Mr. Morrow also relayed what he described as a number of unusual features of the two-part loss portfolio transfer from a Gen Re unit to AIG in the fourth quarter of 2000 and the first quarter of 2001.
One of the deal’s unusual aspects, Mr. Morrow said, was that AIG was given “minimal information” about the underlying business being ceded by Gen Re. “There was no data at all. Without data, there was no way for me to analyze what the expected losses would be,” Mr. Morrow told jurors.
This is the third week of the trial of Mr. Milton and four former Gen Re executives alleging they engineered the loss portfolio deal to help AIG artificially inflate its loss reserves by $500 million. Prosecutors allege that the deal actually transferred no risk, and the defendants agreed that AIG would secretly refund a $10 million premium to Gen Re and pay the reinsurer a $5 million fee for entering the deal.