General Reinsurance Corp.’s $72 million settlement of investor claims that it participated in a fraudulent transaction with American International Group Inc. was revived by a federal appeals court.
The court today reversed a ruling by U.S. District Judge Deborah Batts, who had denied a request to certify a class in the case to allow the 2009 settlement to go forward. The U.S. appeals court in New York sent the case back to Batts to consider the fairness of the settlement.
AIG investors sued in 2004, alleging the companies were involved in a scheme that allowed New York-based AIG to improperly inflate its loss reserves. Gen Re is a unit of Warren Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc.
The investors, led by three Ohio public pension funds, claimed that in late 2000 and early 2001 AIG and Gen Re engaged in a sham transaction that let AIG inflate its revenues and loss reserves.
The case is In Re American International Group Inc. Securities Litigation, 10-4401, U.S. Circuit Court of Appeals for the Second Circuit (Manhattan).