AIG, the world's biggest insurer, revealed on Monday that it had received subpoenaes from US regulators related to policies that may be used by companies to smooth earnings.
New York attorney general Eliot Spitzer and the Securities and Exchange Commission sent them to AIG last Wednesday, the same day it announced quarterly earnings.
While speaking on a call with analysts that day, Hank Greenberg, AIG's chairman and chief executive, lashed out at US regulators and accused them of turning ?foot-faults into murder charges? when investigating companies.
A spokesman on Monday declined to comment on the subpoenas beyond a statement that said they were linked to ?investigations of non-traditional insurance products and certain assumed reinsurance transactions and AIG's accounting for such transactions.?
AIG has been caught in the limelight as Mr Spitzer and the Securities and Exchange Commission scrutinise insurers' activities on the hunt for improper behaviour.
It is one of several insurers to get caught up in a widening investigation into the alleged misuse of insurance products to manipulate company earnings. Berkshire Hathaway, the US conglomerate run by Warren Buffett, has also been subpoenaed.
The investigation into the misuse of so-called finite reinsurance was launched last year after regulators began scrutinising insurance products AIG sold to Brightpoint, a small telecommunications company in Indiana, which were allegedly used to perpetrate accounting fraud.
The products are often tailor-made to fit specific circumstances, but regulators are only interested in cases where there is not a clear transfer of risk from the company purchasing the product to the insurance provider.
AIG has agreed to allow an outside consultant to examine its books as part of a $126m settlement of issues arising from its transactions with Brightpoint and others.
Also, AIG has said it would form a special committee to make sure no products sold to companies are used to misrepresent income statements or balance sheet.
Finite reinsurance, also called non-traditional or loss-mitigation insurance, is typically purchased by companies and insurers looking for protection against the financial impact of future liabilities.
The two questions regulators are asking is whether companies should be permitted to account for these contracts as insurance and not as debt and whether these policies cloud earnings results.
In early trading on Monday, AIG shares fell 3.37 per cent to $70.64.
ares in AIG edged down 1.5 per cent to $71.96 in early morning trade on Monday.
