AIG lawyers scrutinise Dublin firm

A Dublin-registered company that owns 12 per cent of AIG, the world's biggest insurer, has emerged as the latest Irish entity under scrutiny in a deepening US investigation into the international insurance industry.

Starr International is a little-known Panamanian corporation whose head office was moved to Dublin last September. Set up in 1943 by AIG founder Cornelius Vander Starr, the company has assets worth $16 billion (€12.7 billion). Its registered office is at the AIG centre in the IFSC.

Known as SICO in insurance circles, the company was traditionally used by AIG to offer stock on retirement to favoured members of staff. However, its role has come under scrutiny as part of a widening investigation into AIG's accounting and corporate governance.

With US regulators putting pressure on AIG to sever its ties with SICO, the company's future will be discussed at a meeting today in Dublin at which its directors or their representatives will discuss what to do with its assets.

The debate over SICO's future has brought former AIG chief executive and chairman Maurice "Hank" Greenberg to the fore once more. Mr Greenberg was removed from AIG earlier this year amid intensive regulatory scrutiny of a number of questionable reinsurance transactions - some of them with the Dublin unit of General Re, part of Mr Warren Buffett's Berkshire Hathaway conglomerate.

However, Mr Greenberg and six of his confidantes are still on the board of SICO, which puts them in a powerful position in relation to its future. According to people familiar with their thinking, their ideas include giving SICO's assets to an Irish charityor starting a private equity fund to invest in China.

SICO's charter, written in 1943, states that Starr International Charities, a philanthropic group, owns all the company's common equity. SICO and the charity that controls it appear to work in tandem. When the directors decided to move the headquarters of SICO to Dublin late last year, the charity's offices relocated as well.

Although it receives money from SICO each year, Starr International Charities would benefit from any sale of SICO's assets only if the company were to be liquidated.

Among the issues up for discussion in Dublin today is whether SICO's bylaws could be amended to widen the number of shareholders and allow them to hold economic stakes in it. One person close to SICO indicated that efforts to transform it into an investment company would move along seamlessly so long as the charity's three trustees did not object.

Thus far, no one has challenged Mr Greenberg's apparent control of SICO's assets, according to a person close to AIG. However, lawyers working for AIG and regulators are examining whether the grip exercised by Mr Greenberg and Starr's other directors can be loosened.