THE board of giant insurer AIG has decided not to join a private shareholder lawsuit against the US government over the $US182 billion ($A174 billion) rescue of the insurer in 2008.
The lawsuit filed by Starr International, which is controlled by former AIG chief executive Maurice "Hank" Greenberg, argued that the massive bailout of AIG did not fairly compensate shareholders. Starr sued the government for about $US25 billion in November 2011.
"The AIG Board has determined to refuse Starr's demand in its entirety, and will neither pursue these claims itself nor permit Starr to pursue them in AIG's name," the company said in a statement on Wednesday.
The government took control of American International Group (AIG) in September 2008 to prevent its imminent collapse from sparking a cascade of gigantic failures throughout the global financial system.
But the rescue wiped out most of the value of AIG's shares.
The US has slowly sold off its holdings in the company over the past two years, disposing of its last shares only in December. The Treasury said the government had earned a $22.7 billion net profit on the bailout.
Starr petitioned the AIG board to join in or take the lead in the suit.
But AIG concluded that a determination not to join the suit met the company's "fiduciary and legal" obligations to AIG and its shareholders.
AIG, which has made a point in recent weeks of publicly thanking US taxpayers for the rescue plan, did so again on Wednesday.
AIG said that in the coming weeks it would file with the courts a formal statement giving its "underlying" reasons for not joining the suit.
The Treasury Department, which argued with the Federal Reserve Bank of New York that the Starr case has no merit, praised AIG's decision.
"AIG ran a careful process and the Board's decision not to join Starr International's lawsuit is the right result," said Assistant Secretary of the Treasury for Financial Stability Timothy Massad in a statement.
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