AIG announced today in a press release on the AIG corporate web site that it has reached a resolution of claims and matters under investigation with the United States Department of Justice the Securities and Exchange Commission ("SEC"), the Office of the New York Attorney General and the New York State Department of Insurance. These settlements will result in an after-tax charge of approximately $1.15 billion to be recorded in the fourth quarter of 2005.
According to the press release the settlements resolve outstanding litigation filed by the United States Department of Justice, the SEC, the Office of the New York Attorney General and the New York State Department of Insurance against AIG and conclude negotiations with these authorities and the United States Department of Justice in connection with the accounting, financial reporting and insurance brokerage practices of AIG and its subsidiaries, as well as claims relating to the underpayment of certain workers compensation premium taxes and other assessments.
Have these legal proceedings had a negative effect on AIG's brand? Barron's Senior Editor Jonathan R. Laing thinks not and states that the "AIG franchise" both "home and abroad seems as sound as ever". His December 19, 2005 piece in Barrons, titled "A Fresh Start at AIG" which is also posted on the Canadian Banks and Insurance web site tells the whole megillah. It's useful to read this for a different point of view since many of us were and are bombarded with the sensationalist headlines of the tabloids
I'm sure AIG is relieved to put this chapter of its life in its rear view mirror