Five Convicted In Gen Re Fraud Trial

A federal trial jury in Hartford on Monday convicted five former insurance executives on all counts including conspiracy, securities fraud, mail fraud and making false statements to the SEC. The defendants were four former executives of Berkshire Hathaway’s General Re and one former executive from American International Group (AIG): former Gen Re CEO Ronald Ferguson, former CFO Elizabeth Monrad, former senior VP and assistant general counsel Robert Graham, former senior VP head of US reinsurance operations Christopher Garand, and AIG’s former VP of reinsurance Christian Milton. The five had been charged in connection with two reinsurance transactions in 2000 and 2001; Gen Re appeared to assume $500 million in reinsurance risk, which allowed AIG to increase its loss reserves by $500 million. The government contended that the transactions were fraudulent because Gen Re did not actually assume the risk; the transactions misled investors about AIG’s financial condition, which artificially boosted its stock price. Sentencing has been scheduled for May 15, 2008 before US District Judge Christopher Droney. Bloomberg here, Reuters here.