New York's Attorney General and the state's InsuranceSuperintendent announced they have filed a civil suit againstAmerican International Group alleging that executives at thecompany used improper accounting practices to pump-up the company'searnings to deceive the investors and regulators.

The suit, filed in the Supreme court of the State of New York,County of New York against the New York-based insurance giant,claims the company "engaged in misleading accounting and financialreporting, projecting an unduly positive picture of AIG'sunderwriting performance for the investing public."

The suit names AIG, Maurice R. "Hank" Greenberg, AIG's formerchairman and chief executive officer and Howard I. Smith, formerchief financial officer.

Attorney General Eliot Spitzer and Superintendent of InsuranceHoward Mills allege the company and executives:

o Engaged in "two sham insurance transactions" that gaveinvestors the impression the company had larger reserves for claimsthan it did. The transactions, personally approved and negotiatedby Mr. Greenberg, the complaint alleges involved the CEO of GeneralReinsurance Corporation, Inc.

o Hid loses from its underwriting business by converting theunderwriting loses into capital loses.

o Created false underwriting income that involved falsereporting of income from the purchase of life insurance policies asunderwriting polices. This scheme was personally approved by bothMr. Greenberg and Mr. Smith.

The complaint further claims that Mr. Greenberg manipulatedAIG's stock price, instructing traders to "aggressively purchase"the stock and increase the worth of his and Mr. Smith'sholdings.

The company is accused of booking workers' compensationinsurance premiums as regular liability insurance revenue, whichmay have reduced AIG's contribution to the state's workers' compsystem and avoided payment of taxes on the premiums.

AIG also is accused of deceiving New York state and otherinsurance regulators about offshore relationships with reinsures.Documents related to this investigation were destroyed by AIG, thesuit alleges.

The complaint seeks payment of punitive damages and court costs,restitution and other payments without specifying any amounts.

Joe Norton, director of public relations for AIG, said thecompany has reviewed the complaint and is pleased the attorneygeneral noted the company's continued cooperation in theinvestigation.

"There are no new claims raised in the complaint," he said,adding Mr. Spitzer has "previously indicated his expectation ofreaching a civil settlement with AIG."