AIG to Pay $960 Million to End Shareholder Suit
(CN) - AIG has reportedly agreed to pay $960 million to resolve a shareholder lawsuit stemming from the collapse of the company's value in the wake of its bailout by the federal government in 2008.
The settlement was disclosed during a conference call with reporters in which AIG officials disclosed the company's earnings for the second quarter of 2014. The deal to end the class action filed in 2008 was first reported by the Financial Times of London.
The plaintiff shareholders, led by the state of Michigan claimed they'd invested in the company based on false and misleading statements made by various executives, company directors, underwriters and an outside auditor concerning the AIG's financial health and business operations.
After the onset of the global financial crisis in September 2008, was collateral calls from a number of lenders, including Goldman Sachs, led to the AIG's seeking a $180 billion bailout from the U.S. Treasury.
The plaintiffs in the case been demanding upwards of $100 billion in compensation, the FT said.
In a statement released after the conference call, AIG said, "We are pleased to resolve this longstanding dispute. The resolution of this and other legacy financial crisis related matters better enables us to focus on AIG's future."
The settlement is just the latest in a series of moves AIG has been making in advance of Peter Hancock succeeding Bob Benmosche as company CEO in September.
In mid-July the company announced that he had reached a resolution of its residential mortgage related disputes with Bank of America. The resolution includes its claims pending in New York and California federal courts related to the creation, offering, and sale of RMBS from which AIG and its subsidiaries suffered losses either directly on their own account or in connection with their participation in AIG's securities lending program.
The resolution also covers AIG's objections to the $8.5 billion settlement of Countrywide's mortgage repurchase obligations to various investors, as well as disputes concerning the issuance of mortgage guaranty insurance by AIG's United Guaranty subsidiaries to Bank of America and Countrywide.