AIG admits improper documentation

Mr Greenberg led AIG from 1967 until earlier this month

US insurance giant AIG has admitted it has discovered improper documentation connected to a transaction at the centre of a federal probe.

The Securities and Exchange Commission, the Justice Department, and the New York State Attorney General are all continuing to investigate AIG.

The transaction under investigation is a 2000 reinsurance deal between AIG and fellow insurer General Re.

AIG was accused of improperly recording the deal, something it now admits.

Other transactions could also be implicated, a factor which on Wednesday persuaded credit rating agency Standard & Poor's to strip AIG of its top-rank "AAA" rating.

"The number and scope of inappropriate financial transactions have diminished our assessment of management and its internal controls, corporate governance, and aggressive culture," said S&P credit analyst Grace Osborne.

AIG acknowledged that it could be forced to reduce its book value - the accounting value of its assets - by $1.7bn or 2%.

Delayed report

The US authorities allege AIG - the world's biggest insurer - wrongly recorded its purchase of insurance contracts from General Re to artificially boost its financial bottom line.

AIG on Wednesday admitted that the Gen Re transaction documentation was improper, and that its financial statements will now be adjusted.

General Re is a unit of billionaire investor Warren Buffett's Berkshire Hathaway holding company.

Meanwhile, AIG has also announced it is to delay the filing of its annual reports until 30 April - the second time they have now been postponed - to give its new management team time to carry out a full review of its books.

Former AIG chief executive Maurice Greenberg, 79, stood down two weeks ago, after leading the company since 1967.

He is one of 12 former AIG directors who have received subpoenas from the Securities and Exchange Commission.