Starr International Co., led by ousted American International Group Chairman Maurice Greenberg, filed suit against AIG yesterday, claiming the insurer mismanaged a settlement with regulators, a Starr spokesman confirmed.
The suit, filed in Delaware Chancery Court, alleges AIG in a Feb. 9 settlement with New York Attorney General Eliot Spitzer may have incurred unnecessary expenses ranging in the hundreds of millions of dollars.
Starr is AIG's largest shareholder. AIG has a legal action in the Chancery Court attempting to recover payments from Mr. Greenberg and Starr.
The latest Starr action seeks minutes of AIG's corporate meetings, transcripts and materials presented to board members that led to the settlement decision, said Starr spokesman Howard Opinsky.
In a letter to AIG attorneys, Edward Matthews, managing director of Starr, said the $1.64 billion settlement with New York may have included certain "improprieties."
The settlement includes $344 million set aside for states that were allegedly harmed by AIG's understating of workers' compensation premiums.
Mr. Matthews said AIG did not write workers' compensation policies in three of the states–Washington, North Dakota and West Virginia–and possibly more.
North Dakota Insurance Commissioner James Poolman said AIG may have provided reinsurance for its workers' compensation fund, but since he had no control over that he could not say for sure.
The February settlement resolved numerous allegations of broker compensation and accounting wrong-doing during the Greenberg years.
Mr. Greenberg still faces civil fraud charges by Mr. Spitzer. Even before the AIG settlement was reached, Mr. Greenberg through his spokesman and attorneys charged that it was a political action by Mr. Spitzer and the company had worked with him to dump all the blame for accounting infractions on Mr. Greenberg.
Mr. Spitzer's office failed to return a request for comment, while AIG spokesman Christian Murray said the company does not comment on ongoing litigation.
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