AIG settles bailout-era lawsuit for $960m
AIG agreed to pay $960m to resolve a shareholder lawsuit that had demanded compensation for the collapse in the insurance group’s value when it was bailed out by the US government in 2008.
Shareholders led by the state of Michigan claimed they “suffered tens of billions of dollars of losses, at the least, based on false and materially misleading statements that AIG.
AIG paid $960m to avoid the risk that the lawsuit would be successful and the company would be sunk again by bills that it could not pay. During the crisis it was collateral calls from banks such as Goldman Sachs that led to the company’s giant $180bn bailout.
It is one of the biggest payouts of its type. Bank of America, another of the top bailouts of the financial crisis, paid $2.4bn in 2012 to settle a shareholder lawsuit, which argued the company concealed information about the financial health of Merrill Lynch, the securities group it bought in 2008.
The company has separately reached settlements with a string of banks, which it claimed bore responsibility for the toxic subprime securities which they sold and had insured by AIG.
The settlement was disclosed as AIG reported net income of $3.1bn in the second quarter, compared with $2.7bn in the same period a year earlier.
Shares in AIG rose 2.4 per cent in after-market trading to $53.94 after the results, which exceeded analysts’ expectations.
Source: ft
