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. Last Updated: 07/27/2016

AIG Executive Strikes Deal With Prosecutor

NEW YORK -- A senior executive at American International Group, the insurance giant under investigation for improper accounting, has struck a deal with the New York attorney general, Eliot Spitzer, to cooperate in exchange for immunity, people briefed on the details of the investigation said Friday.

The executive, Joseph Umansky, a longtime employee of AIG who was a senior executive in the corporate division as well as president of AIG Reinsurance Advisers, a wholly owned reinsurance subsidiary, has offered to aid Spitzer, who in turn appears to have agreed not to bring charges against him.

His cooperation signals Spitzer's continued intent to try and build a case against the company and possibly former and current executives.

An AIG spokesman said Umansky was still with the company, but declined to comment on any details about a deal.

The agreement could ratchet up the pressure on Maurice Greenberg, who was ousted as chief executive and chairman of AIG in March.

The deal between Spitzer and Umansky is surprising. Prosecutors rarely offer such deals to senior-level executives who could potentially be targets.

Umansky has not been charged with any wrongdoing. He did not return calls to his home.

Spitzer's office, the Securities and Exchange Commission and the Justice Department are deep into investigations about ways in which AIG used questionable accounting to make its financial condition appear stronger than it was. The initial focus of the investigations was a 2000 transaction between the company and General Re, a unit of Berkshire Hathaway, that bolstered AIG's reserves artificially by $500 million.

AIG has already disclosed suspect transactions that would reduce its net worth by $2.7 billion. AIG also disclosed a $2.4 billion credit to its net worth as a result of complex accounting for derivatives.

Among the questionable transactions disclosed by the company, which is cooperating with the investigations, are relationships between AIG and several offshore reinsurance companies.

AIG has said that some of those reinsurers, including Union Excess Reinsurance and Richmond Insurance, should have been accounted for as part of AIG rather than separate companies.

It is unclear what role, if any, AIG Reinsurance Advisers played in those business dealings.

One former senior AIG executive said that Umansky was a major player in the upper ranks of the company.

AIG is expected to file its annual report with the SEC by May 31.