Tuesday, April 26, 2005

More Hot Water for AIG

The internal investigation of American International Group Inc. keeps turning up more problems, according to a New York Times article (here).  Although the internal investigation is not yet complete, and the regulators and prosecutors are far from wrapping up their many probes, there is evidence that AIG's internal controls were easily evaded, and the company hid its control of at least two off-shore reinsurance companies, identified as Union Excess (Barbados) and Richmond Re (Bermuda).  The company has until May 2 to file its annual report, which has already been delayed from mid-March and could be put off even further, although there would be a remote risk of delisting from the New York Stock Exchange if the delay becomes much greater.  Speculation about the size of the charges arising from the various accounting problems uncovered has ranged as high as $8 billion from earlier estimates of $2.7 billion.  The heat on former AIG executives to cooperate in the government's criminal and civil investigations is sure to increase once the internal review is completed and the regulators and prosecutors take center stage.  (ph)

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