Greenberg Among 20 Former AIG Execs to Reach $150 Million Settlement in Derivative Lawsuit

American International Group Inc. and 20 of its former and current leaders, including former Chief Executive Officer Maurice "Hank" Greenberg, have reached a $150 million settlement in a shareholder derivative claims lawsuit.

Under the settlement, filed with the Delaware Chancery Court, AIG's director and officer insurers will fund the entire settlement amount of $150 million, with $90 million going to AIG -- less attorneys' fees to the plaintiffs lawyers who brought the claim -- and $60 million going to Greenberg and Howard Smith, former chief financial officer of AIG, to reimburse their legal fees and expenses, said Mark Herr, a spokesman for AIG.

"We are pleased to have resolved this matter," Herr said in an e-mail.

The lawsuit was brought by plaintiffs including the Teachers' Retirement System of Louisiana and the City of New Orleans Employees Retirement System.

The claims will be paid under AIG's $200 million 2004-2005 D&O insurance tower, according to court papers. The court papers did not name what insurance carriers participated in the tower.

There's been a number of lawsuits involving AIG and Greenberg.

In 2009, AIG said it had agreed to pay Greenberg and Smith up to $150 million in "reasonable legal fees and expenses," according to a legal settlement (BestWire, Nov. 30, 2009).

Earlier in 2009, the Ohio Attorney General's office negotiated a $115 million settlement with Greenberg and three other former executives from AIG in a federal civil lawsuit that stemmed from a $3.9 billion restatement of company finances (BestWire, Aug. 14, 2009).

That came a week after Greenberg agreed to pay $15 million to settle regulators' allegations of improper accounting transactions at AIG, a U.S. Securities and Exchange Commission official said (BestWire, Aug. 6, 2009).

AIG still owes a total of about $97.2 billion to the federal government, which offered a bailout of up to $182 billion to save the company from failing in 2008. AIG never borrowed the full $182 billion it was offered, and has been selling noncore assets to pay back what it owes.

The stock of American International Group (NYSE: AIG) closed at $33.93 in afternoon trading on Aug. 31, down 0.21% from the previous close.

Most AIG insurers have current Best's Financial Strength Ratings of A (Excellent).

(By Meg Green, senior associate editor, BestWeek: [email protected])