Until Enron changed the rules, AIG's habit of revealing unrelentingly smooth earnings tailored to the needs of Wall Street was widely acknowledged to be unremarkable.
Indeed, in recent years AIG has been the subject of regulatory scrutiny and censure for providing products that iron out - however inadvertently - awkward creases in company financials, such as at mobile phone distributor Brightpoint and at bank PNC. This time, however, it appeared AIG was doing the buying - and the regulators wanted to ask Hank Greenberg questions about it.
In particular, New York attorney general Eliot Spitzer and the Securities & Exchange Commission (SEC) are examining a 2000-2001 finite reinsurance contract between AIG and Berkshire Hathaway's General Re.
Under the contract, General Re's Irish operation ceded a $500mn portfolio of business; AIG booked the $500mn as premium income, paid a $5mn commission to General Re, and then added $500mn to its reserves.
If - as regulators suspect may be the case - there was no actual risk transfer (because the losses were capped at around $500mn) then there is a danger that AIG may have misled its shareholders and filed inaccurate accounts. Evidence - including e-mails and taped telephone calls - is thought to support these suspicions and, crucially, it appeared that knowledge went to the top of the AIG organisation.
All this occurred at a time when AIG was under pressure to increase its reserves. Was this contract - apparently structured between Hank Greenberg and General Re's then chief executive Ron Ferguson - designed to prevent a hit on AIG earnings by (artificially) boosting reserves?
We are likely to know by the end of the month. AIG finance director Howard Smith has stepped down, replaced by the well-regarded Steven Bensinger, and the company has delayed filing its annual report for an estimated two weeks. Sources suggest that the accounts may be restructured. And at the time of going to press, news was breaking that Chris Milton, AIG's chief reinsurance buyer, has been suspended from his duties.
AIG's share price fell a further 3 percent to $61.92 on 15 March as investor uncertainty grew, despite a shareholder conference call hosted by Sullivan and Bensinger designed to settle their nerves.
Greenberg had to go sometime. But he would never have chosen it this way.