American International Group Inc., the world's largest insurer in terms of market capitalization, announced its agreement to pay $126 million in settlement of the probes launched by U.S. Securities and Exchange Commission and U.S. Department of Justice.

 

Out of the quoted amount, $46 million will cover the fees related to the SEC investigation of the charge that AIG helped Pennsylvania's largest bank PNC Financial Services Group Inc. boost profits.

 

AIG will use $80 million to pay the fine to settle the Department of Justice probe that relates to the PNC deal and AIG products that were used by the cell phone company Brightpoint Inc. to cover up losses.

The settlement charge accounts for 1% of AIG annualized profit, based on the reported earnings of $8.03 billion in the first nine months of the year.

 

The criminal inquiry focuses on whether AIG CEO Maurice "Hank" Greenberg entered a collusion with NYSE Chairman Richard Grasso to pump up AIG share price to raise funds for a $23 billion purchase of Houston's American General in August 2001.