Former AIG supremo sues insurer for 'ruining' fortune

The former chief executive of American International Group is suing the company he led for 38 years, saying the giant insurer misled investors about its exposure to sub-prime mortgages.

Maurice “Hank” Greenberg, 83, claimed in papers filed in Manhattan yesterday that the company, once the world’s largest insurer, had ruined his fortune by lying about its financial health.

Mr Greenberg’s lawsuit came as the US government threw AIG a stunning new $30bn (€23.7bn) lifeline after it announced a record-breaking corporate loss of $62bn (€49bn) in the last quarter.

The lawsuit says Mr Greenberg, AIG’s chief executive from 1967 until he retired in March 2005, was the New York-based company’s largest non-institutional shareholder.

But Christina Pretto, a company spokeswoman, said: “We believe the suit is without merit and we will defend ourselves vigorously.”

The source of trouble for AIG, which has 74 million customers worldwide and operations in more than 130 countries, is its business insuring mortgage-backed securities and other debt against default. That business imploded when the credit crisis struck with force.

The government has now made four separate efforts to save the company, totalling more than $170bn (€134.5bn).

Mr Greenberg was forced out of AIG amid a controversy in spring 2005 when the company restated its financial statements for the previous five years, acknowledging accounting improprieties, including “improper or inappropriate transactions”.

New York regulators later accused AIG, Mr Greenberg and the company’s former chief financial officer of orchestrating an accounting scheme that made AIG’s financial picture appear brighter than it was, misleading both investors and regulators.