Greenberg Agrees to Sell AIG Shares to Starr International

Former American International Group Inc. Chief Executive Officer Maurice “Hank” Greenberg agreed to sell about 12.9 million of his shares in the insurer to an investment firm that he controls.

Starr International Co., the largest private shareholder of New York-based AIG, may buy Greenberg’s shares for at least $1.25 each and not more than a “mutually agreed upon” price, he said yesterday in a regulatory filing. Starr International may also buy about 47 million shares held by additional Greenberg-run firms and trusts, he said.

Greenberg, forced to retire in 2005 after almost four decades running AIG, has been locked in a legal battle with the insurer about stock held by Starr International. AIG has said that the shares were held for the benefit of its employees, while Greenberg has said that no agreement exists mandating that use of the assets.

Starr International, which had 205.9 million AIG shares as of March, according to Bloomberg data, was closely affiliated with AIG for three decades while it provided incentive pay for the insurer’s managers. After leaving AIG, Greenberg has run the firm as an investment vehicle, making bets on Chinese and Russian businesses.

Government Rescue

Greenberg, 83, was forced to retire from AIG amid state and federal probes into the company’s accounting and sales practices. He denies any wrongdoing in the case, which is still pending. Then-New York Attorney General Eliot Spitzer dropped portions of a lawsuit in 2006 that included four other allegations tied to the investigation.

AIG was rescued by the federal government in September and has taken three subsequent bailouts for a total of $182.5 billion after failed bets tied to housing markets.

The shares, which closed at $1.38 yesterday in New York Stock Exchange composite trading, have plunged 97 percent in the past year.

The rescue includes an investment of as much as $70 billion in preferred stock and warrants, $52.5 billion to buy assets owned or backed by the insurer, and a $60 billion credit line. AIG had tapped about $45.5 billion on that line as of April 29.