World’s largest insurer under investigation

The world’s largest insurer by market value is the target of a criminal investigation by the US Justice Department.

American International (AIG) is accused of helping a banking client commit fraud and keep about $762m (£522m) of bad loans off its balance sheet.

AIG says it did nothing wrong while analysts say the firm’s actions fall into a legal grey area. The Securities Exchange Commission is also investigating the case.

PNC Financial Services paid $115m last year to settle criminal charges brought by the Justice Department on grounds that it had fraudulently moved the loans off its books, inflating its profit by $155m.

The special purpose “vehicles” under investigation are similar to those used by collapsed energy giant Enron to hide debt.