Insurer under investigation from US regulator.
AIG is being investigated by the U.S. Securities and Exchange Commission (SEC) in to whether it overstated the value of contracts linked to subprime mortgages, says the Wall Street Journal.
The paper, citing people familiar with the matter, said the swaps were sold by the insurer to holders of collateralised-debt obligations, which were backed in part by subprime mortgages.
It said the investigation will look at how the CDOs were valued, which underpins the value of the swap and the amount of collateral AIG must use to offset the buyer's credit risk.
AIG posted $9.7 billion in collateral related to its swaps, as of April 30, up from $5.3 billion about two months earlier.
Both the Justice Department and the U.S. attorney's office have told the SEC they want information the agency is gathering in its investigation of AIG, suggesting a criminal investigation could follow, the paper added.
Officials for AIG, the SEC, the Justice Department and the U.S. attorney's office all declined to comment on the new probe. A spokesman for AIG said the company will continue to cooperate in regulatory and governmental reviews on all matters, said the paper.
This follows and announcement by AIG in February, which said its auditor had found a "material weakness" in its accounting, adds the paper.
