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Litigation

AIG to settle crisis-era litigation

US insurance giant AIG has said it will settle crisis-era litigation over allegations that its executives gave false information to investors. The deal was the latest step to move AIG forward after a massive bailout.

American International Group would pay $960 million (716 million euros) to settle several lawsuits accusing the insurance giant of misleading investors in the run-up to the 2008 financial crisis, the company said.

In what would be one of the largest settlements stemming from the crisis, the proposed deal would finally lay to rest investors' claims that AIG deceived shareholders about the company's health in news releases, financial filings and elsewhere.

Plaintiffs maintained they were unaware of the extent of AIG's exposure to the subprime loans that triggered the mortgage crisis. That exposure nearly drove the company bankrupt before it received one of the biggest taxpayer-funded bailouts of the financial crisis.

The settlement is still subject to approval by a federal court in New York, where AIG is based.

AIG has since paid back that debt and undergone massive restructuring that has seen it slash its workforce in half in order to focus on its core insurance business.

News of the settlement came as the company released its quarterly financial filing with the US Securities and Exchange Commission, in which it also disclosed a 12.5-percent rise in quarterly profit.

From April to June, AIG's net income soared to $3.07 billion from $2.73 billion in the same quarter last year, exceeding analysts' expectations.

Shares in the company jumped in after-hours trading on the news, adding 2.5 percent to $54.

The earnings report was the last one to be overseen by AIG's outgoing chief executive, Robert Benmosche, who plans to retire on Sept.1. Benmosche joined the company in its darkest hour in 2009, before a $182-billion bailout.

He oversaw strict restructuring, which included sales of a number of subsidiaries, including AIG's airplane leasing unit, International Lease Finance Corp. Under his leadership, shares in the company have reportedly risen 373 percent.

cjc/hg (AP, dpa)

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