AIG and Gen Re executives to face retrial
Four former GenRe executives and one former executive from AIG will face trial next year on accusations they created a sham reinsurance transaction to boost AIG’s earnings.
This is the second time the executives have faced trial on federal fraud charges.
General Reinsurance Corp, an insurer owned by Warren Buffett’s Berkshire Hathaway Inc, had won a dismissal of a lawsuit accusing it of helping former American International Group Inc. (AIG) defraud investors, but a federal judge in the US has ordered a retrial.
The five are accused of engineering a sham reinsurance transaction called a loss-portfolio transfer. Prosecutors say GenRe allowed AIG inflate its loss reserves to $500 million without assuming any risk. GenRe allegedly paid a $10 million premium that AIG secretly returned through a side deal, plus an additional $5 million fee.
The executives were previously convicted in 2008 and sentenced to prison, but the 2nd US Circuit Court of Appeals overturned their convictions last year and ordered a new trial citing errors made by the judge in the original trial.
The retrial is set to begin in US District Court of Connecticut on January 22, 2013.
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