What kind of year will 2008 turn out to be?
Megaverdict? Two significant insurance industry fraud trials are taking place this year. In Hartford, Conn., four former executives of General Re Corp. and the former reinsurance officer of American International Group Inc. are on trial for securities fraud and conspiracy to manipulate AIG's loss reserves in what prosecutors call a sham finite reinsurance deal. The verdict will mean more than just what happens to the defendants; it could well determine the future of finite re as a risk-financing tool in the United States.
Later in 2008, former AIG Chairman Maurice R. Greenberg and ex-AIG Chief Financial Officer Howard Smith will get their day in court on fraud charges first brought by then-Attorney General Eliot Spitzer. After distinguished careers at AIG, Messrs. Greenberg and Smith are now top executives at C.V. Starr & Co. Inc., and the verdict in their trial could well determine that company's future.