Ex-AIG execs to pay $115 million to settle suit

Former AIG chairman and chief executive Maurice Greenberg and other former executives at the insurer will have to cough up $115 million as part of a settlement in a derivatives lawsuit with the Teachers’ Retirement System of Louisiana. The settlement ends six years of litigation. Originally, the suit by the retirement system accused the former CEO of American International Group Inc. in New York and three other former executives of breaching their fiduciary duty by steering insurance business to C.V. Starr & Co. Inc., a New York-based private AIG affiliate that is controlled by Mr. Greenberg. Howard Smith, AIG’s former finance chief, Edward Matthews, the former vice chairman of investments, and Thomas Tizzio, the former vice chairman of insurance, were also named in the suit. Plaintiffs in the suit also alleged that C.V. Starr was self-dealing and creating a massive compensation pool by awarding tens of millions of dollars in payments to a select group of top AIG executives. Of the total recovery, $29.5 million will come from Mr. Greenberg and the other defendants, while the remaining $85.5 million will be covered by director’s and officer’s liability insurance. Grant & Eisenhofer PA of Wilmington, Del. represented the teacher’s retirement system.