Insurer faces probe over big losses

By Hugh Son  |   2008-6-15  |     NEWSPAPER EDITION

AMERICAN International Group Inc, whose CEO is under fire from investors amid a stock slide, faces an inquiry by a New York regulator over losses on credit-default swaps that wiped out profit for two quarters.

New York Insurance Superintendent Eric Dinallo, the state's top insurance regulator, is reviewing AIG for understating the losses, his spokesman David Neustadt said on Friday. The US Securities and Exchange Commission and the Justice Department are also examining the matter.

"We've had a fairly extensive conversation with their senior managers on that topic," Neustadt said.

"We're planning some additional review."

The examination adds to pressure on Chief Executive Officer Martin Sullivan, who faces investors demanding his replacement after the company lost 41 percent of its value this year.

Sullivan has reported two record quarterly losses totaling more than US$12 billion.