American International Group (AIG) issued a statement todayconfirming that its Board of Directors will consider, at ameeting scheduled for January 9, the demand served on the board onSeptember 21, 2012, by Starr International Company, Inc. ("Starr")as to whether AIG will take over, or allow Starr to continue topursue,  a lawsuit that Starr filed on behalf of itselfand other AIG shareholders contesting the Constitutionality ofcertain terms of the U.S. government's bailout of AIG in September2008. 

The insurer notes that under applicable law, as well asaccording to certain court rulings, the AIG Board must consider andrespond to Starr's demand. It expects to do so by the endof January 2013. 

In November 2011, Starr filed a lawsuit in the United StatesCourt of Federal Claims and the United States District Court forthe Southern District of New York alleging that the Government's2008 receipt of a 79.9% equity interest in AIG constituted awrongful "taking" without just compensation, in violation of theUnited States Constitution. The lawsuit makes  claims on a"derivative" basis in the name of AIG and for its benefit, as wellas on a "direct" basis on behalf of Starr and other similarlysituated shareholders.

By its demand, Starr requests that the AIG Board authorize AIGto assume control of the claims that Starr is pursuing in AIG'sname or allow Starr to pursue these claims on AIG'sbehalf. Starr's complaint seeks approximately $25 billionin damages. 

AIG says its board has three options with respect tothe derivative claims asserted on its behalf: 1) take over Starr'sclaims and prosecute them on its own; 2) refuse the demand andprevent the claims from being prosecuted by Starr, a decision Starris likely to challenge; or 3) allow Starr to prosecute the claimson AIG's behalf. 

AIG notes in its response that the Court of Federal Claims hasdenied the Government's motion to dismiss the suit, so that thecase will go forward with or without AIG'sparticipation. If AIG does not allow the derivative claimsto proceed on its behalf and Starr prevails or obtains afavorable settlement on its direct claims, then AIG will notreceive any of the amountsrecovered.    

AIG says it is its board's obligation and intention to considerseriously Starr's demand and respond to it in a manner that theBoard believes is in the best interest of the Company, taking intoaccount all the relevant circumstances.  

"AIG has paid back its debt to America with a profit, and wemean it when we say thank you to the American people," Robert H. Benmosche, president and CEO of AIG, says in thestatement. "At the same time, the board has fiduciary andlegal obligations to the company and its shareholders to considerthe demand served on us and respond in a fair, appropriate andtimely manner. Tomorrow's Board meeting is about listeningto all of the parties involved and gaining a thorough understandingof the issues. We anticipate making a decision in the nextseveral weeks."