A deal between American International Group Inc. and General Reinsurance unit made in late 2000 or early 2001 is scrutinized at the present moment, since the regulators have to find out whether it was aimed at making the huge insurer’s reserves look healthier than they actually were.

The deal followed by decline in AIG’s shares amid rising concern about the company’s reserving practices.

Investigating this case, state and federal regulators are looking through the e-mails and other documents subpoenaed in recent months from reinsurer General Re and other insurers and reinsurers, according to people familiar with the matter.

According to the Wall Street Journal, regulators are looking into a transaction -- in late 2000 or early 2001 -- in which AIG improved its balance sheet by adding to it hundreds of millions of dollars in claims reserves. Such reserves show an insurer’s obligations to pay claims in the future.

On Oct. 26, 2000, AIG had announced an expected 9% growth in net income for the third quarter. But the company’s shares fell 6%, as some investors feared that income of two cents on a per-share basis was a result of decline in its reserves. The company said the reduction mainly originated from payment of some catastrophe-related claims from prior periods by AIG’s reinsurance division.

Concerns about reserving practices prevail in the property-casualty insurance sector, because a company can prosper due to booking fewer reserves in a tough quarter. Since the transaction under study was comparatively small for AIG, the balance-sheet effect could have calmed investors, people familiar with the matter said.