AIG’s management has “enough competitive pressures out there, having sold their crown jewels, that they don’t need things weighing on the share price.”AIG has slipped 38 percent this year through yesterday in New York trading as the insurer was forced to add $4.2 billion to reserves after disclosing a shortfall in February. Benmosche, AIG’s fifth CEO since 2005, has sold the company’s biggest non- U.S. life insurance units to help repay the bailout.‘Better Trajectory’The 2006 settlement resolved Spitzer’s allegations that AIG misled investors, faked bids and cheated workers’ compensation programs. The deal, which Spitzer said would “send AIG off on a better trajectory,” failed to restore investor confidence in the firm and fueled the insurer’s disputes with other states, rival insurers, investors and ex-executives.Record losses in 2008 cast doubt on whether AIG could compensate investors hurt in 2004, said Thomas A. Dubbs, senior partner for Labaton Sucharow LLP and lead counsel for the Ohio funds, which provide for the retirement of firefighters, police officers and teachers. In 2010, as AIG returned to profit and struck a deal to regain independence, Benmosche agreed to settle the case for $725 million, with an initial $175 million payment.Raising the rest through the share offering was “a creative and outstanding result, given that in the fall of 2008, many people believed AIG might not survive,” said Dubbs.The agreement also covered public pension funds in New Mexico, Mississippi and California. The group said AIG had fraudulently inflated results, causing the share price to plummet when the deception was uncovered.‘Restoring the Value’The accord allows “AIG to continue to focus its efforts on paying back taxpayers and restoring the value of our franchise,” said Mark Herr, a spokesman for the insurer. AIG will use remaining proceeds from its portion of the share sale for general corporate purposes, the company said May 11.AIG resolved legal disputes in 2009 with former CEO Maurice “Hank” Greenberg, who was forced out during the Spitzer probe. The insurer agreed to reimburse as much as $150 million in legal fees for Greenberg and ex-Chief Financial Officer Howard Smith.State insurance regulators and AIG’s rivals said the Spitzer settlement didn’t account for all of the firm’s deception in shortchanging workers’ compensation pools and demanded additional funds. Benmosche agreed in December to pay $100 million in fines and $46.5 million in taxes to a group of state regulators.Liberty Mutual Holding Co. said last month that AIG should pay $1.5 billion to settle a dispute with competitors over the industry pools, more than triple what AIG agreed to in a preliminary settlement with rivals including Travelers Cos. AIG said May 6 that disputes tied to workers’ compensation markets contributed to the insurer raising reserves.AIG plans to sell 100 million shares today, and Treasury expects to sell 200 million, according to data compiled by Bloomberg. The offering will reduce Treasury’s stake in the insurer to about 77 percent, AIG said in a regulatory filing.The case is In re American International Group Inc. Securities Litigation, 1:04-cv-08141, U.S. District Court, Southern District of New York (Manhattan).--Editors: Dan Kraut, William Ahearn
To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net
沒有留言:
張貼留言