AIG Releases Statement on Starr Litigation
- Posted by ToddSullivan
- on January 8th, 2013
Doing this on my iPhone at hockey practice so please excuse any errors. This is about what you’d expect them to say. I’d be very surprised if they chose option 1.
NEW YORK–(BUSINESS WIRE)–Jan. 8, 2013– American International Group, Inc. (NYSE: AIG) confirmed today that the AIG Board of Directors will consider, at a meeting scheduled for January 9, 2013, the demand served on the AIG Board of Directors on September 21, 2012, by Starr International Company, Inc. (“Starr”) as to whether AIG will take over, or allow Starr to continue to pursue, a lawsuit that Starr filed on behalf of itself and other AIG shareholders contesting the Constitutionality of certain terms of the U.S. government’s rescue of AIG in September 2008.
Under applicable law, as well as according to certain court rulings, the AIG Board must consider and respond to Starr’s demand, and expects to do so by the end of January 2013.
Specifically, in November 2011, Starr filed a lawsuit in the United States Court of Federal Claims and the United States District Court for the Southern District of New York alleging, among other things, that the Government’s 2008 receipt of a 79.9% equity interest in AIG constituted a wrongful “taking” without just compensation, in violation of the United States Constitution. The lawsuit makes claims on a “derivative” basis in the name of AIG and for its benefit, as well as on a “direct” basis on behalf of Starr and other similarly-situated shareholders.
By its demand, Starr requests that the AIG Board authorize AIG to assume control of the claims that Starr is pursuing in AIG’s name or allow Starr to pursue these claims on AIG’s behalf. Starr’s complaint seeks approximately $25 billion in damages.
The Board has three options with respect to the derivative claims asserted on its behalf: (1) take over Starr’s claims and prosecute them on its own; (2) refuse the demand and prevent the claims from being prosecuted by Starr, a decision Starr is likely to challenge; or (3) allow Starr to prosecute the claims on AIG’s behalf. Importantly, the Court of Federal Claims has denied the Government’s motion to dismiss the suit, so that the case will go forward with or without AIG’s participation. If AIG does not allow the derivative claims to proceed on AIG’s behalf and Starr prevails or obtains a favorable settlement on its direct claims, then AIG will not receive any of the amounts recovered.
It is the AIG Board’s obligation and intention to consider seriously Starr’s demand and respond to it in a manner that the Board believes is in the best interest of the Company, taking into account all the relevant circumstances.
“AIG has paid back its debt to America with a profit, and we mean it when we say thank you to the American people,” said Robert H. Benmosche, President and Chief Executive Officer of AIG. “At the same time, the Board of Directors has fiduciary and legal obligations to the Company and its shareholders to consider the demand served on us and respond in a fair, appropriate, and timely manner. Tomorrow’s Board meeting is about listening to all of the parties involved and gaining a thorough understanding of the issues. We anticipate making a decision in the next several weeks.”
AIG is the world’s largest insurance organization, serving more than 88 million customers in over 130 countries and jurisdictions around the world. AIG businesses are market leaders in property casualty insurance, life insurance and retirement services, mortgage insurance, and aircraft leasing.
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