Defendants seek a resolution to long-running finite fraud case

Four former General Re executives and one former AIG executive are in talks to settle a long-running case where they are accused of taking part in a bogus finite reinsurance transaction.

It is alleged the transaction boosted AIG’s loss reserves by $500m without any transfer of risk taking place.

The former General Re execs, including ex-chief executive Ronald Ferguson, ex-chief financial officer Elizabeth Monrad, ex-senior vice president Christopher Garand and ex-assistant general counsel Robert Graham along with former AIG vice president Christian Milton were found convicted following a six-week trial in Hartford, Connecticut in 2008.

However, the verdict was overturned in 2011 by the 2nd US Circuit Court of Appeals in New York, which cited errors by the judge handling their trial in 2008.

“The parties have been, and continue to be, engaged in discussions concerning a potential global resolution of this matter,” lawyers for the defendants said in a joint filing last week. “The parties are working diligently to determine whether such a resolution may be reached.”

In May, former AIG chief executive Maurice “Hank” Greenberg lost his appeal to dismiss a 2005 civil lawsuit brought against him by then New York attorney general Eliot Spitzer for his alleged role in finite reinsurance fraud.

87-year-old Greenberg was dismissed from the top role at AIG in March 2005, two months before Spitzer alleged he and former AIG chief financial officer Howard Smith had misled regulators and investors.