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NEW YORK (CNN/Money) -
Investigators are looking at whether insurer American International Group used offshore reinsurers it controlled to manipulate its earnings, according to published reports.
The Wall Street Journal and New York Times both reported Wednesday that if it turns out AIG controls the reinsurers, then it effectively bought reinsurance from itself, allowing it to improve its own results by stuffing bad claims onto these companies' books.
The Times reports that two reinsurers, Richmond Insurance and Union Excess Reinsurance, both based in Barbados, are drawing particular scrutiny because AIG is both firms' only clients.
Another Barbados-based firm, Pillar Insurance, also has only AIG as a client, according to the Times.
The Journal reports that state insurance regulators in New York, who have been working with the SEC and New York State Attorney General Eliot Spitzer, are leading the probe into the offshore operations.
AIG forced out CEO Maurice "Hank" Greenberg on March 15 amid a separate probe into whether the company used a reinsurance deal with Berkshire Hathaway's General Reinsurance unit four years ago to improperly improve its results.
On Tuesday, it was reported that the company had fired two other top executives who signaled they would invoke their right to silence when questioned by investigators in that probe.
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