NEW YORK – The board of giant insurer AIG decided Wednesday not to join a private shareholder lawsuit against the U.S. government over the $182 billion rescue of the insurer in 2008.
The lawsuit filed by Starr International, which is controlled by former AIG CEO Maurice “Hank” Greenberg, argued that the massive bailout of AIG did not fairly compensate shareholders. Starr sued the government for about $25 billion in November 2011.
The government took control of American International Group Inc. in September 2008 to prevent its imminent collapse from sparking a cascade of gigantic failures throughout the global financial system. But the rescue wiped out most of the value of AIG’s shares.
Starr petitioned the AIG board to join in or take the lead in the suit. AIG laid out its options Wednesday, saying that it could take over and lead the Starr litigation, allow Starr to prosecute the demands on AIG’s behalf, or refuse the demand and prevent the Starr litigation, a move that AIG said Starr was likely to contest.
AIG said that if it opted not to join the case and the Starr litigation proved successful, then AIG would “not receive any of the amounts recovered.” In the end, AIG concluded that a determination not to join the suit met the company’s “fiduciary and legal” obligations to AIG and its shareholders.