American International Group (AIG) issued a statement today confirming that its Board of Directors will consider, at a meeting scheduled for January 9, the demand served on the board on September 21, 2012, by Starr International Company, Inc. ("Starr") as to whether AIG will take over, or allow Starr to continue to pursue, a lawsuit that Starr filed on behalf of itself and other AIG shareholders contesting the Constitutionality of certain terms of the U.S. government's bailout of AIG in September 2008.

The insurer notes that under applicable law, as well as according to certain court rulings, the AIG Board must consider and respond to Starr's demand. It expects to do so by the end of January 2013.

In November 2011, Starr filed a lawsuit in the United States Court of Federal Claims and the United States District Court for the Southern District of New York alleging that the Government's 2008 receipt of a 79.9% equity interest in AIG constituted a wrongful "taking" without just compensation, in violation of the United States Constitution. The lawsuit makes claims on a "derivative" basis in the name of AIG and for its benefit, as well as on a "direct" basis on behalf of Starr and other similarly situated shareholders.

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

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

AIG notes in its response that the Court of Federal Claims has denied the Government's motion to dismiss the suit, so that the case will go forward with or without AIG's participation. If AIG does not allow the derivative claims to proceed on its behalf and Starr prevails or obtains a favorable settlement on its direct claims, then AIG will not receive any of the amounts recovered.

AIG says it is its board's obligation and intention to consider seriously Starr's demand and respond to it in a manner that the Board believes is in the best interest of the Company, taking into account all the relevant circumstances.

"AIG has paid back its debt to America with a profit, and we mean it when we say thank you to the American people," Robert H. Benmosche, president and CEO of AIG, says in the statement. "At the same time, the board has fiduciary and legal obligations to the company and its shareholders to consider the demand served on us and respond in a fair, appropriate and timely manner. Tomorrow's Board meeting is about listening to all of the parties involved and gaining a thorough understanding of the issues. We anticipate making a decision in the next several weeks."

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AIG Issues Response to Starr Litigation

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