Former Gen Re Exec Testifies in Trial
Richard Napier, former senior vice president of General Re Corp., outlined for a jury yesterday how he and other company officials developed an allegedly sham reinsurance transaction with American International Group Inc. to improperly boost reserves by $500 million in 2000 and 2001. Prosecutors say this misled investors about the amount of losses that the insurer could withstand, and artificially inflated AIG stock.
Mr. Napier also recounted what defendant and former Gen Re Chief Executive Officer Ronald E. Ferguson told him about his discussions of the deal with former AIG CEO Maurice R. Greenberg and Warren E. Buffett, chairman of Gen Re parent company Berkshire Hathaway Inc.
Napier testified that Ferguson told him of a November 2000 phone call in which he outlined the structure of the reinsurance deal for Mr. Greenberg and told Mr. Greenberg that AIG would not bear any “real risk” in the deal.
Along with Mr. Ferguson, those charged in the case are Christopher P. Garand, former senior vp in charge of U.S. finite underwriting for Gen Re; Robert Graham, former senior vp and legal counsel; Elizabeth Monrad, former chief financial officer for the reinsurer; and Christian M. Milton, AIG’s former vp for reinsurance.
Mr. Greenberg has been identified as an unindicted co-conspirator in the case but has not been charged.
Published on January 11, 2008
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