US Federal Judge Dismisses Shareholder Lawsuit Against AIG

Copyright:	A.M. Best Company, Inc.
Source:	BestWire Services
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A U.S. District Court judge tossed out a stockholder lawsuit against American International Group Inc. The Manhattan court ruling agreed with AIG's request for dismissal based on legal insufficiencies with the case.

The plaintiffs -- led by the Louisiana Municipal Police Employees Retirement System -- alleged the company and its chief officials were guilty of a "failure to properly oversee the company's credit default swap contracts, which were largely based on subprime mortage-backed collateralized debt obligations, and material misstatements and omissions regarding AIG's financial health and risk management," according to court papers. It was one of many lawsuits the insurance giant has faced since its near collapse.

Judge Laura Taylor Swain of the Southern District of New York wrote in her decision that the case -- a "consolidated derivative action" -- is "dismissed in its entirety," citing its failure to meet the legal requirements suggested by AIG in its defense, namely the plaintiffs "did not make a demand on the company's board of directors prior to bringing this derivative action."

"We're pleased by the court's decision," Mark Herr, a spokesman for AIG, said in a statement.

Attempts to reach the plaintiffs' attorneys for comment were not immediately successful. Other claims within the dismissed case had focused on the "decision to increase AIG's dividend payment and authorize and execute a common stock repurchase plan shortly before the company faced a liquidity crisis, and its approval of certain compensation arrangements with three senior executives and certain personnel in AIG's Financial Products division."

On the afternoon of March 31, AIG's stock was trading at $34.10 a share, down 0.26% from the previous close.

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

(Jesse A. Hamilton, Washington bureau manager: [email protected])