Ex-General Re executive to plead guilty in AIG probe

A former senior executive of General Re is to admit conspiring to mis-state American International Group's financial statements, in the first criminal charges by prosecutors investigating the world's biggest insurance company.
subsidiary Cologne Re in Ireland, yesterday also faced civil charges of helping structure two "sham" transactions to bolster AIG's financial statements.
He has agreed to plead guilty to one criminal count of conspiring with others to mis-state some AIG accounts, his lawyer said.
The Securities and Exchange Commission's civil complaint
Greenberg, the former AIG chairman and chief executive, in the "phony" transactions.
Mr Houldsworth is co-operating with the Department of Justice and the SEC. Mr Greenberg has declined to answer questions.
The criminal and civil charges against Mr Houldsworth focus on his work in two transactions between AIG and General Re.
sole purpose of the reinsurance transactions was to enable AIG to add $500m in "phony loss reserves" to its balance sheet.
The SEC said the transactions should have transferred risk from General Re to AIG, but did not.
In 2000 Mr Greenberg called Ronald Ferguson, former chief executive of General Re, to seek help on how AIG and General Re
up to $500m in loss reserves to AIG, said the SEC. "In conversations with the Gen Re CEO... the AIG chairman made clear that, while he was looking to increase AIG's loss reserves, the transaction he was contemplating was one that would not require AIG to take on any actual insurance risk," said the SEC.
"The Gen Re CEO understood that what the AIG chairman was
reinsurance transaction .. rather a transaction that only look like reinsuran< AIG's accounting purposes, Mr Greenberg was ousi AIG chief executive in Mar was not charged in the SE( plaint yesterday. Mr 1 sworth was charged with and abetting AIG to commi rities fraud.