Reinsurance company Transatlantic Holdings, Inc. has reached an agreement with American International Group (AIG) to settle its dispute over losses it incurred in a securities lending program administered and managed by AIG.
AIG will pay Transatlantic a sum, which is still being agreed upon, between $45 million and $125 million. According to the agreement, if the two firms fail to reach a compromise on the amount of the settlement by June 1, a mediator will determine the settlement amount.
AIG formerly owned a controlling stake in Transatlantic. AIG, an insurance and financial services company, shed some of its assets, including Transatlantic, to help repay loans extended by the Federal Reserve to keep the company afloat during the credit crisis. The sale of its Transatlantic shares was estimated to earn approximately $1 billion for the company.
Transatlantics dispute, launched in 2010, originally demanded $350 million from AIG, and last year that was raised to $500 million, according to Bloomberg.
Terms of the arbitration agreement stipulate that neither party admits liability.
Transatlantic reported a net loss of $57 million in the fourth quarter of 2011.
(CG)