AIG profits rise despite scandal

Mr Greenberg led AIG from 1967 until earlier this year

Insurance giant AIG has seen profits rise by almost a half despite the accounting scandal which forced the departure of its chief executive.

The firm said earnings for the three months to March were $3.68bn (£2bn), up 44% from a year earlier.

The firm is facing legal action for having overstated its profits by almost $4bn, or 10%, over five years.

Maurice "Hank" Greenberg, the firm's chief for 38 years, resigned from all his posts at AIG earlier this year.

Share transfer

The figures were boosted by a strong performance in Japan and South East Asia, the firm said.

But analysts pointed out that two key issues - a downgrade by credit rating agencies, making borrowing more expensive, and the leadership changes - both happened in late March, and thus had little effect on performance.

As AIG's figures were being announced, Mr Greenberg said he was reversing a $2.28bn transfer of AIG shares to his wife.

The 41-million share transaction had been criticised by regulators in Ohio, who complained that it could be a "fraudulent transaction" to shield assets.

Mr Greenberg's lawyers said the transfer was innocent but had been "completely misunderstood", causing "needless distractions and wasteful litigation".

Among other lawsuits threatening the firm and its officers, the former chairman and chief executive is accused by New York Attorney General Eliot Spitzer of manipulating the firm's finances to boost its stock price.

Mr Greenberg's lawyers have said they will contest the suit, and say the firm's accounting decisions should not be his responsibility alone.

He led AIG, which has about 90,000 employees and works in 130 countries, for almost 38 years.