(Bloomberg) - American International Group Inc., the world's largest insurer, received subpoenas from New York Attorney General Eliot Spitzer (pictured) and the Securities and Exchange Commission seeking information on policies that may help companies smooth earnings.

AIG said in a statement yesterday that it received the subpoenas last week. The New York-based company didn't specify what role it may have played in the policies, which can be bought or sold by insurers. AIG's shares headed towards their biggest one-day decline in almost four months.

The inquiries revived some investors' concerns that AIG faces regulatory hurdles. Chief executive Maurice “Hank” Greenberg said on February 9 that a review sparked by a separate Spitzer probe of bid-rigging found few instances of wrongdoing, prompting shares to rise 8 percent in three days.

“Everybody thought these regulatory issues were behind them,” said Gerald Bollman, a fund manager at Clearwater, Florida-based Great Companies LLC, which overseas $1.4 billion and owns 536,882 AIG shares. “Apparently they aren't.”

AIG is part of Spitzer's bid-rigging probe and also faces inquiries on some of its policies. The subpoenas surprised investors such as Bollman, who said AIG appeared to have resolved income-smoothing inquiries by settling with the SEC and Department of Justice in November. That agreement involved products sold to two clients.

The company's shares fell $1.81, or 2.5 percent, to $71.31 at 3.34 p.m. in New York Stock Exchange composite trading, the biggest decline since October 22.

AIG said the subpoenas also asked for information on AIG's accounting for certain reinsurance it sold to other insurers, without specifying what type. AIG said it received the subpoenas on February 9 and February 10, after Greenberg, 79, mentioned the bid- rigging review on a conference call to discuss fourth-quarter earnings with analysts.

Spitzer spokesman Darren Dopp and SEC spokesman John Nester declined to comment.

Warren Buffett's Berkshire Hathaway Inc., St. Paul Travelers Cos. and ACE Ltd. are among at least seven other insurers that have been subpoenaed about income-smoothing policies since Spitzer and the SEC collaborated to investigate the policies last year.

Regulators are probing whether the policies, often called non-traditional or finite insurance, act as disguised loans and allow clients to mask losses.

The policies sometimes allow clients to pay losses in installments over time, much like a borrower repays a loan. The debt may go unnoticed because the payments are accounted for as insurance premiums instead of financing costs, regulators said.

Insurers are both sellers and buyers of non-traditional policies, meaning insurers as well as their clients could use them to hide losses. AIG spokesman Chris Winans declined to specify which role the subpoenas addressed.

AIG's first settlement on income-smoothing was in 2003, when the company agreed to pay the SEC $10 million to resolve an investigation into a policy sold to Brightpoint Inc., a cellular phone distributor. The policy helped Brightpoint hide an $11 million loss, according to the SEC.

In November, the company agreed to pay $126 million to settle related allegations with the Department of Justice and SEC.

That settlement involved a Justice Department investigation into Brightpoint and a probe by both regulators of products PNC Financial Services Group Inc., a Pittsburgh-based bank, bought to remove bad loans from its books. AIG didn't admit or deny wrongdoing.

“Investors aren't going to be happy with these subpoenas coming so soon after his company said it was clean,” said Anton Schutz, who helps manage $330 million at Mendon Capital Advisor Corp. in Rochester, New York.

Schutz said he sold the last of his AIG stock in part on regulatory concerns.

The November settlement required AIG to let an independent monitor review transactions. The monitor, James Cole, is just starting his work, chief financial officer Howard Smith said yesterday at a conference sponsored by Merrill Lynch & Co. in New York.

AIG announced its internal review of bid-rigging after two employees of its American Home Assurance unit pleaded guilty in October to colluding with Marsh & McLennan Cos., the world's largest insurance broker, to fabricate quotes. Greenberg said on February 9 the review had been completed and the company had found no wrongdoing outside the employees' unit.

Paul Newsome, an analyst at A.G. Edwards & Sons Inc. in St Louis, Missouri, said the latest subpoenas aren't a concern.

“There's nothing here that makes me want to change my view of the stock,” said Newsome, who has a “buy” recommendation on AIG shares.